Technological advancements of the internet and internet connected devices resulted in the convergence of media, telecommunications, and informatics. This caused a disruption in the US entertainment industry and allowed the aggregation of content to bypass traditional channels to customers. It also provided an opportunity for new entrants to enter the entertainment industry in the form of over-the-top (OTT) services, such as Netflix in 2007. However, Netflix did not remain as a pure content aggregator over the internet. Instead Netflix vertically integrated its business model by producing exclusive content, Netflix originals, in 2012. Since then, Netflix has continuously increased their investments into Netflix originals, which is a marked departure from its previous business model. Hence, the objective of this thesis, a literature review, is to identify the advantages and motivations of Netflix to produce content and vertically integrate their business model.
Netflix’s motivators and advantages were divided into two categories, the ecosystem motivators and the new digital advantages of OTT services. To understand the ecosystem motivators, the ecosystem and its changes, due to Netflix’s business model changes, are first overviewed and analysed. The thesis primarily studies the ecosystem of the major players of the US entertainment industry ecosystem, due to its relative significance. The main trends in the industry that were discerned, was the increasingly vertically integrated entertainment industry as a whole and the increasing of the content scarcity strategy. Since the thesis is attempting to identify insights regarding Netflix, an analysis of the top five risk factors from Netflix’s annual reports during 2007-2018 is conducted. This is complimented with traditional competitive motivations for vertical integration (i.e. platformization, vertical integration advantages, horizontal integration, content scarcity and differentiation) in order to find the ecosystem motivators for Netflix.
Netflix’s inherent digital advantages, as an OTT service, are subsequently reviewed. The capabilities identified are the new data capabilities of OTT services, the long tail content diversity strategy opportunity, and the international scalability of digital services. The thesis concludes by drawing upon the ecosystem motivators and digital capabilities to determine; why Netflix vertically integrated their business model prior to the rest of the industry.
FAQs
1 By creating compelling original programming, analyzing its user data to serve subscribers better, and above all by letting people consume content in the ways they prefer, Netflix disrupted the television industry and forced cable companies to change the way they do business.
Are Netflix originals produced by Netflix? ›
Netflix has produced over 1,500 original titles since it began producing original content in 2013. The company produces two kinds of original content—TV shows and movies that it pays for and develops in-house, and TV shows and movies that it acquires that acquire the exclusive rights to broadcast.
When did Netflix start doing originals? ›
It completes its shift to the cloud by January 2016. Netflix Originals was launched. Netflix starts expanding its streaming service to the international market, starting with Canada."
What was the first Netflix Original production? ›
In February of 2013, Netflix introduced House of Cards, the first major TV show that ran exclusively on a streaming service.
How have Netflix originals helped Netflix? ›
Their success could well be neverending if they continue producing the quality content we've seen in the past few years. Netflix truly is the king of streaming. Although movies and series come and go from the platform, they have such a solid base of original content to keep viewers hooked (and people paying).
What are the benefits of original content on Netflix? ›
Original content production means Netflix can address niche audiences as well as mainstream with targeted project production, which helps add more potential subscribers once the more mainstream audiences are all onboard.
How often does Netflix make originals? ›
Netflix averaged just over one new original TV program or movie for every day of 2019. The streaming giant released 371 new TV shows and movies on the service in the U.S. this year, according to data from Variety Insight. This is an increase of 54.6% over the 240 shows and movies Netflix released in 2018.
How much of Netflix's content is original? ›
There are currently 6,206 titles on Netflix and of those, 3,104 are Netflix Originals. That translates to roughly 50% of the content library including TV series, films, documentaries, and interactive specials.
Why are Netflix originals not on Netflix? ›
To get to the bottom of why Netflix Original titles leave, they usually fall into one of several categories. The majority leave because they are not owned by Netflix. Instead, they're distributed internationally exclusively by Netflix for a fixed period of time.
Why are Netflix originals popular? ›
But what we also need to bear in mind is the positive impact of the production of so many Netflix Originals. One of the main benefits of their original content is its diversity; in covering so many different styles of shows and films, they are succeeding in popularising forgotten and unpopular genres.
In 1997, Reed Hastings and Marc Randolph had an idea that would revolutionize the entertainment industry and the way the public consumes movies and television shows, forever. They co-founded an online site that allowed customers to buy and, more importantly, to rent, DVDs to watch at home.
Why are they called Netflix originals? ›
A “Netflix Original” is defined by the status Netflix gives to the show. This may be defined by the following: Netflix commissioned and produced the show. Netflix has exclusive international streaming rights to the show.
What did Netflix do when they first started? ›
Netflix was founded in 1997 by Reed Hastings and Marc Randolph as a DVD-by-mail service. The idea came after Hastings was charged a late fee for a movie rental. Customers could subscribe to receive DVDs by mail. The company later expanded to streaming and now has millions of subscribers.
How did Netflix begin? ›
Netflix was founded in 1997 by Reed Hastings and Marc Randolph in a small California city called Scotts Valley in Santa Cruz county. Hastings has said the idea was sparked by a $40 fine he got for renting the movie Apollo 13 from long-dead Blockbuster and returning it six weeks late.
What is Netflix original series? ›
How successful is Netflix Original series? ›
Using this methodology, Netflix's Originals account for more titles in the 20 most popular titles each month, more than those of any other streaming platform and have consistently accounted for at least 31 per cent of the most popular titles since 2019.
Are Netflix originals more popular? ›
Demand for Netflix originals is on average 8 times higher than that for Amazon's originals, according to a study by Parrot Analytics. And that's just the beginning. Demand for Netflix's originals is 9 times higher than Hulu's and nearly 60 times more than Crackle's, according to the same study.
What is Netflix's content strategy? ›
Netflix knows what TV shows and movies its users like to watch. It uses this information to create customized recommendations for them. This allows them to find the content they enjoy without searching through many lists. It also ensures that users are always getting the latest and greatest content.
What was Netflix's biggest originals? ›
The 10 Best Netflix Original Series of All Time, Ranked According...
- 8 'Heartstopper' (2022 - )
- 7 'House of Cards' (2013 - 2018)
- 6 'Dark' (2017 - 2020)
- 5 'Stranger Things' (2016 - 2024)
- 4 'Bojack Horseman' (2014 - 2020)
- 3 'Narcos' (2015 - 2017)
- 2 'Black Mirror' (2011 - )
- 1 'Arcane' (2021 - )
Films
| Title | Genre | Hours watched (millions) |
|---|
| Red Notice | Action comedy | 364.02 |
| Don't Look Up | Satirical science fiction film | 359.79 |
| Bird Box | Post-apocalyptic horror thriller | 282.02 |
| Glass Onion: A Knives Out Mystery | Mystery film | 279.74 |
10 more rowsAs of press time, TVD spinoffs The Originals (which ran for five seasons and ended in 2018) and Legacies (which ran for four seasons and ended in 2022) are still available on Netflix. They'll presumably make the move to HBO Max in 2023 and 2027, respectively.
Why is Netflix cancelling so many shows? ›
In response to underwhelming growth, streaming services are cutting costs and pulling back, something that has been compounded by the possibility of a recession. To that point, Netflix had a difficult time in 2022.
Who owns Netflix now? ›
Netflix's largest individual shareholder is Reed Hastings, co-founder, and former CEO of the company, now Chairperson of Netflix, with a 1.7% stake, valued at over $2.4 billion in February 2023. Other significant individual shareholders comprise Jay C.
What is Netflix mission statement? ›
Netflix Inc.'s corporate mission is “To entertain the world.” This mission statement is based on the nature of the company in providing on-demand movie streaming services.
What series are made by Netflix? ›
Drama
| Title | Genre | Seasons |
|---|
| Stranger Things | Science fiction horror | 4 seasons, 34 episodes |
| The Crown | Historical drama | 5 seasons, 50 episodes |
| The Umbrella Academy | Superhero action | 3 seasons, 30 episodes |
| Virgin River | Romantic drama | 4 seasons, 42 episodes |
27 more rowsA “Netflix Original” is defined by the status Netflix gives to the show. This may be defined by the following: Netflix commissioned and produced the show. Netflix has exclusive international streaming rights to the show.
Does Netflix fund originals? ›
The company hinted that it plans to use the additional funds to create more original content after spending $17 billion in 2021. The production of original content has become somewhat of a hallmark for Netflix in recent years, with a number of shows receiving accolades and massive viewership numbers.
What is the biggest Netflix original? ›
The 10 Best Netflix Original Series of All Time, Ranked According...
- 10 'Mindhunter' (2017 - 2019)
- 9 'The Crown' (2016 - )
- 8 'Heartstopper' (2022 - )
- 7 'House of Cards' (2013 - 2018)
- 6 'Dark' (2017 - 2020)
- 5 'Stranger Things' (2016 - 2024)
- 4 'Bojack Horseman' (2014 - 2020)
Without further ado, here are Netflix's top original series.
- Kim Fields in 'The Upshaws' Credit: LARA SOLANKI/NETFLIX. ...
- 'Kingdom' Credit: Juhan Noh/Netflix. ...
- League of Legends. ...
- 'Squid Game' ...
- Maitreyi Ramakrishnan in 'Never Have I Ever' ...
- Hilda Season 1. ...
- Dead to Me. ...
- Lupin.
Netflix licenses TV shows and movies from studios around the world. Though we strive to keep the titles you want to watch, some titles do leave Netflix because of licensing agreements.
That's why Netflix started producing original content. Netflix has shaken up the movie industry because of its pay structure. They pay producers the full cost of production.
What is the biggest budget Netflix originals? ›
"Stranger Things" was by far the most expensive Netflix original series as of May 2022, with estimated production costs of around 30 million U.S. dollars per episode. "The Crown" and "The Get Down" rounded out the top three at 13 million and 11 million U.S. dollars, respectively.
Do Netflix originals ever expire? ›
You can watch a downloaded title as many times as you'd like before it expires. If a title has expired, you will need to renew it. Some titles may only be renewed a certain number of times. Titles that are no longer available on Netflix will expire when they leave the service, regardless of when they were downloaded.
