Netflix a.k.a World TV
Behind Netflix's ambition to build a global entertainment hub that is free from physical boundaries or cultural inertia.
Credits: @mathilde_34
The key to understand Netflix’s global strategy lies in grasping how the company wants the future to be. Netflix wants to build a global village for entertainment which is concerned with the interests, opinion, behavior, background of its citizens instead of nationality, language, caste etc. Also, the experience for one user is the same as for any other person one when it comes to the mode of communication or the speed of it. The user’s location and culture does plays an important role but only to the point of influencing what they like or not like, not the only thing that matters. For Netflix, a user in Sri Lanka can have similar interests, opinion or attitude to the one in Italy. The economic motivation behind it also makes sense; Netflix’s library of content will provide maximum value to Netflix & its shareholders, when it’s seen by maximum number of people. Once we understand this vision, we can allow ourselves to comprehend just about everything Netflix is doing to achieve it. And Netflix is going all guns blazing; both when it comes to it’s content strategy and also through technology. It wouldn’t be an understatement to say Netflix is both a powerful media house and a technology company at the same time. While most technology companies aim to solve everything through technology; Netflix is unique in its ability to work like a Hollywood production powerhouse and a silicon valley tech giant. Let’s analyse both in context of this vision to win the world.
Content is king
Much has been said about the amount of money Netflix spends on content and why it might work or not work. But most of the analysis falls short to assess or take into account one key point. As accurately pointed out by Matthew Ball in this article -
Netflix bears and competitors claim the company’s content spend is reckless. There’s no way to disprove this allegation, of course, but it misses the point on what Hastings is trying to achieve. Netflix’s goal is to have more subscribers than any other video service in the world, and to be the primary source of video content for each of these subscribers. The company doesn’t want to be a leader in video, or even the leader in video – it wants to monopolize the consumption of video; to become TV.
This focus towards content spend and the strategy around it becomes all the more critical, when taking a global perspective. There are a few different sub strategies that fall under the overall umbrella of this bigger focus.
Going “Glocal”
Glocalization essentially means tailoring of company’s local practices to incorporate the expectations of international markets. The best example can be seen with fast food giants like McDonalds or Dominoes. They would customize their food, marketing, brand ambassdors to make sure the local customers are able to get the best of both worlds. To make their content work for international customers, Netflix knows the importance of producing local content. As explained by Erik Barmack, VP of international originals.
In terms of programming strategy, where we are coming from is that a show has to feel true and authentic to the country it originates from. If we do a show in India it has to feel loved in that market first for it to have any strategic value for us.
Also, besides producing authentic local content, Netflix is trying to bring its capabilities and the model of producing content, thus reinventing the traditional makeup of releasing movies and television shows in many countries. As pointed out in this article.
Bela (VP, international content at Netflix) really has a background in the highest level of producing and developing American content with American creators,” says WME president Ari Greenburg. “And so she’s bringing a lot of that system, which is writer-based, to the international marketplace, which is very producer based… I think Bela is bringing a newfound respect for these writers internationally.
A show like Sacred Games, for instance, is a perfect example of what Netflix has been able to do, mixing the Netflix approach of delivering original content with local interests and expectations in mind.
Local - Global
Netflix doesn’t just follows the textbook glocalization principle but improvises upon it. Since, it wants to maximize the engagement that it can get for a single show among all the users on its platform, a good number of shows or movies produced cater to a globalized audience. As pointed out in this thesis.
In the case of Lilyhammer, Netflix felt it needed to make the Norwegian production less Norwegian. The company explained, “[Lillyhammer] is finding a broader audience, as we have introduced new English speaking characters and more global storylines [in the second season].” Whereas most applications of glocalization strategies involve tailoring global products to incorporate local market elements, making them more appealing to a particular local market, this example demonstrates how Netflix’s sometimes uses glocalization strategies in the opposite direction.
Producing content that is authentically true to a local culture and available for the global audience also provides the increased variety for the overall platform in terms of cultural exposure. For instance, the recently released show Indian Matchmaking has been causing social media trends and is a perfect example of how Netflix is doubling down on its ability to create shows which can be seen by people from all over the world. As pointed out correctly in this Wired article.
They can also create new international avenues of influence. "American films have influenced other cultures for a long time, clearly, and as Netflix helps bring international work to an American audience, the influence now can run the other way," says Grant McCracken, a cultural anthropologist who has worked directly with Netflix and several other brands. "Not that Netflix is the only player here, but the deep Netflix catalog really opens up possibilities that the local art house cinema couldn't hope to deliver."
Technology first approach
To say that Netflix’s technology is limited to the apps that it has on different platforms would be a gross understatement. Underneath the consumer facing apps which is just the tip of an iceberg, Netflix has huge technology infrastructure that powers the experience of it’s apps and the decision making at the company. With the expansion to over 190 countries in the world, technology has been playing more important role than ever in helping the company to break the many physical barriers as well as map the interests and expectations of it’s users.
The tip of an iceberg
Although, tip of an iceberg, Netflix app is the primary way users interact with its content. As such Netflix has been making sure the experience transcends cultural and infrastructure barriers. For instance as mentioned in this article -
“We’re beginning to focus our attention much more on mobile,” says Hunt, which is how customers in markets like India predominantly consume his product. while most next-generation video codecs focus on 4K streaming, Hunt says Netflix has also prioritized a video format that helps with efficiency “at the low end.”
The painstaking attention to detail can also be seen with how Netflix enables its user to watch content in foreign language. Be it accounting for the differences in the display of written content or the way Netflix uses tech to add subtitles for different languages.
Mapping human behavior at scale
Last I checked, Netflix is fast approaching close to 200 million subscribers all over the world. Every one of those users spend shocking amount of time on the platform which has been accelerated with people spending more time at home. Naturally Netflix spends an insane amount of money and time in terms of trying to find out what people want to watch next ? When we think of this from a global perspective, the challenge becomes two fold; how to provide local content and at the same time expose them to an ever increasing global library. First problem is tackled by making content decisions in the company which will lead to the expected output and the second by focusing on how to recommend or market this content for its users.
Producing great content with technology
Netflix collects an insane amount of data from its viewership. As pointed out in this article:
Here’s a look at some of the “events” Netflix tracks:
When you pause, rewind, or fast forward, what day you watch content, the date you watch, what time you watch content, where you watch (zip code), what device you use to watch, when you pause and leave content (and if you ever come back), the ratings given, searches, browsing and scrolling behavior, data within movies (various “screenshots” to look at “in the moment” characteristics, volume, colors, and scenery that help Netflix find out what users like.)
The data described above guides Netflix in making decisions when it comes to launching new shows or movies. For e.g if a good percentage of users globally have seen a particular series from start to end, it makes it a rather obvious choice to release the next season. For instance, the same article puts forward an interesting reasoning which helped give House of Cards a green light.
Before green-lighting House of Cards, Netflix knew:
A lot of users watched the David Fincher directed movie The Social Network from beginning to end.
The British version of “House of Cards” has been well watched.
Those who watched the British version “House of Cards” also watched Kevin Spacey films and/or films directed by David Fincher.
Besides relatively simple decisions like above, there are lot of interesting metrics that can aid complex decisions as well. It can also help to decide which key international markets to focus on. As pointed out correctly in this thesis.
The company cannot localize its content to appeal to every market, as localizing in over 190 markets is not a fiscally viable strategy. Therefore, Netflix must choose which local markets are key local markets. When Netflix chooses which local markets are key markets, the company must consider the local market’s global potential. Brazil is a strong example of how Netflix chooses to localize in markets that have a strong global appeal.
Recommending content with technology
Netflix follows unconventional methods with the way it caters to its users. For Netflix, its not 190 countries and the many cultures for which it has to recommend content for. Rather, its just one Netflix universe where the users might fall into different categories, like “New age romance”, “Historical drama pieces” or “Emotionally charged biographies”. Technology at Netflix works for this calculated foresight. Once a show or movie is out there, Netflix tries it’s best to personalize it’s recommendations and the way those recommendations are shown. The most critical piece of suggesting great content to users is by identify the themes or genres. And Netflix goes over and beyond in trying to identify thousands of genres to represent the interests of its 180 million users. This excellent analysis into what it take to tag Netflix content describes the painstaking process.
The Netflix Quantum Theory doc spelled out ways of tagging movie endings, the "social acceptability" of lead characters, and dozens of other facets of a movie. Many values are "scalar," that is to say, they go from 1 to 5. So, every movie gets a romance rating, not just the ones labeled "romantic" in the personalized genres. Every movie's ending is rated from happy to sad, passing through ambiguous. Every plot is tagged. Lead characters' jobs are tagged. Movie locations are tagged. Everything. Everyone.
After tagging each piece of content with the genre and the extent of it, Netflix would then recommend user content based on, for example how much a user is interested in romance or sci-fi. And they don’t stop at employing fixed logic based decisions for recommendation. Machine learning is heavily used to churn out suggestions that are completely dynamic and continuously changing based on user watch patterns. Using ML and other predictive programming methods also helps Netflix find recommendations which helps users to discover new content across its library. As explained in this Wired article:
Netflix uses machine learning and algorithms to help break viewers’ preconceived notions and find shows that they might not have initially chosen. To do this, it looks at nuanced threads within the content, rather than relying on broad genres to make its predictions. This explains how, for example, one in eight people who watch one of Netflix's Marvel shows are completely new to comic book-based stuff on Netflix.
Netflix also uses technology to even go as far as personalizing the way content is recommended or marketed to users. For instance Netflix shows different trailers based on your viewing habits.
Netflix made 10 different cuts of the trailer for House of Cards, each geared toward different audiences. The trailer you saw was based on your previous viewing behavior. If you watched a lot of Kevin Spacey films, you saw a trailer featuring him. Those who watched a lot of movies starring females saw a trailer featuring the women in the show. And David Fincher fans saw a trailer featuring his touch. (Source)
It wouldn’t be wrong to assume that in order to promote the same show to a culturally diverse audience, Netflix may customize based on what influences a particular culture. (Netflix may never admit or use it explicitly due to fear of hurting racial sentiments).
The amount of emphasis Netflix has on using technology warrants a question; is there anything else that it can or should do ? A natural answer to that question is hardware. Television experience as it currently exists, is a little broken and has not probably reached the intuitiveness or ease of use of a tablet or smartphone. There are multiple streaming platforms; Roku, Chromecast, FireStick, Apple TV which results in a fragmented experience plus the inability to search everything that’s out there in a simple way. There is some history that goes way back to 2013 that explains why Reed Hastings pulled the plug on Netflix’s own streaming device. Hastings strategically made the decision to avoid the conflict with many hardware owners out there and instead focused on building a digital powerhouse. But, with hardware, Netflix could provide a more innovative experience in terms of watching content (voice/gesture interaction) and much better integration between the hardware and software especially for machine learning applications. With increasing number of users and Netflix’s bargaining position getting better with time, it may just decide to expand itself as a hardware maker.
Netflix’s vision is ambitious and it will definitely face tough competition in the international market. But then, the company’s unparalleled technology infrastructure and the volume of content would be hard to match. With each hit piece of content or a new subscriber, the Netflix village only gets stronger.
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