I propose three main reasons for Netflix rapid growth: (1) broad device and software architecture support, (2) contracts with top content producers, and (3) optimal timing with respect to scaling, product deployment and technology road mapping. I will outline the ways these three factors have contributed to Netflix growth below.
1. Broad device and software architecture support
Netlflix supports a huge range of devices and operating systems. The astounding list includes: Windows and OSX, , ChromeOS, iOS, Android, and Windows Phone, Amazon Kindle, and Nook, which pretty much rounds out the entire PC, notebook, smartphone, and tablet markets. Netflix was also able to secure streaming capabilities in a wide array of Blue-ray players, and smart TV’s and set-top-boxes. Once you include XBox, Playstation, Nintendo Wii, 3D, WiiU, TiVO and Boxee, it’s hard to find a digital device that doesn’t support Netflix. Forbes reports that Playstation is the most used device for Netflix streaming (Tassi, 2012). USAToday reports that 38% of Americans use Netflix (Levin, 2013).
2. Contracts with top content producers
Of course, being on every device isn’t going to help attract user-base if there isn’t great content once they get there. Luckily, or through hard-nosed deal forging, (likely the later) Netflix secured top-content producers to offer their content through Netflix streaming. Content producers have been stingy with who they offer licensing to because they are afraid of file sharing. In the past, content providers have had high-demands for digital rights management (DRM) file encoding. The list of content produces that have licensing agreements with Netflix is just as staggering as the list of device and OS support. Dreamworks, Paramount, 20th Television, Disney, Pixar, Lucasfilm, MGM, Lionsgate, CBS, TNT, ABC,Time Warner, etc. (Wikipedia, ‘Netflix’) The list goes on.
3. Best Practices for scaling and technology utilization
Netflix started during the end of the dotcom boom in 1998-99 by offering a disruptive solution to physical DVD rental. That means that during the dotcom boom they were not even trying to offer online services. Being a first mover has its advantages, but if you can come in at the right time with a superior product and eat the other guy’s lunch you are saving a lot on technology development costs. That’s what Netflix did. While other companies were investing big into the internet, Netflix was mastering DVD delivery and utilizing robotics technology that had been developed since the 1960s in manufacturing sector (Wallen, 2008; Hasegawa, 1989). Their robots sorting and packing DVD’s were not new when Netflix deployed them (can bee seen @ Youtube, 2008). Then, once the streaming technology was really ripe, they swooped in, offered the high quality streaming service with the lots of content. They scaled well, and hit all their bases in devices, OSs and content.
So, Netflix did three important things perfectly: (1) technology road-mapping for optimal product deployment, (2) made their product available on virtually every electronic device that can play video, and (3) amassed a dominant content portfolio.
References:
Hasegawa, Yukio. 1989. “‘ CUTTING EDGE ’ OF THE STATE OF THE ART OF CONSTRUCTION ROBOTIZATION IN JAPAN.” … on Automation and Robotics for Construction: 27–32.http://www.iaarc.org/publications/fulltext/Cutting_Edge_of_the_state_of_the_art_of_construction_robo….
Levin Gary, (2013). Nielsen says 38% of Americans use Netflix. http://www.usatoday.com/story/life/tv/2013/09/18/netflix-hulu-amazon-nielsen-viewership-data/2831535…
Tassi, Paul (2012). Playstation 3 is the Most Used Device for Netflix Streaming. http://www.forbes.com/sites/insertcoin/2012/12/04/playstation-3-is-the-most-used-device-for-netflix-…
The Robots at NetFlix (2008). Youtube. https://www.youtube.com/watch?v=DxukC23AoF8
Wallén, Johanna. 2008. “The History of the Industrial Robot: Report No. Lith-ISY-R-2853”.
Linkopoing, Sweeden. http://www.control.isy.liu.se/research/reports/2008/2853.pdf.
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