Media File on Videos: Netflix as a Digital Disruptor

Philippe Mercier

Champlain College

Digital Disruptors

Tracy McDougall

November 27th, 2021

In this text, the information given on three articles about Netflix and its nature as an enterprise
will be analysed. In fact, this paper will show how Netflix has a digital disruptor, and now is
being disrupted, all of that by looking to its effects on consumers, its industry, and other
emerging disruptor or competitor as Disney+, HBO, and Hulu.

The disruption of Netflix: a plan for its survival (Student’s name: Fabiana Pennimpede)

Summary: To start, this article written by Jeffrey Cole breaks down the way of Netflix; how it
programs, how it views the market and how it is slowly losing its high standards of being the
dominant source. In other words, Netflix is no longer the main disruptor but is being disrupted
by its competitors that were once in alliance with them. It is seen how Netflix does not want to
break into new habits but clings to old ones and seen before with multiple fallen industries (ex:
Kodak) old habits are no longer of use. Netflix would need to adapt to newer ways such as their
competitors (ex: Disney+, HBO and Hulu). It is demonstrated how Netflix is a mix of many recent
films seen and provided in movie theatres, along with a few old school television shows.
However, what made Netflix originally stand out was their original production, which allowed
them to obtain $12 billion. It was later conducted, by a vase group of people from all ages,
Netflix had reached 80 million viewers in the USA and globally hit 190 million. Becoming a
subscriber to Netflix was a no brainer, it became a norm however with new productions and
companies coming into play and offering better options Netflix would begin losing subscriptions.
It was seen that people would be paying a minimum of 40-50$ a month just to obtain their
favourite television shows that each program would have. With this, people would need to
chase content and not the channels. They would want to see what is of interest to them, hear
from others which shows on which channels would be good for them and Netflix has not been
able to do so. Their dominance of destroying the market would now be thrown back to them,
they would be destroyed and cling to old habits; all in the way needing to fight for customers.

Analysis: When looking at Netflix, it is clear that it was once a digital disruptor but now it is the
company that is being disrupted. They are no longer the dominating field; everyone wants to
compete with them and in so doing a better job than Netflix. Disney+ recently became a new
competitor to Netflix, the channel having Disney, Pixar and Marvel on their side allowing viewers
to be persuaded into that direction; along with the recent Star option, Disney is slowly becoming
the new disruptor. A breakdown of what Netflix needed to accomplish was provided, and such
details allowed a better understanding as to how the company is doing poorly. Firstly, Netflix
would need to make less content and hold better original programming, as there are a variety of
options some of the shows are lacking in the entertainment section leaving viewers to go to
more creative channels such as HBO with its legendary Game of Thrones. Secondly, Netflix
needs to attract the best content in their production, they would need to do a minimum of 100
episodes per show as most of the time they would cut the show-off at two or three seasons.
They would need to look at what the viewers enjoy rather than what the market tells them.
Thirdly, there was the need for more than two or three seasons made, as yes with not enough
viewers there would be less motivation to continue such series however people would not only
rely on such series but on the old school shows such as Friends or The Office. Fourthly, Netflix
would need to consider advertising their new shows in order to keep costs down. Without any
ads it would be difficult for Netflix to obtain new subscribers and for the rates to rise. Finally,
Netflix would need to sign a lockdown deal with smaller players. Companies such as Sony or
Paramount are not in the process of creating their own streaming business yet. They are
analysing their competition and viewing how to make things better, Netflix should strike a deal
with them for a better chance of staying alive. Overall, the good disruptor is about to be
disrupted and clinging to old habits will not save them.

How Netflix Is Changing the TV Industry (Antoine Paradis)

Summary: Firstly, this article written by The Investopedia Team gives a very well-rounded image
of Netflix and its business model, while at the same time defending the position that this
company has disrupted the television industry. Titled “How Netflix Is Changing the TV Industry”,
it states that Netflix has done so by creating a more curated experience than cable tv which
allows customers to have more flexibility and choice. In being digital, Netflix also killed the brick-
and-mortar video rental businesses because customers now had access to similar content from
their own devices. Indeed, Netflix customers benefit from three main advantages; they do not
have to leave the comfort of their homes, they are free from a once constraining schedule, and
they are exempt from commercials. These advantages led to the rise in popularity of Netflix,
which began in 2007 when devices were finally sufficiently technologically advanced to support
streaming services. The article also states that Netflix undercut the competition by offering low
monthly subscription fees in return for diverse content such as movies, documentaries, and
television series. Its three plans, namely $8.99 for the basic plan, $12.99 for the HD-quality
service, and $15.99 for the premium plan, were much less expensive than the typical cable tv
package of 156.71$/month, which often can go up to 217$/month with taxes and add-on fees.
To assure customer retention and growth, Netflix began to produce its own original content in
2013, which proved to be an important milestone. It produced extremely popular series like
“House of Cards” and “The Crown”, ones that allowed them to build a loyal and long-term fan
base. Another strategy aimed at growth and continued improvement is the mining of user data,
which allows them to know which genres are more popular and therefore need more attention
in their original content production. The article concludes by stating that Netflix faces fierce
competition in the years to come, namely by Disney, Amazon, and Google.

Analysis: When looking at Netflix, we clearly see that it is – or at least it has been – a digital
disruption. Through its digital platform, which is the main digital innovation, Netflix allowed
customers to have much easier access to content than before and gave tremendous value for an
extremely competitive price. The article reveals that the discovery and development stages of
Netflix occurred mostly from 1997 to 2007, just before streaming was made available for the
public. From 2007 onwards, Netflix diffused its product globally and created centrality by
allowing customers to watch anything on their own time and from their own device, removing
completely the need for transportation and displacement to go buy or rent in-store content. In
this way, it completely altered consumer behaviors by offering a much more convenient and
flexible avenue for a lower price. As expected, this digital innovation impacted the brick-and-
mortar video rental business by making it valueless and also disrupted the cable industry. This
latter disruption forced cable companies and TV networks to adapt their business models and
ultimately to offer their own on-demand content. The ripples of this digital disruption also
impacted other industries like music, which took a lot from the subscription-based business
model and streaming technology.
 The Digital Revolution Is Disrupting the TV Industry

Summary: This article written by Neeraj Aggarwal analyzes the threat that the digital disruption
brought by streaming platforms represents for traditional enterprises in the television industry,
what will potentially happen in the future of the industry and what should be done by
enterprises according to each possibility.

First, the article explains how streaming video services are more adapted to consumers’ desires
than traditional TV services, that they are very easily accessible/affordable to the majority, that
people are utterly ready to make the switch to streaming services, and finally that those services
cost considerably less to the company which offers them for driving a same amount of viewers.

According to the author, this results in a greater consumers’ appetite for using streaming
services, and a decreasing interest in watching traditional TV. The consumers’ behaviour and
expectations are thus completely changing because of those streaming services, since due to
them, TV is becoming an “archaic medium”, and “online, time-shifted video has altered the
types of content that viewers consider valuable”.

Then, the articles tells that while the old business model was around producing content which
was diffused live, the arrival of streaming platforms brought three new business models which
are replacing the old one (for the reasons mentioned above): Advertised-supported video on
demand, transaction-based video on demand, and subscription-based video on demand. This
change is important enough to make traditional content providers feel the need to make
investments to stay in the game.

Also, four possible disruptive scenarios are discussed in this article: the universal remote (global,
all-inclusive navigation solves the discovery problem), the walled garden (exclusive
entertainment becomes the critical strategic assets), the distribution disintermediation (direct-
to-consumer takes on the traditional TV bundles), and the live TV online (online players stream
live water-cooler programming).

Finally, this article tells its reader that, in order to stay relevant in this new ecosystem,
enterprises will have to create their own creative and high-quality content and/or change their
mindset and initiate new digital disruptions in order to become the single point of navigation for
all video content. It also says that online aggregators such as Netflix will have to continue to
leverage their advantages and evolve, because sitting on the success is the worst way to last
long as an enterprise.

Analysis: Netflix being one of the most important streaming services, this article proves very well
that it is a digital disruptor - or at least that it was, when the article was written. In fact, when
talking about those services’ effects on our society, it mentions huge changes in consumers’
behaviour and expectations and in enterprises’ business model, which are of the most
important characteristics of digital disruptors.

In fact, the article shows that streaming services are so low-priced and accessible that a majority
of North America’s and Europe’s population can afford to have the tools and the subscription
necessary to use them. Combined with the idea that those services allow consumers to have the
entertainment that they want, where they want and when they want - something that
traditional TV services cannot offer -, it makes this new service ideal for the population. That’s
why people are starting to use their money for streaming services, and that TV is becoming
obsolete. Hence, the new TV services are disrupting people’s way of consuming, since they are
replacing the traditional services, making people purchase differently - streaming subscriptions
instead of TV channels - and expect different services to be offered by a good recreational video
service. Therefore, since streaming services disrupt the system, are using digital technology, and
that Netflix is a streaming service, Netflix is a digital disruptor.

To add, other information given in the article which proves that Netflix is a digital disruptor is
the one about streaming services’ impact on the TV industry. In fact, if they brought new
business models which replaced other ones because they were too effective - this way forcing
some enterprises to adopt them in order to stay competitive - it means that streaming services
brought huge upheavals in their industry and disrupted it. Hence, since changing business
models - and forcing other enterprises to follow - is a part of what defines digital disruptors,
Netflix is one of them.

In brief, Netflix has been a digital disruptor, and is now being disrupted. It is easy to conclude
that by looking at the impacts on its industry and people in general that it has had, and at the
current activity and success of Disney+, HBO and, Hulu, with their impact on Netflix. Hence, this
paper has shown that this Einstein quote, “Life is like riding a bicycle. To keep your balance, you
must keep moving” also apply to enterprises, in the sense that a business always have to think
about the next change that it will bring to its way of doing things – that stopping doing it or
slowing down means falling.
 Bibliography

Aggarwal, N. (2016). The Digital Revolution Is Disrupting the TV Industry. Boston Consulting
Group. https://www.investopedia.com/articles/investing/060815/how-netflix-changing-tv-
industry.asp

Cole, J. (2019). The disruption of Netflix: a plan fot its survival. Center or the Digital Future.
https://www.digitalcenter.org/columns/netflix-rough-times/

THE INVESTOPEDIA TEAM. (2021). How Netflix Is Changing the TV Industry. Investopedia.
https://www.bcg.com/publications/2016/media-entertainment-digital-revolution-disrupting-tv-
industry