Spencer Lazar
Netflix is an incredible company.
Had you invested in the business in the depths of The Great Recession of 2008 and held until today, your stake would be up more than 20x your initial investment (a venture capital-worthy return that happened in the public markets). In that period, the company outperformed the NASDAQ as a whole by more than 12x. Just astounding.
But as tremendous as their financial performance has been, what’s equally as impressive has been the boldness and consistency of their product execution.
The achievements include: (1) navigating the transition from their initially revolutionary analog DVD rental business to a digital subscription (remember Qwikster?); (2) breaking device and platform silos to offer its content as one of the first true web services; (3) pioneering the concept of quality “original content,” driving consumer satisfaction, stickiness, defensibility, and stronger long-term operating margins; (4) pushing consumers expectations of what streaming video fidelity…
While it’s catalogue often still is missing the specific movie that you’re looking for, the company has clearly established itself as a fountain of consistent entertainment and a partner to those looking for a cozy lean back experience (75 million of them!).
So when Netflix announced its plans at CES in January to expand to an additional 130 countries overnight, you’d expect that people all over the world would have been celebrating in the streets.
A recent story, however, on NPR called “Is Netflix Chill? Kenyan Authorities Threaten To Ban The Streaming Site” got me to see the company in a different light. The piece describes the reactions of Kenyan consumers and local entertainment industry.
Local consumers, on one hand, appeared overjoyed. For years, they have been finding clever hacks to tap into “sugar bowl” of Netflix-style content. But the site’s formal domestic launch took the hassle out of access, and allowed locals to feel like participants in the global media community conversation.
On the other hand, those — like actors, directors, and producers — with hands in the creative process of making local content were up in arms. They fear that Netflix’s content, capital, technology, and product are so strong, that they will locally not be able to compete for domestic consumer interest. And as such, the indigenous stories and sensibilities will struggle to survive.
There is truth to both sides here.
Entertainment is one of America’s largest global exports. Maybe that’s because we are a nation of immigrants, and so are maximally relatable. Maybe it stems from something aspirational about the stories we tell. But no matter the reason, it’s clear that Netflix is a crucial new piece of infrastructure, paving the way for the migration of our talent and stores.
To the extent that local businesses are economically suboptimal mechanisms for global storytelling, as painful as the transition may be, I support the market efficiency Netflix facilitates. If local creatives can partner with Netflix to develop and distribute their content, and do so more cheaply and effectively, that’s great.
I fear, however, that the first content to be successful locally on the Netflix platform will be non-local content, capturing imagination and attention.
These are existing shows like Narcos, House of Cards, and Orange is the New Black. While this might be the most profit-maximizing strategy for Netflix, as it continues to pour billions into original content, I very much hope that the company reaches into the local countries and cultures it touches to bring out their own stories.
While internet connects us and unites us, it also has the potential to facilitate a kind of imperialism and monoculture.
Beyond Netflix, as companies like Facebook, Twitter, and even Medium continue to go global, they should work to preserve the unique local flavors that make the world a truly interesting place to explore.
Disclaimer: The comments and views above are my own and are not intended to be construed as investment advice.
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