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The future of Netflix – what’s really on the cards?

The future of Netflix – what’s really on the cards?

The extent to which Netflix has become a pop-culture staple and a constant in so many people’s lives – it was reported back in January that the streaming service has 139 million subscribers globally – is nothing short of extraordinary.

It has continued to build on its success, tweaking and shifting at an explosive rate to stay ahead of the competition, of which there is more than ever before.

The streaming platform is bringing in a number of changes and hinting at adjustments we could possibly see to ensure that it remains at the forefront. Here are just some of those changes, both guaranteed and potential, and how they will affect the platform.

More original and global content

The tectonic plates are in serious motion over at Netflix as the company strives to focus on more in-house projects rather than acquisitions from other networks.

“We spent $8 billion last year to create original content,” Andy Law, director of product design, told The Economic Times.

And while Netflix has produced many duds, the likes of Sex EducationThe Crown and Stranger Things more than make up for it, with those payouts truly paying off.

Netflix is also branching out to deliver a raft of titles whose roots lie outside the UK and US, with more funds being channelled into into non-English speaking projects such as Dark (Germany), 3% (Brazil) and Delhi Crime (India).

Netflix representative Kim Minyoung added: “We want to create content that can be intuitionally understood by the global audience, beyond language barriers.

“Netflix’s content crosses borders, showing our positive side.”

The mass Marvel clear-out that happened recently – DaredevilLuke CageIron Fistand Jessica Jones were all cancelled – was one of the biggest indicators that the tide is turning.

When Netflix was a relative unknown, brands like Marvel helped boost it, offering it clout, but Netflix has become its own entity and the brand is now robust enough to stand on its own two feet, hence the kicking those shows to the curb.

Lots of brand new shows are coming.


There was a mixture 0f panic and anger among some Netflix users last year when one Redditor claimed that an advert had popped up while they were watching a show.

“If you could think of a way to degrade my experience further, I’m not sure what it would be. Completely disrupted my enjoyment of the show I was watching,” said zgrizz.

“With the obnoxious autoplay while browsing, and now this, you are rapidly moving into 3rd place behind Amazon and Hulu in our household.

“Making yourself less interesting than your competition is NOT smart business. No suggestions here. Just observations. Don’t really care what the carebears at Netflix think.

“They need my money, I don’t need their ads.”

Word quickly began to spread, forcing Netflix to pipe up and address the situation.

The “adverts” were actually promotional material designed to recommend other Netflix shows, which could potentially be quite helpful when you consider the number of titles available and how long it can take to make a choice.

It was one of the service’s many experiments that are carried out on a near-constant basis – Netflix ran a test on price hikes also.

“We are testing whether surfacing recommendations between episodes helps members discover stories they will enjoy faster,” said Netflix in a statement.

“It is important to note that a member is able to skip a video preview at anytime if they are not interested.”


But a handful of experts believe that eventually, we could start to see adverts appear on the platform.

Speaking at an event in New York earlier this year (via TVB Europe), Joshua Lowcock, global brand-safety officer at media agency Universal McCann, said: “We grew up in digital believing we should inject ads everywhere at every moment we could. And that’s why you’ve seen ad blockers and a move to ad-free environments. I think there will become a tipping point where ads come back.

“Netflix is ad-free now. I can’t imagine a world where Netflix will be ad-free forever. If you look at their content costs… that’s where addressable advertising and new ad formats will come in.”

Tara Walpert Levy, YouTube and Google’s vice president of Agency and Media Solutions, added: “They’re going to need growth. Eventually, they’re going to need more growth.”

Saying goodbye to big shows

The Office US and Friends might be more than 14 and 24 years old respectively, but they are still a huge draw for many Netflix users – data from 2018 revealed that the former was the most-streamed show on the platform.

So there was mass hysteria recently when it looked like we might lose both of them.

NBCUniversal is launching its own streaming platform, according to The Wall Street Journal, which means that The Office, as one of its crown jewels, is unlikely to remain in the hands of a competitor.

In a statement, NBCUniversal said that it had “begun internal discussions about removing The Office from Netflix”, and while the deal between the two is in place until 2021, there is a high chance that the sitcom will be taken off the Netflix table following that date.

Friends belongs to AT&T, the world’s largest telecommunications company, which also owns WarnerMedia (formerly Timer Warner), and comprises HBO, Turner and Warner Bros.

It has also made the decision, like every man and his dog, to launch its own streaming platform.

“Today we announced plans to launch a new direct-to-consumer streaming service in the fourth quarter of 2019,” said WarnerMedia CEO John Stankey during a presentation in New York – the “beta version of the service will not have original content on it, but you’ll see that in 2020 and then ramping up”.

At the 2019 TCA winter press tour, Kevin Reilly, chief creative officer for WarnerMedia’s Direct-to-Consumer division, addressed the concern surrounding Friends. No concrete answer was given about the show’s future, but it’s not sounding particularly positive for Netflix.

“There is no piece of content in the Warner catalogue that will not be looked at for the service,” he said.

Reilly also added that “for the most part sharing destination assets is not a good model and should be exclusive to the new service”.

But like The Office, nothing is leaving just yet – the sitcom will remain on the platform”throughout 2019″, Netflix coughing up around $100 million to keep it on its books.

The CW is also partly owned by AT&T, along with CBS, and that contract is up this spring. That means the likes of RiverdaleArrowThe FlashSupergirlDC’s Legends of Tomorrow, and Black Lightning could all be on their merry way and potentially find a home on DC Universe which, as stated previously, belongs to WarnerMedia.

Price hikes

According to reports, Netflix in the US has increased its prices four times thus far, which means it’s happening around every other year on average – and this year in the US, prices have climbed from $11 to $13 per month. That’s the biggest increase yet.

This, as with everything, is likely to keep on happening because, first, inflation happens, and second, it’s one of the easiest ways for the company to raise funds, especially now that it is sinking all of its efforts into creating more original content. The platform operates on a “cost-plus” model. That means that it covers all of the production costs, and offers around 30% extra on top of that to own most of the licensing rights.

Also, over at Netflix more money goes out than comes in – it had a negative free cashflow of $2 billion last year, and that figure is predicted to rise to $3 billion this year – which is no surprise when you consider that it has committed to spending $18.6 billion on content.

The production line is expanding and it looks set to continue at a similar pace, so don’t expect this to be the last of those increases.

Clamping down on password sharing

Netflix CEO Reed Hastings previously said: “We love people sharing Netflix. That’s a positive thing, not a negative thing.”

HBO CEO Richard Plepler also echoed that sentiment: “It’s not that we’re ignoring it, and we’re looking at different ways to affect password sharing. I’m simply telling you: it’s not a fundamental problem.”

Both of them believe that ideally, if someone is accessing Netflix or HBO and experiencing all it has to offer, eventually they will commit to a membership and pay the subscription fee.

But according to reports, if that shift isn’t happening, that’s an expensive problem for streaming services.

“The cat is out of the bag,” said Jill Rosengard Hill, executive president at research-based strategic consulting company Magid when speaking to CNBC.

“I wish I had a solution, because it’s really hurting the business model and monetisation of these premium high-value services.”

According to Magid’s data, 35% of millennials share passwords for streaming services, which equals a lot of untapped financial dividends. They also found that “post-millennials” – users who are around 21 years or younger – are sharing passwords at a rate of 42%.

But while Netflix is missing out on significant financial gains, it has yet to discuss what its plans are for dealing with said problem, or if it’s going to be something that it even pursues at all.

“As we move away from an advertising-only revenue model towards people paying for subscriptions more, it has to carry with it the rise of sharing,” Daniel McCarthy, a marketing professor at Emory University, told CNBC.

Watch this space. (Or wait for the algorithm to remind you of it.)

View the original post on Digital Spy.


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