Suzanne Lanoue MM 3223 Trends in Modern Media

Suzanne Lanoue MM 3223 – Trends in Modern Media Spring 2017 • From mail order DVD Service to influential entertainment

In The Beginning Netflix was started in 1997 by 2 Software Millionaires, Marc Randolph and Reed Hastings The company was launched in April 14, 1998 with only 925 different DVD’s that you could rent over the Internet for a small fee. In 1999, they started the subscription membership. Business took off after that. They had their first initial public offering (IPO) on May Personal Observation: I was an early member in the late 29, 2002 and became very rich. 2003 was their first profitable year. I used to be a member of 1990’s! their DVD service and watched lots of movies and TV shows, but then I had so many programs that I recorded onto VHS and then DVD, that I never had time to watch the Netflix DVD’s. They literally gathered dust on my shelf; so after saving my Netflix queue, in 2010 I canceled my membership. Later, in 2014, I signed on to the streaming service. I use it semi-regularly.

First, a little history… • Before the 1980’s, most Americans had to watch TV live with no rewinding, fastforwarding, pausing, or skipping around (and there were only a few channels, as well). • Videotapes were developed in the 1950’s for commercial usage, but the first home VCR was sold by SONY in 1976. Their Betamax tapes and machines were very expensive, so few homes had them. Later, JVC developed the VHS (Video Home System) VCR, which was much cheaper (although not as good quality), and they won the “videotape wars. ” Most homes in the U. S. still did not have VCR’s until the late 80’s. • Videostores began in the 1980’s so that people could rent and buy VHS tapes of movies and TV shows to watch at home. People also used video cameras to make “home movies” - to film their friends and relatives, to watch on their VCR’s. • In the 1990’s, DVD’s (Digital Video Disks) came out and quickly started to replace VHS tapes were flimsier (broke easily) and took up a lot of space. Also, you had to rewind and fast-forward the tapes to get from one spot to another. VHS died by 2004.

History continued… • Since CD’s (Compact Disks) were already replacing records and tapes, DVD’s were easy for consumers to understand handle (they look virtually the same). Also, home computers and the Internet started getting more popular in the late 90’s, making it even easier for consumers to be familiar with the digital format. • People still had to go to the Video Stores to buy or rent DVD’s, however, which was not ideal. The Netflix founders realized that they could make money renting DVD’s through the mail. • Once their company took off, they quickly moved to subscription format so that people could pay a small monthly fee and no longer have to worry about paying any late fees for DVD’s that they didn’t return right away. • As more and more people went on the Internet and discovered all of the things you could buy online, Netflix and other early companies like Amazon profited. The advent of DSL AKA Broadband in the early 21 st century made everyone’s access to the Internet much faster (and cheaper) so that streaming video became a reality. • Netflix developed their own streaming Internet, moving away from DVD’s, in 2007.

NETFLIX IN THE EARLY 2000’S AND BEYOND • THEY DEVELOPED AND MAINTAIN AN EXTENSIVE PERSONALIZED VIDEORECOMMENDATION SYSTEM (ALGORITHM) BASED ON RATINGS AND REVIEWS BY THEIR CUSTOMERS. • THERE WAS A PERIOD OF ADJUSTMENT WHERE SALES FELL, IN 2011, BUT THE COMPANY KEPT GROWING ANYWAY. • BY SEPTEMBER 2014, NETFLIX HAD SUBSCRIBERS IN OVER 40 COUNTRIES, WITH INTENTIONS OF EXPANDING THEIR SERVICES IN UNREACHED COUNTRIES. • THEY STARTED DEVELOPING ORIGINAL MOVIES AND TV SHOWS IN 2006. • THEIR FIRST ORIGINAL TV SHOW WAS THE HOUR-LONG POLITICAL DRAMA HOUSE OF CARDS, WHICH DEBUTED IN FEBRUARY 2013. FIRST SEASON PROMO NEW SEASON 4 PROMO • ORANGE IS THE NEW BLACK (ALSO IN 2013) WAS THEIR MOST SUCCESSFUL SHOW THUS FAR. FIRST SEASON PROMO

MORE NETFLIX ORIGINAL TV SHOWS MARVEL ACTION SHOWS • They produce live action • • • superhero-focused series' from Marvel: Daredevil, Jessica Jones, Iron Fist and Luke Cage. They will all unite in a mini-series • called The Defenders. OTHER ORIGINAL SHOWS Bo. Jack Horseman (2014) Marco Polo (2014) Sense 8 (2015) Bloodline (2015) Narcos (2015) Master of None (2015) Unbreakable Kimmy Schmidt (2015) Grace and Frankie (2015) Stranger Things (2016) The Get Down (2016) Travelers (2017) Lemony Snicket’s A Series of Unfortunate Events (2017) 13 Reasons Why (2017)

Other Netflix Endeavors Beyond original TV • Netflix first developed its original movie content with Red Envelope Entertainment. They made many independent films but then closed it down in 2008 so they could partner with other movie companies and not compete with them. • In 2011, they decided to separate the mail order DVD service from the streaming service, and add video games, to a new service called Qwikster. They decided to cancel that project the same year. • In 2012, they formed a political action committee (PAC) called FLIXPAC. • In 2013, they hosted their own awards ceremony, The Flixies. • In 2016, they started blocking virtual private networks, or VPNs, so that people in other countries could not watch Netflix illegally. (A VPN hides your IP address) This was for copyright as well as business purposes. • In November, Netflix announced that subscribers can download shows and movies to watch offline at no extra cost.

PROS • Subscribers pay a small monthly fee for content that they can view any time. • New TV shows are often released all at once so you can watch the entire “season” at once. • There are no commercials in shows or movies. No re-runs unless you want them. • You can watch it on almost any device. • It has more original content than any other network. • You can download shows to watch when you have no internet (unlike Hulu or cable) • The company is innovative and always trying out new ideas. • Their shows now win a lot of awards. CONS • You can’t watch current non-Netflix Original TV shows (yet) like you can on Amazon, HULU, Cable or broadcast TV. • You have to have a good, reliable, fast internet service, unlike Cable or Broadcast TV. • The price has raised in the past few years. • They may face a lot more competition in the future from cable and other

NETFLIX REVIVES FAVORITE TV SHOWS NETFLIX HAS PRODUCED EPISODES OF SEVERAL SHOWS THAT WERE PREVIOUSLY CANCELED AND HAVE FOUND NEW AUDIENCES ON NETFLIX. THESE INCLUDE: • ARRESTED DEVELOPMENT • FULL HOUSE (NOW FULLER HOUSE) • GILMORE GIRLS • LILYHAMMER • THE KILLING • LONGMIRE • STAR WARS: THE CLONE WARS

NETFLIX HAS DEALS WITH MANY STUDIOS AND COMPANIES Netflix is now available on many devices, including Blu-ray Disc players, tablet computers, mobile phones, high-definition television (HDTV) receivers, home theater systems, set-top boxes, and video game consoles. Netflix holds rights to back-catalog titles to films from among other distributors, Warner Bros. , Universal Pictures, Sony Pictures Entertainment, 20 th Century Fox, and Walt Disney Studios; and also holds current and back-catalog rights to television programs under license by Disney–ABC Television Group, Dream. Works Classics, Kino International, Warner Bros. Television, 20 th Television, Hasbro Studios, Saban Brands and CBS Television Distribution. The streaming service also held current and back-catalog rights to television programs distributed by NBCUniversal Television Distribution, 20 th Century Fox Television, SOME DEALS FALL THROUGH Epix signed a deal with Netflix but then after 2 years moved to Amazon. Starz had a deal until 2012. Netflix also previously held the rights to select titles from vintage redistributor The Criterion Collection, but were pulled from the streaming library when Criterion titles were added to Hulu's library. CUSTOMERS DEVELOPMENTS COMPLAIN WHEN SOME TITLES ARE NO LONGER AVAILABLE Netflix’s deal with Disney does not include films released after 2015, so they will not be streaming the new Star Wars movies any time soon. Netflix has fewer TV shows and movies than it used to have As they make more original shows and movies, they’re moving away from what made them successful into new territory. Can Netflix survive in this new world it’s created?

NETFLIX SUCCESSES • From VHS to DVD to Netflix and beyond, TV viewers can now watch “On Demand” instead of just at the time when TV networks or movie theaters want to let them watch. Netflix is partly responsible for that. • Despite the warnings that traditional TV networks can’t keep making original programming without having as many viewers, Netflix seems to be disproving that argument as well as adding to the demise of broadcast TV. • The FCC keeps broadcast TV from having profanity and nudity; it doesn’t monitor cable TV, nor Internet companies such as Netflix; they can make whatever programming they want, without having to worry about any kind of censorship or even sponsors (for the most part). Netflix is able to have shows for all ages and backgrounds. • DVD’s will soon be as scarce as VHS tapes. They still make and sell them, but digital content is definitely the wave of the future. A 1 Terabyte hard drive can hold 500 movies. This won’t affect Netflix that much, since they have streaming and downloadable programs as well as original content. They no longer rely on DVD’s. • Netflix’ main online competitors are Amazon and HULU, both of which have catalogs of older shows and movies, subscription services and original programming. • Netflix announced at the Consumer Electronics Show in January 2016 that it had become available everywhere worldwide outside of Mainland China, Syria, North Korea and the territory of Crimea. • Netflix released an estimated 126 original series or films in 2016, more than any other network or cable

Netflix Influence on Culture The rise of Netflix has affected the way audiences watch televised content. Netflix's CPO Neil Hunt believes that Netflix is a model for what television will look like in 2025. No pilot or cliffhangers are needed, unlike previous TV network shows. Viewers can bingewatch (which has become a common slang term). The company’s unlimited time for shows means that TV creators no longer have to have seasons or other traditional formats. According to a 2013 Nielsen survey, more than 60% of Americans said they binge-watch shows and nearly eight out of 10 Americans have used technology to watch their favorite shows on their own schedule. In 2009, someone on Twitter used the phrase “Netflix and Chill. ” It was an ordinary phrase, just “Netflix & Chill” until, for some reason, in 2014, it took on a sexual meaning. It was put into more widespread usage as a sexual metaphor in 2015. Many people have canceled their cable/satellite TV service and only watch on their phones, tablets, computers or other devices. They

Netflix has a good Media and PR site; most of the site can be seen publicly, but like most TV media/PR sites, there is exclusive content for press-only that requires a log-in. Also like most TV networks, Netflix and its shows are promoted all over the Web with advertising, and on TV with commercials, and on social media. Until a few years ago, Netflix did no traditional advertising, but now they do. However, it’s unconventional, but awardwinning. The only thing it seems to be lacking is that it doesn’t send out long press releases for each of its shows, nor does it have screeners for all press. Each show is handled by different PR teams and the press must contact each team separately. However, each TV network does

Netflix doesn’t have a target audience. They don’t care about demographics like age, gender or nationality. They only care about your interests. They group viewers into clusters of common tastes.

Unlike most other companies, their employees get unlimited vacations and high pay, get expenses paid for easily and don’t have performance reviews. They have to perform very well or else they’re fired, but with generous severance package. They have a culture of “freedom and responsibility” as outlined in their Netflix culture deck.

CONCLUSIONS • Netflix started at a crucial time in Internet commerce. • Netflix founders were savvy businessmen who’d already done well with software sales. • Through a combination of good business practices, great deals with other companies, and excellent employee treatment, they’ve built a profitable business that keeps growing. • They’re always innovative and forward-thinking. • Netflix values customer loyalty, recommendations and feedback to help them build. • Despite a few setbacks, they’ve managed to build a world-wide, successful business that, with any luck, will continue to be profitable and successful for decades to come. • The only possible roadblock is that technology and public tastes constantly change. However, they seem ready for any challenge.