Why Netflix will become the virtual Cinerama Dome?
Netflix has recently acquired Hollywood’s historic Egyptian Theater for $14.4 million. Now, most of us had anticipated this because streaming services have always wanted a seat at the table. It was indeed a thoughtful initiative because the world’s largest streaming service buying the Grauman’s Egyptian Theatre would prevent it from closing down in the foreseeable future.
Although the doors of ArcLight, Cinerama Dome and Pacific Theatres remain closed indefinitely mainly because of the pandemic, Netflix has had a stronger than expected subscriber growth in the past quarter.
The streaming television leader added some 8.5 million paid subscribers in the quarter to reach 203 million, topping 200 million despite recent price hikes, its quarterly earning update showed.
As the reports from the last quarter reveal, Amazon too had seen a much required boost in its prime memberships mainly because of ‘Primevideo’, Amazon’s own streaming platform.
So, why is Netflix the largest streaming service?
The now largest streaming service had started expanding to other countries since 2011. Netflix’s global growth is the big reason for the company’s success.In 2010, it entered the international market by expanding into Canada. In 2011, Netflix began to expand more. By 2017 it was operating in over 190 countries, and close to 73 million of its subscribers were outside the United States.
Country-specific approach
The international expansion, especially for Netflix was a well formulated process and not anything out of the ordinary. In 2016, Netflix had focused mainly on English-language films and series, with an 80/20 model of United States vs. local content.The earliest of the foreign language shows include the Columbian crime drama Narcos, a french political thriller Marseilles, and another show named Hibana, which had a Japanese backdrop.The company then introduced dubbing and subtitling in countries like Poland and Turkey and tilted more towards local content in countries like Japan. When Netflix began to work with international rights holders, it often got translated subtitles that weren’t exactly up to par.
To unseat established streaming services in international markets, Netflix fostered relationships with smart TV providers. For example, Vodafone launched their own TV service in Ireland in 2016, Netflix paid for a dedicated Netflix button to be featured on Vodafone remote controls. Thus increasing their visibility.
“Three years ago, we had a blanket style guide for all languages, these days, Netflix is working on a constantly updated Wiki, often tapping into a pool of translators and academics to make sure that key terms and phrases don’t get lost”
- Chris Fetner, the company’s director of content partner operations.
To date, Netflix has only translated its apps and catalog into 20 languages, and Netflix co-founder Reed Hastings acknowledged that it will take some time to localize for additional territories. They plan to add 2 – 3 languages every year, most recently being Greek and Romanian.
Right now, Netflix said it expects to see strong growth ahead even if it faces more competitors such as Amazon, which is also expanding globally. Amazon Prime’s streaming service is a major Netflix competitor in some European markets.
A definite licensing policy
Movies and shows that Netflix produced and owns, include Stranger Things, Mindhunter and The Irishman. Netflix also acquires exclusive rights to stream content as well as produces in-house. Examples of Netflix-branded originals that are nonetheless exclusively licensed content include House of Cards from MRC, Orange is the New Black from Lionsgate and The Crown from Sony.
Securing licensing agreements with filmmakers, TV networks and other content owners is undeniably Netflix’s largest expense. At the end of 2020, Netflix had $25.4 billion worth of content assets, up from $24.5 billion which was at the end of 2019.
Sometimes, the company does not seek a license with the expectation that the risk of settling is less expensive than routinely paying costly licensing fees. This is an effective method only so long as it works for them. It compares this metric to similar content arrangements, and it thereby decides final pricing based on the time frame of the contract as well as exclusivity. But in most cases, they do end up negotiating Licensing Agreements with producers .
And, hence the Netflix phenomenon
Netflix slowly but surely built its entire business with tech and data at its core, understanding what people want and how they navigate the entertainment industry.
Netflix’s success lies not only in creating and distributing content but to have done so through a system of machine learning algorithms capable of not only recommending the most appropriate content for each of its user but also using them as a guide to plan their productions.
Encouraging binge watching by making all the chapters of a series available to users at once, has turned many of us into junkies, in many cases, when we watch a series on Netflix, we devote a good part of an evening to it. This strategy formulated by data analysts, has created economy of scales.
The idea that a streaming television series can have an impact on product sales is not a new one, but we are finally able to view it through the data.
Mary Higbe, director of marketing at Goliath Games, told “that while October chess sales were up 178% compared to the year before, the late October release of “The Queen’s Gambit” has led to a 1,048% increase over 2019.”
Thus, the Netflix drama has inspired one of 2020’s most popular Christmas gifts, and also plenty more shopping trends. That exactly is the Netflix phenomenon.
What about big ol’ Hollywood then?
The global streaming service has endured an uphill battle with the industry since its first venture into financing original films. Although big media houses are not quite exhilarated by the “disruption of hollywood” as they call it, by streaming services. But the story really starts in 2008, when Netflix broke into streaming in a big way, through a backdoor: It purchased the digital rights that is, movies all of us have heard of, like Pirates of the Caribbean. Netflix got those movies for a song around $30 million a year while becoming a pretty good streaming service almost overnight.
In the very recent years, Netflix’s films have had no trouble earning top spots in the Oscars, but it has had a hard time turning those nominations into awards.
Netflix spent an estimated $25 to $30 million to campaign for Roma, a film by Alfonso Cuarón and it is a particularly impressive sum since the film’s cost was only $15 million. Alfonso Cuarón did win an Oscar for directing the film. It won best Cinematography as well as best foreign language film. Although it lost the biggest prize of the night, the best picture which was given to Green Book.
Some of the pre-eminent filmmakers like Steven Spielberg have criticized streaming companies because they “fail to provide a theatrical experience”.
“I hope all of us really continue to believe that the greatest contributions we can make as film-makers is to give audiences the motion picture theatrical experience.” — Steven Spielberg,at the Cinema Audio awards ceremony
In his role as a governor of the Academy of Motion Picture Arts and Sciences, Spielberg is reported to be backing a proposal that Oscar eligibility rules for films distributed by streaming services should change.
On the bright side..
David Fincher, the director of films like Fight Club, Se7en and Gone girl has signed an exclusive four year contract with Netflix. His most recent movie Mank, based upon the screenwriter of the path-breaking 1941 film Citizen Kane, received much positive reviews and won Best cinematography at the 2021 Academy Awards.
The director said he wants to use the Netflix deal to try out different things, “like Picasso painted.”
Martin Scorsese, known for “reinventing cinema with each new camera movement and each new cut” is a filmmaker from the time when Fellini, Kubrick and Godard controlled a wide audience. His 2019 film The Irishman was a movie exclusively financed by Netflix. It was nominated for 11 categories in the 2020 Academy Awards but won none. Although he was not a big admirer of the streaming revolution from the start, the acclaimed director later said that the executives at Netflix had offered him the required “creativity” which the three and a half hour long film demanded. Therefore, he is certainly inside the transition as he’s not shouting at digital clouds. Martin Scorsese’s also directed and starred in the Netflix documentary show “Pretend It’s a City”.
Many believe that with filmmakers like Scorsese and Fincher can restore Netflix’s creative integrity. It could be Netflix’s passport to legitimacy in the eyes of the industry. The Irishman even has Cannes director, Thierry Frémaux reconsidering the festival’s stance on streamers.
Changing the game
Whatever the outcome of their discussions with Cannes and the Academy, one thing is certain, that despite friction with the traditional industry, Netflix is gradually changing the way we watch movies and shows. Soon enough media companies would be scrambling to sell their movies and shows to Netflix. Also not every media house or filmmaker is racing to catch up with streaming services. Many directors now are welcoming these platforms because they just want their films to reach a broader audience. Many niche films are getting the recognition they deserve through these virtual platforms as it can reach their targeted audience.
All things considered, Netflix too will have to rethink their strategies and gradually change with the coming tide. Winning over new subscribers while keeping the ones they have is a must for all streamers. The company has managed to weather and conquer many storms, so they are here to stay.