Thoughts on: Bloomberg - "Netflix Hopes ‘Stranger Things’ Can Be Its Billion-Dollar Franchise"

If you haven’t read the article, check it out here before you read this:

Bloomberg gets a lot of the analysis right, but then concludes with a premise that is entirely wrong. Many of the reasons they’re wrong are right in their own article. I’ll explain.

Netflix shows are by their own paradigm, unsustainable. In this new age of internet media culture, people are always looking for a new exciting fad. This is why one of Netlfix’s flashiest in-house shows, Stranger Things, experiences rapid viewership decline after every season. Many factors contribute to this, one of the most impacting being that their in-house seasons, already short in comparison to other television titles, have every episode release all at once. This plays into the trend of “binge watching” the entire thing in only a few short evenings. Thus, Netflix shows are nothing more than glorified viral YouTube videos.

It’s for this reason that Bloomberg fails at this conclusion. If Netflix is to move forward, it is not by emulating the predecessors they are quickly killing, but to follow the customer interests. Netflix could do a better job if it focused on longer one-off seasons with high budget actors. No need to pay for contract renewals, and no need to experience interest decay. There will always be something new and different coming from Netflix studios that would play perfectly into their corporate sponsored virality. One of the shows that does this best is “Maniac” staring Jonah Hill and Emma Stone. Both are super high budget actors with amazing performances on a one-off season of ten episodes. Netflix is able to set the cultural and artistic pace of their competitors, and they will always manage to stay relevant if they continue to produce shows such as this.

This is essential for the emerging market of online streaming. With many competitors on the rise, like uh, DISNEY, Netflix would be insane to try and compete with them at their own game. There is now much less friction to leave or join new streaming networks as there was with Cable TV, so Netflix has to make itself stand out on the internet battlefield for number one on trending, whatever social media network it is.

The slow exponential, sustainable licensing model is too expensive for a company that only operates at 7% profit margin. Netflix should be more focused on increasing margins on quality viral shows instead of decade long runs like The Office. Bloomberg sees big opportunity in Netflix emulating the previous model, but if that were the case, why does Netflix exist in the first place?