A number of years ago my wife and I were in Phoenix for an extended stay. While we were there, I thought I would subscribe to a video service that delivered DVD’s to our home by mail. I thought this was a strange concept, but signed up. I was surprised by how efficient and effective this idea was. An envelope arrived in the mail with the DVD, I had about a week to watch it, and then return it.
It struck me as an innovative concept, and clearly a threat to the bricks and mortar corner video store. Those stores had a limited inventory, and were slow to update their titles. The DVD mail company offered a vast selection of titles, with many recent releases. The disks were sometimes damaged, but the company was very receptive to problems, and honourable.
Those were the early days for Netflix, and as the internet gradually became ubiquitous in our lives, it also became the business model for accessing entertainment. I can’t remember at what point this happened, but I realized that not only was the video store an endangered relic, but I could also see Netflix shrouded in the dark clouds of doom!
Clearly the Netflix folks were a step ahead of me, because when we later lived in the Caribbean I stumbled across the new incarnation of the company. It came in the form of an online subscription, allowing me access to movies from the comfort of our air conditioned home, while taking refuge from the searing tropical heat. No longer did we have to make the long trek across the island to the lone video store, which was enjoying an extension on life due to the island’s remoteness from the world at large. Nor did we have to weigh our options by - how many times had we seen this title? Only three times, ok let’s watch it again. Or, waiting our turn on the long list for the lone new release on the island. Though bandwidth was an early issue on our small island, innovation in entertainment was well on its way, even to us at the end of the broadband road.
By 2012, and on our next move to Panama we were greeted by Netflix yet again. The streaming service was preloaded onto the TV we bought in the local electronics store. Once I programmed our new TV for the time zone, country and language (English, please), we found that the Netflix folks had figured out where we were now located, but still chose to deliver more than half of our content in Spanish. We had the regular fare of Hollywood and US TV programming, and then a mix of mostly Mexican, Spanish and Argentinian content. After a few months this became normal for us, and my wife grew frustrated by the amount of content she did not want to watch, regardless of what language it was in.
Fast forward to 2016, when I was visiting an RBC colleague in Seattle. As I rode up the elevator to the top floor, where the RBC offices were located, I was accompanied by varying groups of very garrulous companions. As we stopped at various floors on the way up, some would get off and others would get on, but the stream of conversation never seemed to end. I glanced out at each floor and noticed a brightly coloured theme with a country’s name. Each floor was a different colour, and each represented a different country. On questioning my colleague about this experience, he told me those were the Netflix floors. Oh!
Strangely, even though this company has been a part of my life for several years, and in several countries, I only recently began stitching their story together. Netflix is the world’s largest internet TV network. The company has over 130 million paid subscribers, with 56 million being in the US and the balance are spread out over 190 countries. I began using the company to view mostly Hollywood titles in DVD format, but now you will see Netflix earning awards for original content they are producing right alongside the Hollywood names we have all grown up with. The company continues to grow its subscribers, and as this number grows so does their revenue, and their ability to produce more original content.
With more than half of their subscribers being outside the US, their penetration into countries with original content in domestic languages is expanding their presence outside North America.
The company is not alone in its push to disrupt the delivery of entertainment. Amazon, Apple and other content providers are vying for the role of leader in the push to compete for our viewing time. Another facet of this wave is the desire for consumers to disconnect their link to cable TV. With more options for streaming TV, and choosing programming, viewers are increasingly cutting their cable connections and the associated fees. Companies like Netflix are also coming to the market to raise debt in order to produce more content.
Netflix represents another face of the digital revolution. Where jobs are scarce and still declining in traditional industries, many aspects of technology are experiencing explosive growth in jobs. It’s also likely that many of the skills of the old tech can be deployed in new tech jobs, people just have to be able to adapt to change.
I now have a new appreciation of Netflix as I scroll through the new interface on my TV, which is now delivered in HD. Most of my content is in English, though there are some programs in Spanish, Hindi, Mandarin, French, and I think perhaps it was Romanian – not sure. So not only does Netflix know where I am, but the folks there also know that my city, like many others around the world, is multicultural.
As we can see, the entertainment industry is also vulnerable to disruption from technology, and I believe we are just at the beginning of this wave. The way we access content will likely change radically in the years to come. But interestingly, Netflix has shown me two things in particular – 1) its ability to innovate and adapt, and 2) its practical view of the planet as being multicultural, and mobile. These are critical factors that it has embraced as its business model for success. I believe that could or should be the business model for most of us as we move into an increasingly disruptive future, which is also full of opportunity.