Jun 16, 2018 - Economy

What we're reading: How Netflix is changing the TV landscape

A pair of headphones next to a laptop, with the Netflix homepage pulled up.

Photo: Guillaume Payen/SOPA Images/LightRocket via Getty Images

In just seven years, Netflix has revolutionized the television industry with its original content, Vulture's Josef Adalian reports.

The big picture, per Adalian: "Netflix doesn't want to be a streaming, supersized clone of HBO or FX or NBC. It's trying to change the way we watch television."

Netflix is dominating the industry

  • Netflix is spending $8 billion this year on content; it makes more TV "than any network in history."
  • It's operating in over 190 countries, Adalian writes.
  • A veteran TV-industry executive told Adalian: "The first word out of everybody's mouths in meetings is, 'How do we deal with Netflix? How do we compete with Netflix? What are they doing?'"

Their game plan

  • Netflix chief content officer Ted Sarandos told Adalian: "More shows, more watching; more watching, more subs; more subs, more revenue; more revenue, more content."
  • As viewers spend more and more time watching shows, Netflix collects data "on their viewing habits, allowing it to refine its bets about future programming."
  • Executives decide on what shows to put out based on "verticals," which are "super specific genres of film and television." They also focus on "taste clusters" or "taste communities" to help them understand how viewers are interacting with the content.

What's next

  • It's beginning to focus on an international push. Per Adalian, the company "believes it needs to offer subscribers stuff made in their own countries, by local artists."
  • By the end of 2020, Wall Street analysts are predicting that Netflix brings in 200 million subscribers. A Morgan Stanley analyst believes it will grow to 300 million by 2028.
  • Netflix is becoming more reliant on original content as studios like Disney start pulling theirs from the library.
  • Sarandos also told Adalian that eventually, Netflix will start cutting back on its spending on content.

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