Success with Netflix's original work will further strengthen Netflix as 'aggregator'


Netflix released the original movie "Bird Box" in December 2018. In the United States, the bird box has succeeded enough that it has a topic of spreading in various fields, but Netflix, which has attractive original works and involves other movie suppliers, will further strengthen the centripetal force and become even more powerful An up-and-coming analyst explains it as it is coming.

Netflix Flexes - Stratechery by Ben Thompson
https://stratechery.com/2019/netflix-flexes/

Netflix's original sci-fi horror movie "Bird Box" gets a big repercussion in the United States with a thrilling development that suddenly it is driven to a mysterious death if you see the outside world, and one week after the release in the Netflix work We updated the viewing record of.

NETFLIX original movie "BIRD BOX / BIRD BOX" 5 min special picture! - YouTube


In the NBA, the parody event of the bird box is so booming.



Ben Thompson, an analyst with a reputation for sharp analysis of IT business about the business of Netflix that caused the original movie to hit, evaluates that Netflix as "aggregator" is building a stone system.

First, Mr. Thompson says that the Bird Box is contributing to the Netflix business with the following three types of user approach.

· 1: Existing users - Bird Box has the value of offering 2 hours of entertainment for existing users already subscribing to Netflix and paying monthly fee. Unlimited viewing of Netflix does not have to bear the fee for each viewing, so it gives existing users the value of offering attractive work.

· 2: Prospective customer
For those who have not used Netflix yet or "prospective customers" who are considering using Netflix's services using "30 day free viewing", hit works with topicalities like bird boxes Is making the flat fee Netflix more attractive. From a different point of view, it has value as a marketing expense to lower the cost of acquiring Netflix customers.

· 3: boundary customer
Although it is an existing customer of Netflix, we are considering whether to quit the monthly usage or to be a user "marginal customer" who is on the "borderline" who is about to close the free period of 30 days soon to decide whether to subscribe On the other hand, Netflix's original work like the Bird Box creates an active reason to stay on the platform. In other words, it means that it is meaningful as operating expenses to reduce the cost for maintaining customers.

Among the value offered to these three customers, Mr. Thompson emphasizes the value of 2.3, and I believe that this is what supports the strength of Netflix as an "aggregator".

Here, "aggregator" refers to a platform servicer that has a "place" to provide services to customers and also allows other suppliers access to customers. In terms of not only providing a place but also acting as a content provider by itself, Amazon and others are likely to be positioned as aggregators like Netflix.

According to Mr. Thompson, if the aggregator gains a certain number of end users, it can effectively make commoditization and modularization. The addition of other suppliers will make aggregator services more appealing to users, creating a virtuous circle of suppliers joining in search of increasing users.

Therefore, the aggregator has the feature that the acquisition cost decreases with time. If the profit expands due to the increase in the number of users and the contents are enriched, the marginal user will be prevented from leaving, and finally the huge aggregator will be able to secure profits without allowing rivals to enter newcomers. In contrast to businesses other than aggregators as opposed to increasing customer acquisition costs as the user base grows, Mr. Thompson says.

The incentive for other suppliers (movie makers) to participate in Netflix as an aggregator is because Netflix will buy the work at the highest price. Netflix 's customer base, which distributes content worldwide, is larger than other content buyers and purchasing power is high. And since Netflix monetizes each content as part of the overall subscription service, the lifetime value paid by the user will be greater than the price of the movie ticket.

In the United States, a service called " TV Everywhere " was introduced, which enables cable TV (CATV) companies providing television broadcasts and Internet lines to view broadcast programs on the Internet. However, the user had to download different applications for each network, so it was not convenient. In other words, TV Everywhere was just a service based on the existing CATV service.



Netflix, on the other hand, said it is a value chain built to fit streaming services. Integrating content production and distribution has created a market that is flexible and approachable both in terms of supply and demand. In the business of Netflix, we were able to approach not only users around the world but also future users, on the demand side, and on the supply side, the flexibility to sell all kinds of content was brought about.



Netflix's goal of capturing all content as well as original content, "making the best content" is in contrast to Disney, which will be a competitor in streaming delivery. Disney is focusing on its own IP to the last, the policy is different from Netflix aiming to expand the scale.

Netflix said in a performance report to investors, "Netflix's rival is Fort Knight (of game), not HBO (of television network)." As Netflix, which provides content on both a large screen like a television and a mobile small screen such as a smartphone, the existing broadcast network is not in the eyes as a person who competes for the time consumed by the user, and the game That it is a formidable enemy. And Netflix admits that we are losing Fort Knight at the present time in competition for user competition.

Netflix as an aggregator aims to further expand the line in order to compete for the time of the user facing the display and clarifies the policy to keep focusing only on "how to improve the experience of paying members"?

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in Web Service,   Video,   Movie, Posted by darkhorse_log