Ditched By Disney, Netflix Races To Become Content King

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It’s been a busy week for Netflix NFLX +0.22%. On Tuesday, Netflix found itself cornered by Disney, who announced it will remove its movies from the streaming behemoth by launching its own direct-to-consumer services. That means future smash hits such as Toy Story 4 and Frozen 2 scheduled in 2019 will only be available on Disney’s own platform.

This is a blow to Netflix, but it also comes at a time when the company is building an enviable position based on original content. Earlier this week, Netflix revealed buying Millarworld, the comic book publisher behind “Kingsman,” “Kick-Ass” and “Old Man Logan.” Mark Millar, who founded and runs the publisher, is considered by many a creative legend. While working at Marvel, Millar had developed the comic books that ultimately led to the first Avengers movie, Captain America: Civil War, and Logan (Wolverine).

“The moment Lucy and I walked into Netflix’s headquarters in California last Christmas we knew this was where we wanted to be,” Millar recalled. “Netflix is the future and we couldn’t be more thrilled to sell the business to them and buckle up for all the amazing movies and television shows we plan to do together.”


Netflix was equally enthused. “Mark has created a next-generation comics universe, full of indelible characters living in situations people around the world can identify easily with,” explained Ted Sarandos, Netflix chief content officer. “We look forward to creating new Netflix Originals from several existing franchises as well as new super-hero, anti-hero, fantasy, sci-fi and horror stories that Mark and his team will continue to create and publish.” So complete is the embrace that Netflix’s bid for Millarworld is as much about buying existing comic characters as buying Mark Millar himself who will create other new characters.

A Lone Beacon

In the world where the Internet is dominated by Facebook FB +1.52%GoogleGOOGL +1.04%, Instagram, and Snapchat, Netflix’s latest devotion to original content, is not only unusual, but in Silicon Valley, downright heretical. When the young Mark Zuckerberg started the social media platform in his Harvard dormitory, Facebook was nothing more than a student directory. But the website struck many as an arena for users to project a more desired self, an augmented representation of one’s social life. Flaunting a selfie taken under the Eiffel Tower or the Great Pyramid become something akin to self-expression.


The genius of Facebook, and to a large extent, Instagram, is that it radically reduces the amount of labor that end users need to invest to create a continuous visual narrative. Long gone is the flexibility for users to customize their own page using HTML code. Unlike the primordial social networks of an earlier generation, MySpace or Friendster, everyone today is confined to the same basic layout, whether you are on Facebook, Snapchat, or YouTube . Creativity is focused on channeling better content, not tinkering around the edges.

Yet most social media users, no matter how compelling their content is, are not professional artists, film makers, or poets. Which in part explains why user-generated content tends to be short in duration, and evanescent in nature. On a typical day at YouTube, the lengthiest video in the top ten most popular would last about 9 minutes; the shortest, 4 minutes. According to comScore, a media analytics company, the average YouTube videos last 4.4 minutes. Still, no other network can beat Facebook in temporality: the standard length of a successful video varies from 90 seconds to 24 seconds. So much for sustained attention.

If you ever intended to just read an email, but ended up reading numerous ad-laden articles, sponsored videos and playing free games, while receiving instant messages from casual acquaintances, and then were later dismayed by the hours gone by, you should not be surprised. The business model of every social media giant is to capture as many eyeballs as possible. If anything, the rage of artificial intelligence is to get users “hooked,” forming an irresistible habit of checking in again and again, mindlessly or not.

“Facebook’s progress in AI can been seen in everything from the company’s news feed to the way in which people are tagged,” commented Mike Schroepfer, Facebook’s Chief Technology Officer. “Then there is the realization that the only way to scale that is to start building intelligent systems in AI that can be my real-time assistant all the time.”

Dying TV?

Not too long ago, everyone was still watching television on schedule. I remember rushing home to catch prime time shows in order to share the same conversation at the water cooler the next day. Though commercials were annoying, we were at least able to grasp the contour of a drama series, or the personality of the characters being developed. Absent multiple screens through our smartphones and laptops, our attention had yet to be fragmented.

All this put Netflix perhaps in the most interesting spot. Practically single-handedly, Netflix invented a new consumption habit: binge watching.

In 2013, when House of Cards premiered, Netflix made headlines by releasing all thirteen episodes at once. What the company didn’t predict was binging with thousands of viewers consuming the entire series in one gulp over the weekend. A Netflix pool of TV streamers found that 61 percent defined their viewing style as binge watching, which meant two to six episodes at a sitting.

Such is the new golden era of TV drama. With HBO, Netflix Originals, and Amazon Prime, on-demand TV is now taking the Hollywood style, cinematic series to the next level. “Getting immersed in multiple episodes or even multiple series of a show over a few weeks is a new kind of escapism that is especially welcomed today,” noted cultural anthropologist Grant McCracken.

Like being carried away by a current, viewers immersed in binge watching soon forget everything that bothers them in everyday life. Once in the “flow,” as Mihaly Csikszentmihalyi would say, it feels spontaneous and effortless, so long as we give our undivided attention to a single storyline over a sustained period of time. And what exactly are people trying to escape? Perhaps they want a vacation from all the incessant noise from email, newsfeeds, and every other chatterbox around us.

The Attention War

One measure of investor confidence about the growth prospect of a company is P/E ratio — price-to-earnings ratio per share. Right now, Google’s sits at around 35, Microsoft’s at 27, and Facebook’s at 37. By the same measure, Netflix is an extreme outlier, with its P/E at more than 200. To put it differently, investors are willing to bet five times more on Netflix than on Facebook for every dollar that either company earns.

What Netflix has demonstrated is a business model that creates prolonged attention rather than fragmenting it. Its content team draws on its rich trove of customer data when producing shows. Sophisticatedly engaging, these long shows in turn allow Netflix to charge a subscription fee rather than selling advertisements. From this perspective, the battle for consumer attention again proves an age-old formula: Content is king.

Originally published on Forbes.

Ditched By Disney, Netflix Races To Become Content King -

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