Tom Dougherty, CEO – Stealing Share
26 February 2018
Netflix spending means you can never leave
Reading that Netflix’s spending on content is reaching $8 billion makes you wonder, “Why?” Reading that Amazon spending on content reaches $5 billion, you ask the same question.
Consider this. The major networks (ABC, CBS, FOX and NBC) spend less than that on their content spending. About $4 billion each. So what’s going on here?
I’ve been thinking a lot about this recently because, as a cord cutter myself, I wonder how long the astronomical numbers of Amazon and Netflix spending can last? When is, uh, the money gonna run out?
Netflix and Amazon are, of course, capitalizing on the cord-cutting trend. More than that, they are the instigators of that trend, more so than any other brands.
“Netflix banks on the idea that you’ll always live within the Netflix environment. That you’ll simply never leave.”
So what do they know that others don’t? Well, for one, they understand that old models developed by their grandfathers no longer work. (That’s something the retail industry should understand. Should.)
Netflix spending keeps you from watching anything else
But there’s something else going on here. When Netflix spending reaches levels even Donald Trump couldn’t envision for his Mexico wall (kidding), the service is aiming for more than just being the streaming video market leader. It’s aiming to be the only one you watch.
Stay with me here. Netflix premieres a new series every week. Last Friday, it was Seven Seconds (from the creators of The Killing) and the movie Mute directed by Duncan Jones (Moon). The week before? Everything Sucks, a high school comedy set in the 90s. The week before that? The Ritual. And so on.
Netflix banks on the idea that you’ll always live within the Netflix environment. That you’ll simply never leave. Because the service doesn’t release viewing numbers, we don’t know how many people are defaulting to the Netflix environment. But the service counts more than 117 million subscribers worldwide, with more than 54 million coming from the US. That’s 43% of all US households. That’s an incredible number.
So the next time you or I wonder why Netflix spending on content alone is so high, remember this. It is attempting to capture your viewing habits 24/7. You can check out any time you like, but you can never leave.
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