FilmScience & Tech

Netflix and the Disruptive Innovation of Entertainment

The clock shows that it’s almost three in the morning. I rub my eyes and lean over the coffee table in front of me to snatch the TV remote. Are you still watching? Netflix asks. It’s a Tuesday and I have class in a few hours. I click the next episode.

Nowadays we don’t think twice about the seemingly countless movies and TV series we can watch on our devices, but not too long ago we could barely imagine it. Only a few years ago, I would miss episodes of my favorite TV series, whether it was because I was running errands or studying during the time when the episode aired. The missing episodes would feel like gaps in a story that I was immersed in and it always frustrated me. With Netflix and other on demand technology, I can now watch the shows anytime they fit into my schedule. As a form of disruptive innovation, Netflix has transformed the way we access and consume media.

Netflix and the Disruptive Innovation of Entertainment

Streaming on our tablet or laptop. 

According to Clayton Christensen, a Harvard Business School professor, disruptive innovation is a process by which smaller companies manage to influence how big companies do businesses by targeting an overlooked market and offering a new business model. In this case, it means that Netflix has influenced the traditional market of the television and entertainment industries, especially how we access their content.

Netflix started as a small service for people to rent DVDs through the internet. It slowly evolved, taking a monthly subscription model and then forming a streaming service in 2007. The cable networks were baffled; Netflix was doing different things from what the cable networks usually did, but people liked it. Netflix gained 20 million subscribers on their streaming service in just three years. How did it happen?

Netflix and the Disruptive Innovation of Entertainment

(Image Source: Jens Kreuter on Unsplash)

It’s Cheaper, Portable and More Convenient

Netflix is significantly cheaper than the regular cable service. The average cable subscribers pay more than $60 CAD for their plan every month. A monthly subscription to Netflix is more affordable for most people, starting from the significantly lower price of $8.99 CAD. This alone allows more people to have access to media content than ever before. Bonus: Netflix doesn’t show ads to their users either.

Most importantly, Netflix breaks away from the rigid form of traditional cable service, which requires people to stick with a viewing schedule to be able to watch the shows or movies that they want. Even if people used DVRs, they still needed to set up the recording time for the show. Netflix understands that adjusting your own schedule for TV programs is not possible for everyone, and in return offers their customers a streaming service with multiple viewing options and no set scheduling, to move beyond the constraints of traditional television viewing.

Netflix and the Disruptive Innovation of Entertainment

With a Netflix account, people can watch anything on it, anytime. They don’t have to follow the television schedule to be able to watch a show. If the users have the urge to watch a 90s movie at midnight, Netflix has an entire selection that the users can watch that very second. They also don’t need to wait if they want to watch the next episode in a series since Netflix uploads complete seasons for most of their shows.

Cable does offer On Demand services where viewers can order a movie or TV episode to watch right away. However, the difference between Netflix’s and cable’s On Demand feature is that Netflix provides the user with a subscription based model, giving the users access to all the content available on Netflix by paying a monthly flat fee. Meanwhile, On Demand cable users need to purchase or rent each movie and TV episode that they want to watch. To viewers who need to constantly make use of the cable On Demand feature, the accumulated cost that they spend on it would be much higher than Netflix’s monthly price.

Moreover, the option to access Netflix through various devices makes it more versatile than cable. The instant access that Netflix offers manages to win over users who seek convenience in their life. We might not think much about the lack of time and space constraints on accessing entertainment today, but just a few years ago this convenience was unheard of. 

Now cable services not only have On Demand options for us to rent or buy movies and the ability for us to record the shows we want, but also new phone apps where we can stream our shows. While cable services have only started to adapt to Netflix through the implementation of cable streaming apps on multiple devices, Netflix has always considered ease of access for their customers to be a main part of their streaming service from its inception.

Netflix and the Disruptive Innovation of Entertainment

It Produces Original Content

Netflix doesn’t just provide us a different way to access content—it also creates new content. Starting with a show called Lilyhammer in 2012, Netflix continued to produce original programming with House of Cards, Hemlock Grove, and the fourth season of Arrested Development, before branching out to many others. The successes of some of these shows, such as the 12 Emmy nominations that the first season of Orange Is the New Black won, urge Netflix to continue developing original movies and series.

Accordingly, Netflix announced last year that they would be spending up to $8 billion USD on their original content in 2018. Judging by how shows created by streaming services, such as the viral Stranger Things, have been popular among the public and welcomed by awards such as the Golden Globes and the Emmys, Netflix’s investment may have been a smart move.

Netflix and the Disruptive Innovation of Entertainment

(Image Source: Charles Deluvio on Unsplash)

Now…

Netflix targets specific needs in their customers—convenience and the availability of choice. If Netflix’s surging number of subscribers is any indication, people respond positively to Netflix’s innovation. In addition to Netflix’s influence on the entertainment industry, Netflix became a disruptive innovation that has normalized the ways we can access our entertainment.

Author

Netflix and the Disruptive Innovation of Entertainment