Netflix and the Future of Entertainment

I spent last Thursday night watching all eight episodes of Stranger Things, a new Netflix Original series. When Netflix releases a full season of episodes of a show, I tend to watch them all in fairly quick succession. I have had long debates with myself as to whether I prefer having a season’s episodes released all at once or weekly over the span of many months. I’m still not sure which I prefer but I do think Netflix is onto something which may give us a glimpse into the future model for entertainment.

The Future is Story as a Service
What made Stranger Things interesting was it felt like a story which could have been a two-hour movie but was made better from a storytelling perspective by being made into an 8-hour series vs. a movie. The story and overall entertainment value was better with it being the former. Stranger Things could end now or go another year but, either way, it had a satisfying end.

The full episode release of the season gave the impression of it being a great movie broken up into episodes that could be consumed in my own time — all at once or over time. This model allows writers to do more than they could in a movie given the time constraint. I’d even offer the viewpoint that this model allows for better storytelling overall. Which is why the glimpse we are seeing from Netflix is the future of entertainment — storytelling as a service.

Interestingly, in a recent cloud services study we did, 47% percent of consumers said they were more likely to pay for an internet service which was entertainment-based than any other kind of internet service category. Consumers like to be entertained and they are OK paying for it. This is not surprising.

But the model Netflix, and even HBO and Amazon Prime video, are using with their approach of original content investment is the beginning of this shift to storytelling as a service. Which means, their investment in original content and even the hiring of full-time story writers is essential to their futures. But it also positions them as the best versus network TV brands who are stuck in the “show a week” model.

Over the weekend, using our Survey Hound research technique, I took a quick sample of our panel and found 83% of consumers say they have binge-watched entire series or seasons and 40% said they do so monthly. Even more interestingly, 75% of consumers said they prefer the shows series/season to be released all at once vs. one per week.

TV networks are, in my opinion and analysis, not well positioned for this shift given their business model. Due to their advertising focus, they are incentivized to release content over long periods of time due to how they structure ad deals. Netflix, HBO, and Amazon are not subsidizing these shows by ads but by my consumer dollars, so I’m paying for these stories as a service. Which allows for this favorable model consumers prefer of releasing all at once. The challenge, as I see it, is their need to keep the stories coming. If I’m paying for it then I always want something to be on. The thing I dislike the most about binge-watching a series is when it is over. After you finish a series or season in a weekend, we need/want something else and, if we are paying for these stories as a service, we will demand it. Netflix, Amazon, HBO and any others wanting to compete here for consumer dollars need to be extremely aggressive in how much original content they release regularly. Again, the demand, if this future comes to fruition, is that we will always want a fresh story. That will be expensive.

I often emphasize a point that consumer markets are not generally “winner take all” markets. However, this may be one of those areas where it could be, simply on the point of economics to invest and create original stories at a frequent pace. The capital intensive nature of this business model means those who pull it off will acquire the most customers and can turn that revenue scale into investments in new content. Storytelling is not a commodity and quality production of content is not cheap. Even in the neutralizing era of the internet, not everyone can do this well. So it will continue to be an area less open for disruption.

This shift is just starting to happen but I do believe we are nearing a tipping point in the way consumers consume their content. This will have a major impact in incumbents today and could put companies like Netflix in dominant positions in the future of entertainment.

Published by

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

1,164 thoughts on “Netflix and the Future of Entertainment”

  1. “I have had long debates with myself as to whether I prefer having a season’s episodes released all at once or weekly over the span of many months.”

    It depends on the types of stories being told. Some series are designed to be regarded as a whole, others are designed to be seen as discrete but linked episodes. Try watching a season of some old show which does not feature multiple episode story arcs, and your need to binge watch them will decline precipitously. Broadcast TV is full of police procedurals (one murder per week, case closed by the end of the episode).

    There’s also a matter of individual taste and available time. For an intense drama like Orphan Black or Jessica Jones, my spouse prefers to limit herself to one episode at a time because binging them leaves her feeling emotionally wrung out. I often do not have free time to watch more than one or two episodes of any show at one sitting.

    1. I don’t think it’s either/or. Sams as books are divided in chapters, sagas in books… Mostly depends on time available, so I’m not sure it’s as generational as Ben Bajarin puts it, it could be age-ational, with even the younger generation going back to bite-size morsels once they’ve got Important Stuff in their lives (jobs, spouse, kids, hobbies…).

      As an older guy, I’m loving binge-watching. The current hot weather makes it hard to be very active, I’m delighted binge re-watching old series from noon to 5pm. it does allow one to get more into it, even, for series that were released for the Binge.

    2. I will binge watch older non-serialized shows. But for the new Netflix shows like Jessica Jones, Daredevil, and Stranger Things, I prefer watching an episode or maybe two and then living with it. Part of the fun is thinking about what you saw, what it means, what could happen next, and not knowing. Also, some shows are too heavy to binge. The Marvel shows are great, but they are violent and for me, that takes some time to process. And shows with trauma, like Jessica Jones, require some air. And shows like Stranger Things where you have so few episodes, I want to dole them out over a few weeks so I can live in that world and appreciate what the storytellers are doing. But then, when I read books, I tend to read only a few chapters at a time so I can think about it.

      This article doesn’t address how else the Netflix model shapes content. The format of the episodes is different than broadcast TV. You don’t have constant false jeopardy every 9 minutes to insert ads. You don’t waste time with recaps at the beginning of the episode. Episodes can vary in length because they don’t have to trim down scenes to fit a fixed run-time. The result of this is that moments in these shows breathe. You get to live with the consequences of the action for a moment before moving on. Broadcast TV shows have to trim these moment out too often.

  2. Cannot edit my post on tablet, and no access to laptop today, so multiple comments.

    Economically speaking, the entire television industry is organized around episodic content, from contracts to union rules to filming techniques. Even the shows designed to be binge watched are made one episode at a time. There are serious logistical problems with trying to make long form video entertainment non-episodically.

    Culturally speaking, Episodic content has a very long history, going back to serialized stories in periodicals and before to oral storytellers telling stories a bit at a time, night after night, Scheherazade style, as far back as we have been storytelling creatures. Simultaneously with all those episodic stories, we have had long form stories being told or published all at once. Each kind of storytelling scratches a different itch, and people have always liked both.

    So i strongly doubt that TV is going to completely shift storytelling paradigms to binge watching, all at once releases. Rather I think the current obsession with binge watching is an overreaction to that form of storytelling not being possible before now for video fiction. Some stories will best be told episodically, others will best be told all at once. Some creators of TV shows will specialize in one form, others in the other form, and some will publish both.

    1. Good or bad the youngens will drive this. Their behaviour is clear and I don’t see it going back. Meaning, over time, this becomes the norm due to their impact on the consumption side of things.

      1. Young people do not constitute 100% of the market for TV shows. People with the free time to binge watch do not constitute 100% of the market either.

        The human hunger for stories has always been for various forms of fiction, both short and long as well as both episodic and discrete. That’s on the one hand. On the other hand, authors and producers of TV will continue to have stories they want to tell that are not suited to binge oriented storytelling. And on the gripping hand, TV has always been run by ducklings – executives with no ideas of their own who simply follow whoever’s in front of them, whether that’s to profits and triumph or bombs and disgrace.

        After 70 years of episodic done in one hour stories on TV, its true that there’s a hunger to tell and be told longer, more connected stories. But does that mean a 100 percent swing away from “done in 1 hour” format shows towards bingeable “10 hour movies told in 1 hour chunks” shows? And is that trend you detect going to be permanent, or just a temporary fad before the novelty of being able to binge a show wears off and we go to a mix of arc based bingeable shows and more discrete shows that provide smaller chunks of entertainment to fill smaller chunks of time?

        How about a lesson from the past. Look at 19th century print publishing. Novels released in instalments were a huge thing in the 19th century, to the point that people lined up on the docks in New York city waiting impatiently for the ship carrying the magazine that was serializing Dickens’s Old Curiosity Shop (serialized over 17 months) to arrive. Serial publication was good for authors since it meant a steady income week after week, and piracy was eliminated (in an era when copyright did not apply outside the original country of publication) since only the official publisher could provide readers with the latest instalment. It was great for magazines, and readers loved their weekly fix. And yet, even with all those reasons for authors to move over entirely to magazine publication and nonserialized novels to die out as a neglected form, original book form novels continued to be published in great numbers. That’s because each kind of storytelling scratches a different itch. The desire for both long format stories and for short format stories is not going to go away. Neither are the desires for both instalment based stories and released all at once stories.

        Netflix has tapped into a format of storytelling that has been neglected on TV (outside of family melodramas) for over 70 years, but that doesn’t mean they are going to become the new paradigm for all TV from now on.

        1. No I don’t expect it to nor made the case that it is the only way. HOwever, I do feel for a growing number of global digitally connected consumers it will become the preferred way.

          There is a fundamentally better way to do this and that is what I think we are seeing shift.

  3. But if you get a DVR, you essentially have the same thing. I often have had full seasons of shows recorded, then started watching them. Heck, I only recently caught up on MasterChef from 2 years ago..

  4. Come on, what kind of analysis was this? 47% of customers said they were they were more likely to pay for an internet service which was entertainment based than… than what? This just in. A lot of people have binge watched a show. I was expecting a more thorough breakdown of viewers per shows per networks/services and a comparison of show/season/episode lengths over time, or maybe stats reflecting the declination of cable subscribers or in what medium a show is watched, not a general description that full season access is cool with a few numbers that don’t really reflect anything. Also, you didn’t clearly define binge-watching, which is significant here due season length variations for different shows.

  5. Here’s what I want to know Ben: how has this trend shaped the fields of documentary and other form of non-fiction programming that are not reality TV? I have heard that documentary sales to Netflix are down due to low audience numbers? I constantly hear people aka audiences say “I love documentary”, but are they watching them, or just making a statement that makes them sound interested or intellectual? Show me the analytics!

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