How did they become so succesful?
Watching television has not been the same since the introduction of Netflix. We no longer watch at a given time slot, but we stream a film or series when it suits us. A good 75 million people worldwide are a member of Netflix. How has Netflix become so big?
|Turnover||$ 2.1 billion||$ 6.8 billion|
|Profit||$ 160 million||$ 122.6 million|
|Members||20 million||74.7 million|
In 2007, Netflix set a completely different course. Until then, it was only a mail-order company that rented out DVDs in distinctive red envelopes. Its turnover that year was 1.2 billion dollars. Achieved profit: 66.6 million dollars. In 2007, however, Netflix changed into an application, allowing users to stream films, series and documentaries. Initially it was only available in the United States. From 2010 the streaming service started to expand and success followed. In 2010, Netflix became available in Canada, followed by Latin America in 2011, and in 2012 it crossed the Atlantic to the European market. In the Netherlands Netflix was launched in 2013.
Netflix caused a revolution. In the Netherlands, for example, the service had one million members after the first year. The coax cable became irrelevant to a growing number of viewers. A high-speed internet connection is now much more important. Thanks to growth of no less than 500 per cent in five years, Netflix is one of the top-performing companies in the US share index S&P 500. This is thanks to the company’s growing client base. This immense growth, however, did put pressure on the profit margin. For example, with less turnover and a smaller client base, profit in 2010 was higher (160 million dollar) than in 2015 (122 million dollar).
Netflix’s success not only depends on having been the first streaming service; it also has a comprehensive database with content at a relatively low price (in the Netherlands, eight euros per month). Just as important is the clever way in which Netflix presents its content to the viewer. It selects its offer based on viewing history and offers films and series phased over the year.
There is also criticism. For example, some viewers find that the selection doesn’t ‘refresh’ quickly enough. ‘Where season 6 of Homeland is already coming up on television, Netflix is still lingering in season 4.’ This enables rival streaming services to ‘attack’ Netflix on all fronts. Pay television channel HBO – which broadcasts the latest films and produces its own hit series, such as Game of Thrones – is now offering a streaming service. Netflix counters with its own series, such as House of Cards, Orange is the New Black, Fargo and Lillyhammer.
Competition or not, partly thanks to Netflix, we can no longer imagine television without streaming. Research on the online statistics portal, Statista, shows that more than 30 per cent of Americans will be using paid streaming services in 2020; in the Netherlands, almost 25 per cent.
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