Today's Cache | Netflix gets ahead of the curve

Today’s Cache dissects big themes at the intersection of technology, business and policy. Written by John Xavier, tech news lead at The Hindu

The streaming giant is coming out of the pandemic with cash and anew idea

Netflix is old. The company is approaching its silver jubilee year in 2023. It started its online-based DVD-rental business during the dot-com era when Google engineers were still tinkering with the search algorithm. And most households didn’t have the Internet.

But, within five years of its launch, it added nearly 700,000 subscribers. Another five years later, it launched a feature to stream movies. Gradually, the company’s streaming feature began to get support from different handheld devices.

Image used for representation purpose. 

 

Growing smartphone adoption, faster Internet speeds, and a steady decline in physical DVD rentals pushed up Netflix’s reach. By 2013, the movie-streaming platform created its own content, House of Cards, and had nearly 40 million paid users. It stuck to making own content, and followed up its debut with Stranger Things, Glow, Orange Is The New Black and The Crown.

As Netflix’s flag rose, Amazon sensed an opportunity. In 2014, the ecommerce giant bought LoveFilm, Netflix’s sole competitor at that time in the UK, and folded it into its Prime offering. And gradually competition in the streaming space started to heat up with various other players entering the market.

Yet, Netflix topped the share of TV time in the U.S. The streaming giant has over 25% market share, followed by Amazon at 7%, according to a 2021 Nielsen study.

But, Netflix is losing out on growth in the emerging markets. The company’s year-on-year subscribers growth dropped in both Asia-Pacific and Latin-America markets. It against this backdrop the platform is making a structural change.

To capture the demographic growth in emerging markets, Netflix has to rethink its business plans. That’s why it has picked gaming to be part of its offering. But, the company is steering carefully to ensure it picks the right kinds of game-plays that suit its existing offering.

This is where Night School Studios comes in. The game developer is known for its critically acclaimed Oxenfree, a supernatural teen thriller. Netflix has purchased the company and has rolled out five mobile gaming titles in certain European markets.

This acquisition will not only help Netflix in diversifying Netflix’s revenue streams, it will also give the streaming giant an opportunity to experiment in gaming narratives. Results from its current pilots in Europe, and future title acquisitions are two key criteria to watch out for.

Perhaps in 2023, Netflix could well have its first original game.

 

(This column was emailed on September 30.)

 

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