You have walk before you can run and apparently you have license content before you can distribute your own.
Almost 21 years ago Netflix became the world’s first online DVD rental store in April of 1998 with over 900 titles to choose from. As the internet we know and love today starting coming into shape, DVD revenue decreased and the demand for streaming services skyrocketed. By 2009 Netflix’s streaming library grew to over 12,000 movies and shows to choose from including the first Netflix originals from Red Envelope Entertainment. The first production arm of Netflix produced around 100 films in a two year window before closing down to avoid competition from their studio partners.
Fast forward ten years and Netflix is no longer worried about upsetting any studios. Instead they are diving headfirst into original content after spending a reported $8 Billion on it last year. A staggering number that will continue to grow in the coming years.
Why? Because it’s all about that cold hard cash.
At first Netflix couldn’t afford to upset any of their studio partners and lose content. Now they can’t afford to not be pushing for a future with only Netflix content. A future without having to pay to license anyone else’s content and instead reap all the rewards of their own. This, however, will not be a walk in the park.
One of the many reasons Netflix has amassed their cult following has been the ability to binge watch shows people love or shows that people might have missed. Which is why there was a social media outcry when Netflix announced that the hit 90’s sitcom Friends would be leaving the platform. To Netflix’s credit they listened to their customers and kept the show. Unfortunately for Netflix this decision came at a significant cost, a reported $100 million dollar deal. Money that the original programming team would love to have back in their budgets.
There will be more tough syndicated programming decisions in Netflix’s future but they haven’t been shy about their strategy. It is all about Netflix original programming from here on out and eventually you won’t be able to hang out Monica, Ross, Rachel, Phoebe, Chandler, and Joey but – at least you can hangout with BoJack Horseman.
Netflix isn’t alone in this streaming shift. Audio content giant Spotify is right there with them.
It’s safe to say that Spotify has changed the way people consumer audio. You can find a song, playlist, or podcast for any occasion on the app and their media library is rapidly expanding. But similar to Netflix, Spotify sees an opportunity to use their platform to promote themselves.
This week Spotify announced that they have acquired Gimlet Media and Anchor in a strategic move to own both the creation and distribution of podcasts. Gimlet owns a variety of popular shows and Anchor claims they are the engine behind 40% of new podcasts entering the market. Similar to Netflix’s growing original production budget Spotify plans to spend $400-$500 million on acquisitions this year, setting them up to push more of their own material to their user base.
While movie studios and production companies can still distribute their content in theaters and on televisions the music industry may get a little murkier. Spotify has said that they have no interest in becoming a music label, but that hasn’t stopped them from offering partnerships with independent artists to directly upload music.
This phenomenon of building a marketplace then filling it with your own goods isn’t just limited to the darlings of silicon valley. One of the largest online retailers in the world, Amazon is continuing to build out their Amazon Basics line of products that always are prominently placed on their site.
So where will consumers go to stream The Office, listen to their favorite non-Spotify artist, or get two day shipping on every non-basic item you could dream of? Maybe that’s for the next tech evolution to solve.