How They Rose to Fame

Animation: Yuliya Kim; Source: Getty Images

The history of streaming services arguably began with Netflix when they first introduced their streaming service for free because it was included in the company’s physical DVD subscription package back in 2007.

Nowadays, Netflix is a tour de force - the one-stop streaming service that has all the best of old TV series, films, along with chart-topping originals in its arsenal. Netflix with its home base in Los Gatos, California, now has 18 office locations across 14 countries including the Philippines. Each of these with its own original shows and movies exclusive to their location. It’s a far cry from what it used to be in 1997: a rent-by-mail DVD service using a pay-per-rental model. In the past, users went to the Netflix website to put an order for films and Netflix would send it via post. Now, users can access Netflix on TV, laptop, phones, and other devices that connect to the internet and stream anything they want without additional cost.

Netflix has proven the quality of their originals that they started winning prestigious awards usually given to series on cable TV (e.g. House of Cards) and shake up the Hollywood giants by winning Academy Awards for their films and documentaries (e.g. Roma (2019), American Factory (2020)).

Globalization along with the continually changing landscape of the Internet made digital streaming services the better alternative for cable or pay-TV. The following are a few more reasons why this disruptive technology rose to popularity:

Innovative Technology

Netflix has been around since 1997 as a rent-by-mail DVD service. However, they only incorporated online streaming in 2007, when higher-bandwidth Internet became more common and affordable. This allowed Netflix to provide both DVD-by-mail and online streaming as options for their subscribers. The following year, Netflix would announce the halt of its DVD rental service as they debuted Watch Now on Mac platforms. They also announced a partnership with the American cable TV Starz, allowing Netflix access to over 2,500 titles at just $30 million (Fritz, Flint, 2011). At the time, there were few real competitions for Netflix because very little actually saw the potential for a streaming service to be profitable. Through its partnerships, Netflix was the first streaming service to actually be accessible on multiple devices such as Xbox 360, Smart TVs, PS3, and Apple devices, to name a few.

Even with thousands of titles accessible on its website, it wasn’t until 2013 with its three high-budget original shows - House of Cards, Hemlock Grove, and Orange is The New Black - did Netflix actually successfully rebrand its image as a game-changer for the entertainment industry; Netflix’s original shows received 31 Primetime Emmy nominations that year. To date, Netflix has garnered 203 awards and 432 nominations.

Convenience

When computers and an Internet connection have become more affordable, it became a commodity for every household to have one. The same is true for cell phones which become ‘smarter’ and more sophisticated with every new release. With only so much time to unwind after a long day at school or at work, we would take any chance we can get to do so. With our gadgets, particularly our smartphones, it has become easier to catch up with our favorite series, anytime we want to. We miss a lot with cable TV, like a daytime soap opera, for example - unless it is recorded but with streaming services, we can catch up at our own pace.

It’s worth the cost

For an average working person, it becomes more practical to pay for comforts like a Netflix Subscription than Cable TV. a subscription for streaming services can be used anytime and anywhere in the world as long as there are internet and data connection. Cable TV would probably cost as much, depending on the subscription package, but it still cannot be taken anywhere besides where it is connected. There is also an added incentive that streaming services don’t have commercials and it makes for good, uninterrupted viewing.

Customized content

Netflix’s algorithm suggests new content unique to every user based on how they interact with the service. It takes into account the nuances of the content the user previously watched and how they rated other titles. Through this, the algorithm suggests new shows or films that audiences would normally overlook. This innovative technology means that Netflix anticipates what an audience needs before the audience even thinks about it. People’s regular pay-TV still requires manual browsing and the content is not curated to the customer’s palette.

Creative Freedom

Adding to Netflix’s popularity is the diversity of their talent pool and content. As a venture capitalist, Netflix invests its deep pockets and other resources in start-ups (i.e. new series or film). This allows Netflix to churn out new original and exclusive content at a faster pace than their competitors, along with the fact that the streaming service is available worldwide except in a few select countries. According to the streaming search engine Reelgood as reported by Business Insider, Netflix has the most original shows at 674 compared to its competitors: HBO Max (190). Amazon Prime Video (134), Hulu (87), Disney Plus (26), Apple TV Plus (23). The same report also states Netflix having the most “high-quality” TV shows, defined by Reelgood as having an 8.0 and above score on IMDb (Clark, 2020).

This model gives Netflix an edge over its competitors, but it is also the reason why some new shows get canceled rather quickly before they even have the chance to actually take off. At the end of the day, Netflix is a business. However, it remains a better alternative for both seasoned pros (e.g. David Fincher, Martin Scorsese) and novices waiting for their big breaks. Netflix allows them creative freedom as opposed to more family-oriented brands like Disney.

Netflix is still the King of Streaming

Netflix had several major competitors during the early months of 2020. There were new launches from companies that have been around far longer than Netflix. Among them are Disney+ (2019), AppleTV+ (2019), and NBCUniversal’s Peacock (2020), all of which had access to thousands of titles that are no longer available on Netflix. In early March, Netflix was laying off employees as the company overhauled its marketing strategies. According to Netflix’s quarterly earnings report as published by The Hollywood Reporter, Netflix’s global subscriber base rose 20 percent to 167 million members. However, viewership in the U.S. and Canada has slowed even if these were the regions with higher market saturation compared to the rest of the world (Masters, Sandberg, 2020).

In a report published by Forbes early in November, Disney+ dominated the ‘streaming wars’ as its subscribers rose to 73.7 million, surpassing the company’s expectation to achieve it in 2024 (Freeman, 2020). The price of a Disney+ subscription is offered at $6.99 (up to 4K resolution) a month in the U.S., still cheaper than Netflix’s Basic Plan of $8.99 (4K resolution is available with the Premium Package at $15.99/mo). Disney also has the advantage of time as an entertainment company so they do not have as much pressure as Netflix to churn out fresh new content. According to that same report, Netflix has Projected Original 2020 Content Spend of $4.5 billion while Disney+ only has Projected Original 2020 Content Spend of $1.3 billion. The estimates of Netflix’s expenditure on new content is still larger than its other competitors: Amazon Prime ( $1.3 billion), Apple TV+ ($1.9 billion), Hulu ($170 million), Peacock ($1 billion), HBO Max ($1.2 billion) CBS All Access ($800 million).

Nevertheless, Netflix’s early investments in research and development made it ubiquitous - compatible for almost every device and its service is available globally. Although Disney+ is Netflix’s main competitor, for now, Netflix remains the king of streaming services worldwide.

Video Streaming Services

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