How Netflix is Winning The Streaming Wars

Netflix’s grand strategy for winning the streaming wars involves crafting a diverse lineup of series and franchises, rather than relying upon a terse selection of splashy hits. And it’s working.

Amazon, Netflix, Hulu, and (soon) Disney are moving to a new phase in their ongoing conflict. Each service is competing for the affections of a finite subscriber base; a push-and-pull for eyeballs wherein original content is the fulcrum. That sounds kind of gross, but it’s not far off the mark. There are only so many viewers to go around, and as subscription costs rise, audience commitments wane. The streaming wars are engaging in trench warfare.

Consequently, maintaining subscribers becomes far more important (and efficient) than either finding new subscribers or recovering lapsed subscribers. At a certain point every viable subscriber will have tried one or more of these services, and most people will settle on just one or two. Therefore, compelling content is necessary for attraction, but volume and variety are the keys to retention.

Netflix has committed billions to developing original content over the last few years, but so too has Amazon, Hulu, and Disney. The difference is how Netflix is going about it.

Amazon, Hulu, and Disney have invested in a handful of high-profile projects — Lord of the Rings, Castle Rock, Conan, The Handmaid’s Tale, Star Wars — meanwhile Netflix has been quietly accumulating a stable of accomplished creators who’ve signed onto multiple projects over multiple years. Netflix recognizes that shiny one-offs might grab a few headlines, but audiences will burn through such content in just a week or two… and lack of content creates churn.

For these services, churn is essentially the net loss of subscribers (attrition), due to lack of choice, boredom, and apathy. Once a subscriber leaves, it’s incredibly hard to get them to come back. So, do everything you can to keep them in the fold — and Netflix is sparing no expense to do so.

Today we learned that TV veteran Ryan Murphy (Glee, American Horror Story, Feud) joins David Ayer (Suicide Squad, Bright), Mark Millar (Wanted, Kick-Ass), and David Fincher (House of Cards, Mindhunter) at Netflix’s ever-expanding table of top-notch creatives. Building long-term relationships with showrunners, writers, and filmmakers is how Netflix ensures a deep well of content well into the future.

Murphy’s deal is noteworthy partly because of the dollars ($300 million), but also the terms (five-year pact for new, original series and films), according to Variety. Murphy has enjoyed a long relationship with Fox, but their acquisition by Disney provided a convenient exit.

Netflix’s Chief Content Officer, Ted Sarandos, offered these comments:

Ryan Murphy’s series have influenced the global cultural zeitgeist, reinvented genres and changed the course of television history. His unfaltering dedication to excellence and to give voice to the underrepresented, to showcase a unique perspective or just to shock the hell out of us, permeates his genre-shattering work. “From ‘Nip/Tuck’ — our first licensed series — to ‘American Crime Story: The People v. O.J. Simpson’ and ‘American Horror Story,’ we’ve seen how his brand of storytelling captivates consumers and critics across the globe.”

The underlying message here: Murphy’s value to Netflix is his following as much as his body of work. The same could be said for Millar, Ayer, and Fincher — none of whom are necessarily associated with any single project. Whereas a Tarantino or a J.J. Abrams typically tell certain types of stories or work in particular genres, Murphy and the other Netflix creatives are somewhat more versatile and flexible with the work they do.

Versatility is Netflix’s secret sauce, if you will. Netflix doesn’t do any one thing necessarily better than Amazon, Hulu, or Disney; instead, they do a lot of things really well, covering multiple bases, while appealing to a broader range of audiences. When you have a worldwide subscriber base well above 100 million, it’s crucial to bank as much content as you can, since there’s no single show, movie, or genre that’s going to appeal to everybody at the same time.

Netflix knows that their material is often hit or miss, which is fine when there’s a giant river of content swelling close behind. Amazon, Hulu, and even Disney are betting big on a much narrower list of projects; projects that should attract and entrall massive audiences. However, it’s not the hits or misses that should worry these services, it’s the gaps in-between and how they fill them that will dictate whether their subscribers stick around or move on.

SOURCE: Variety, IMDb, TechCrunch, TheVerge