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What really characterizes NETFLIX?

Netflix and Streaming Video: The Business of Subscriber-Funded Video on Demand
Forfatter: Amanda D. Lotz
Forlag: Polity Press, (USA)
NETFLIX / Media professor Amanda Lotz provides some interesting perspectives on the global streaming services' business models and Netflix's success.


Despite the reports of a decline in subscribers recently, Netflix has long been the king of the pile of streaming services. But there is a lot we don't know – or have misunderstood – about the streaming giant's business model, says Amanda D. Lotz, professor of digital media studies at the Queensland University of Technology. Netflix then also keeps the cards about its strategies close to its chest and, as is well known, does not share viewing figures publicly.

In his new book Netflix and Streaming Video: The Business of Subscriber-Funded Video on Demand Lotz surveys some of the characteristics of so-called SVODs (subscriber-financed providers of "Video On Demand"), a field she has followed for a number of years. In addition, she looks at Netflix in particular – and how Netflix differs from other streaming services.

Advertising versus subscription

In order to analyze how the streaming services operate, one must recognize that some basic assumptions are different than for ordinary linear television channels. In the beginning, Netflix was even an online DVD rental service – and perhaps the streaming service in its current form has a lot in common with the long-extinct video apps.

Lotz highlights how advertising-funded channels want to gather the largest possible audience in order to "sell their attention" to advertisers. However, subscription-based streaming services are neither advertising-funded nor linear and therefore do not aim for one large audience, but several audiences – in the sense of many and different segments. This difference is significant for the business model of such streaming services.

Attempts to analyze the streaming services are usually only about content, and this overlooks another difference between linear television and these online services. Because the latter have too experience the subscribers are offered, great importance, the professor claims, and then in a wider sense than a preferably applicable user interface.

Streaming services such as Netflix can tempt different viewers with different content, and this is essential for subscribers' experience of the service. Netflix will naturally also have series that reach high viewing figures, not least to create attention and attract new subscribers, but the most high-profile series are hardly as important as one might think. More important is building a library that satisfies people's different preferences. Subscribers should be able to find content that appeals specifically to them – and this does not have to be on the list of today's ten most watched titles.

Ground-breaking in this respect is the ability of streaming services to collect data on subscribers' viewing habits with far greater precision than linear TV channels. A central part of the user experience is then also the recommendations of the type "since you saw this, you might also like these". Since they are not based on advertising revenue, demographic information is of little relevance to the streaming services. Netflix is ​​concerned that you subscribe, not that you are a highly educated woman in her 40s. However, they care that you like dark thrillers, romantic dramas and revealing documentaries. Such information categorises users into different taste groups.

Something for every taste

According to Lotz, Netflix wants its series and films to be different from those shown on commercial television channels (although some titles will be found in both places). Not completely different, which can be illustrated by being turned 180 degrees, but a bit different: a 45 degree turn, says the media professor.

Amanda Lotz

Netflix obviously wants to offer something for every taste – and seems to have understood that a certain distinctiveness is a prerequisite to appeal to someone's taste. Netflix can target niche audiences across many territories. Thus, they can be successful with productions that are too specific to attract high viewership in each country. Lotz emphasizes that Netflix, for example, has many series for so-called preteens, a target group often considered too narrow by advertising-funded channels – which instead try to appeal to this group and other segments simultaneous, and thus "waters down" the content of their productions.

In line with this, Lotz points out that big "blockbuster" films tend to tone down location-specific elements in the action in order to make the most impact, while local color is an advantage in Netflix's eyes. Not primarily to appeal to the subscribers from the country in question – local productions do not necessarily reach their largest audience in the country of origin – but because it gives a distinctive character. This rhymes with the rather well-worn statement that one must think locally in order to hit globally.

A significant difference between Netflix and other global streaming services is also the former's international profile. Where more than 90 percent of the selection on Disney+ is American-made, this does not make up the majority of the titles on Netflix – not even in the United States. (The selection on the streaming service differs from country to country.)

The right feeling

Lotz further writes that media studies tend to concentrate on narratives and genre classifications, while tone (in Norwegian, "mood" is possibly more precise) is just as important a term for understanding Netflix's program strategy. The streaming service's own reviews often use words such as "dark", "heartwarming" and "challenging". The tone or mood is largely about which ones feelings the films and series evoke – as well as about the sought-after distinctive character.

Netflix has probably nevertheless contributed to increasing the room for sting, originality and diversity.

Although Netflix's productions are not supposed to be as round at the edges as the TV channels' "prime time" series or the cinema's blockbusters, they are not quite as dark and uncompromising as those found on HBO, which in turn has made this perhaps its most prominent feature. But Netflix has probably still contributed to increasing the room for sting, originality and diversity – even as part of a commercially successful strategy.

Recently, Netflix announced plans to launch a more affordable ad-supported subscription option, which is now available in several countries. In order to make the ads more targeted, Netflix will ask for more information from the users who choose this solution. Unless the business model changes completely, however, it is unlikely that the streaming service's program profile will turn upside down – nor turn it back 45 degrees.

Aleksander Huser
Aleksander Huser
Huser is a regular film critic in Ny Tid.

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