The Future of Netflix Looks Bright

netflix-making-a-murderer

It was an outstanding holiday season, as I was able to spend a good amount of time with family and friends, and basically decompress and catch up with everyone.  That said, it seems that just about every person I spoke with wanted to talk about a television show that I hadn’t even heard of.  On December 18, Netflix released a ten episode show entitled ‘Making a Murderer‘.  I have to admit, I have only watched two and a half of the episodes thus far, but it has been remarkable how much buzz this show has created across all forms of media.

The premise is a documentary about a man in eastern Wisconsin who was sent to prison for 18 years for a sexual assault that he didn’t commit and was eventually DNA evidence ended up clearing his name and he was released from prison.  Without getting into too many of the details, it looked like the police were covering up essential details, and from there something nearly unthinkable happens.  I find the show fascinating, but there are only so many hours in the day, so it could be a couple of weeks until I finish the series.

This brings up an interesting situation, as I really didn’t want to talk about the show with anyone I encountered over the holidays, nor did I want to read any of the countless articles I came across as I wanted to experience the entire series before discussing it.  Of course I wanted to talk about it, but at the same time, I didn’t want the outcome to be spoiled for me.  This is where the business model of Netflix comes in.  Starting in 1997, Netflix was an innovative idea.  You could rent DVDs and send them back whenever you wanted with no late fees.  As we all know, DVDs have gone to the wayside, especially with the fall of Blockbuster video.  We now have on demand through your television provider, or through a device such as an AppleTV.  Netflix went through some rocky times, but began to take the majority of their service online, while they do offer DVDs, the digital aspect is a much bigger component of their revenue.  While the streaming service offered is great for children’s programming, they were no longer able to offer movies that were fresh from the theater.

Therefore, they started creating their own programming that is only available through the Netflix service, trying to make that $7.99 more valuable to the consumer.  While they have been successful with shows such as House of Cards, Orange is the New Black, and plenty of others, the idea of releasing an entire season at once has always been interesting/confusing to me.  I greatly enjoyed the first two seasons of House of Cards, but again, people like to talk about and read about shows they have watched, and never felt I could do so because I hadn’t completed the season.  I was enthralled with Breaking Bad on A&Eand would read about it online each week of the last two seasons as every episode was critiqued.  Its difficult to do that when all the episodes are released at once.  I’ve always thought it was a bit silly and not maximizing their effectiveness, but in the case of Making a Murderer, the decision and the timing was absolutely perfect.

  • The last two weeks of the year is when people have the most free time
  • Especially a documentary is something you feel like you need to watch as quickly as possible
  • The show would never have received the type of buzz and acclaim it has had if it were released one week at a time

Obviously Netflix knows far more about how to run their business than I do, which can be made abundantly clear with the below chart of subscriptions over the past few years.

netflix-growth

We all know that people are ‘cutting the cord‘ left and right, and the future of television is with these types of offerings, and Netflix appears to be leading the way.  As a perfect example, in 2015, the S&P 500 was essentially flat, but Netflix stock rose by over 136%, which shows that investors also know that Netflix is on to a good thing.  I can’t wait to get through the Making a Murderer series, and kudos to Netflix to evolving with market needs and becoming a true success story.