Netflix's Shift to Original Content: A Change Context Analysis

Introduction

Netflix began as a DVD-delivery rental service, with members renting DVDs online and Netflix sending them by mail to the recipient. The model quickly proved successful because of its low-cost structure for customers and its convenience. The large DVD rental chain Blockbuster, which served as the traditional brick-and-mortar model for DVD rentals, went out of business following Netflix's growth in popularity with its online model of customer interactions. Since then, Netflix has transitioned away from DVD-by-mail service to a streaming service, where all content is available for streaming directly from its website.

Additionally, Netflix is now producing more of its own content rather than relying on purchasing distribution rights from other content providers. Netflix has essentially become its own production studio and streaming service. This approach appeals to content creators who have signed major deals with Netflix, including Adam Sandler, David Fincher, and others. The only question is whether it can continue to support creators while keeping costs low for consumers. For Netflix, the most important change it has engaged in is content creation, because content is king. This paper explains why this change is both exemplary and necessary for Netflix, given the context of change in community, political, social, and global fields.

Context of Change

Netflix made the change to produce its own content in order to control its own library without having to rely on other studios for permissions and rights to stream that content. Netflix still offers the streaming of content it did not produce, but these offerings are temporary and are likely to end as other production studios implement their own streaming services, such as Hulu, Peacock, and others. Netflix thus realized it had to make a transition to become a producer of original content in order to provide consumers with streaming options while remaining competitive in the streaming industry. It began by disrupting the way in which content is delivered to the public with its DVD-by-mail service, but this disruption was only temporary and did not provide Netflix with solid ground for maintaining its position in the market.

Community, Political, Social, and Global Dimensions

Netflix made viewing content radically more convenient for consumers — first by introducing its DVD-by-mail service and then transitioning to streaming. Consumers no longer had to go to a brick-and-mortar location to obtain content, such as a Blockbuster store or a movie theater. Now they could stream quality content at home on their personal computer or television. Netflix correctly identified the impact that the digital age would have on consumer habits and saw potential for a business model shift toward streaming content. This affected communities immediately, as consumers showed a strong preference for Netflix over traditional methods of viewing content. As Hickman (2012) points out, Netflix was able to lead the change toward streaming by creating a service that appealed to the convenience factor most associated with e-commerce.

Netflix is a global provider of content, but because there are many different governments around the world, it has faced political pressures associated with censorship and permissions (Frue, 2018). Currently, Netflix is able to stream in the United States and in many other countries around the globe. However, in countries like China it is blocked for political reasons related to censorship and content permissions.

Netflix has changed the way people think about viewing content. Before Netflix switched to streaming, people were still relying on DVDs. Today, DVDs are not sold to the same extent they once were, and renting DVDs is virtually unheard of. Streaming has become the norm largely because of Netflix, which has transformed the social landscape of viewership.

In the global context, Netflix's change has resulted in the need to appeal to different cultures with content, which is why Netflix is producing films around the world in order to appeal to various cultures in those regions (Rosenberg, 2021). Producing its own content is an important change for Netflix that enables it to be a major player on the global stage of streaming. By creating content in foreign countries, it is better able to appeal to those markets.

Conclusion

The value created in content is not just measured by consumer subscriptions. Still, there is some risk going forward that Netflix will have to find another way to change in order to stay competitive as other studios enter the streaming industry. Overall, this change has been a positive one for the company, and despite the costs required to produce content consistently, Netflix is positioned as the dominant content service provider in the streaming industry. However, it faces new rivals in Amazon, Apple, HBO Max, and Disney+, all of whom are also engaged in producing and streaming original content. To appeal to a global audience, Netflix has had to define itself as a producer of original content where creators are given creative control and are allowed to pursue their vision with minimal oversight from the studio.

References

Collins, J. (2020). Netflix's business model does not work. Retrieved from https://www.forbes.com/sites/jimcollins/2020/01/22/netflixs-business-model-does-not-work/

Frue, K. (2018). PEST analysis of Netflix: How politics and the economy impact the media provider. Retrieved from https://pestleanalysis.com/pest-analysis-of-netflix/

Hickman, G. R. (2010). Leading change in multiple contexts: Concepts and practices in organizational, community, political, social, and global change settings. SAGE.

Patel, S. (2018). Netflix's aggressive content-buying spree creates opportunities and risk for creators. Retrieved from https://digiday.com/future-of-tv/netflix-content-spree-creators/

Rosenberg, E. (2021). Why Netflix content is different abroad. Retrieved from https://www.investopedia.com/articles/investing/050515/why-netflix-content-different-other-countries.asp