business news in context, analysis with attitude

by Kevin Coupe

I’ve long been intrigued with the evolution of the media business, with traditional, legacy-encrusted companies challenged by upstarts with names like Netflix and Amazon that see new ways to reach customers and disrupt old ways of doing business. It is, I think, an apt foreshadowing of what is happening, albeit somewhat more slowly, in retailing.

In a piece this week about Ted Sarandos, chief content officer at Netflix, Variety writes, “These days, where there’s smoke or fire in the media business, there’s usually one revolutionary holding the match. At the center of most industry angst — or, often, bewilderment and excitement — is Sarandos, who engineered the company’s stunning transformation from a mail-order DVD-rental company in the early aughts to a full-fledged studio that is competing dollar for dollar with a crowded field of rivals for Hollywood’s top stars, directors, showrunners and writers.”

In just the past week, Variety reports, Sarandos “stole Shonda Rhimes from ABC, lured retiree David Letterman back into talk-show mode, prodded the reclusive Coen brothers into TV production and snapped up Millarworld, a comic-book empire with buzzy titles like ‘Jupiter’s Legacy’ and ‘Huck’ … The dramatic events of the last few days suggest that Netflix is in an escalating arms race with Disney. It also ratchets up the blood sport between Netflix and all the major studios and TV networks as Hollywood grapples with how to adapt to the seismic shifts in technology and consumer habits.”

The story goes on: “No media company today is expanding faster and is more talked about, admired, feared and debated than Netflix — which has upended the traditional models for television and inspired binge culture … Depending on where you stand, Netflix is either saving Hollywood or wreaking havoc on an already unstable industry.”

And, in what could serve as a metaphor for traditional retail, Netflix is aiming for a time when as much as half the content it offers will be original, as opposed to programming that is licensed from other companies. Sarandos tells Variety about his biggest fear: “The more successful we get, the more anxious I get about the willingness of the networks to license their stuff to us,” he says. That’s why original content is critical, so subscribers feel like they can’t live without Netflix.

It is all about finding differential advantages … and then exploiting them aggressively, ruthlessly, and tirelessly.

It’s an Eye-Opener, I think.
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