Streaming service Netflix overturned the traditional hierarchy in global media and has established a new model for entertainment consumption. Legacy media companies have been scrabbling for the past five years to adapt to the same model. Originally launched in 1997 as a mail order DVD rental company, Netflix reinvented itself in the late 2000s as an internet broadcaster streaming on-demand movie and TV content to monthly subscribers. Its most significant breakthrough was the move into proprietary content, commissioning high-quality scripted drama and comedy - such as the series 'House Of Cards' and 'Orange Is The New Black' - which would be available exclusively to its own subscribers. As a result, it became the main global rival to Time Warner-owned HBO, far surpassing that mainly US-based service by 2015. Netflix's now-massive budget for commissioning or buying content - around $14bn in 2020 - is far above any traditional Hollywood studio. At the same time the company has expanded its global footprint, initially in Latin America and then Europe and Asia, to cover 190 global markets. Helped by stay-at-home restrictions during the Covid pandemic, the Netflix audience soared to 203.7m streaming members by the end of 2020. Of these, almost 74m were in North America, nearly 67m in EMEA and almost another 63m in Latin America and Asia combined. The UK and Brazil were the company's biggest foreign markets by mid 2019. Revenues for 2020 were just under $25.0bn, with net income of $2.8bn. Several challenges have emerged since 2018, not least competition from Disney's own streaming service, which deprived Netflix of some important content, including major Disney, Marvel and 20th Century Studios movie releases, as well as similar services from WarnerMedia, Apple and others. That competition was partly offset - to the benefit of all the streamers - by the Covid pandemic which created a new spike in demand for home entertainment during 2020. Netflix also ramped up its own production budget, and delivered a succession of new content in all its global markets during the year. Several of these shows came to dominate the popular culture conversation. Nine of the top ten most searched TV shows worldwide on Google during 2020 were Netflix series, including such massive global hits as 'Tiger King' and 'The Queen's Gambit', followed by 'Bridgerton' and 'Lupin' in early 2021. Co-founder Reed Hastings remains CEO of Netflix. According to company legend, he first decided to launch the company after he was fined $40 by original video rental giant Blockbuster for the late return of the movie 'Apollo 13'. Ted Sarandos is chief content officer, responsible for commissioning new content, and added the title of co-CEO in 2020.
Capsule checked 20th January 2021
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Adbrands Daily Update 29th Jul 2020: Being nominated for an award isn't the same as winning, but Netflix nonetheless dominated the nominations for this year's Emmy Awards with 160 nods, a record that beats even long-established champion HBO. The latter accumulated a second-best 107 nominations this year, but that included no fewer than 26 for 'Watchmen', this year's single most nominated show. Netflix's hot hopes are 'Ozark', 'The Crown', 'The Kominsky Method', 'Unbelievable', 'Unorthodox' and of course 'Stranger Things'. But if past performance is anything to go by, only a few of Netflix's noms will actually convert to wins. Other strong contenders from rival networks include HBO's 'Succession', Amazon's 'The Marvelous Mrs Maisel' and newcomers Apple TV's 'The Morning Show' and Disney+'s 'The Mandalorian'. As has become standard in recent years, the traditional networks barely made a dent in any of the categories. There was only one series from the Big Four among the Best Comedy noms - NBC's 'The Good Place' - and none in either Best Drama or Best Limited Series. The only other network entry in any other series category was ABC's 'Shark Tank' in the Structured Reality category. [Updated: In the end, Netflix converted only 21 of its astonishing 160 nominations into wins, falling into second place behind HBO with 30 wins. Pop TV came third with 10 wins, all but one for comedy series 'Schitt's Creek', while Disney+ had 8, including 7 for 'The Mandalorian'. The biggest drama winners were HBO's 'Watchmen' and 'Succession' with 11 and 7 wins respectively.]
Adbrands Daily Update 17th Jul 2020: Netflix reported another strong quarter (though not as strong as 1Q). Another 10.1m subscribers lifted the company's total global audience to 192.9m. Unusually, the strongest growth - 2.9m adds - came from North America, which has mostly until now been lagging behind international markets. EMEA added 2.8m, Asia 2.7m and Latin America 1.8m. Revenues and net profits both hit new highs of $6.15bn and $720m respectively. However, Netflix shares took a 10% fall in the immediate wake of the results as investors were spooked by the company's low growth forecast of just 2.5m subscribers for 3Q. Separately, Netflix elevated content chief Ted Sarandos to co-CEO alongside founder Reed Hastings, and promoted Greg Peters to COO.
Adbrands Daily Update 1st Jul 2020: Netflix named Bozoma Saint John as its new CMO, taking over from Jackie Lee-Joe, who is leaving the company for personal reasons. Saint John is one of the global industry's most high-profile female marketers, having held a succession of key roles including head of marketing for Apple Music and chief brand officer of Uber. Most recently she was CMO of talent and entertainment rights giant Endeavor.
Adbrands Daily Update 22nd Apr 2020: Netflix has been one of the biggest beneficiaries of the global lockdown, as consumers flock to streaming services for ways to fill the time. As a pure-play streamer, its gains aren't offset by losses in other divisions. Its stock price was already at record highs, even before 1Q figures which showed an additional 15.8m subscribers, taking the total figure to 182.9m worldwide. The biggest gains came outside North America. However CEO Reed Hastings warned that the gain could be short-term. "Like other home entertainment services, we're seeing temporarily higher viewing and increased membership growth. We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon." The future remains uncertain, not least because all production on new programming has been suspended. Revenues in 1Q rose 29% to $5.8bn, but net profit more than doubled to $709m.
Adbrands Daily Update 23rd Mar 2020: Disney, Netflix, Amazon, Google's YouTube and Facebook have all agreed to downgrade streaming quality by at least 25% throughout Europe to reduce the pressure on broadband networks during Coronavirus lockdown. Demand is now reaching peak levels throughout the day because of home working and an even greater requirement for entertainment, and is expected to hit new highs this week with the launch of Disney+. Disney even agreed to a request from the French government to delay the launch of its streaming service in France for another two weeks until early April.
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