BEST OF THE WEB: How Netflix plans to claw its way back to success
Wednesday, May 23, 2012/
Netflix hasn’t had a very good year. Last year the online rental company announced that it would split its physical DVD and streaming businesses and raise prices at the same time. The reaction was harsh – fans utterly rejected the plan and the company was forced to back down.
It made the situation worse by announcing a new name for the DVD rental business, along with a completely different site, making the switch over even more confusing.
Over the last year, its shares have plummeted a whopping 72%. There have been calls for chief executive Reed Hastings to step down. Some critics say it’s the beginning of the end.
But over at the Daily Beast, there’s an interesting story as to how the company plans to stage a comeback – with original content.
Chief content officer Ted Sarandos is at the head of this strategy. The philosophy behind all this is simple – more viewers are watching television not just when it screens, but through DVRs and online streaming. Sites like Hulu are allowing users to watch old and new television series on demand, and Netflix does the same.
Ratings aren’t the most accurate assessment tool anymore. Streaming and internet views have a lot more to offer.
As a result, Netflix – and Hulu, for that matter – are attempting to create new, original programming in order to bring in new viewers. They’re trying to become networks of their own.
Sarandos now regularly meets with Hollywood A-listers including Steven Spielberg, hoping to convince them to do work over at Netflix.
“The viewing habits have changed,” says director Eli Roth. “I don’t think people necessarily want to have a show stretched out for six months. People would much rather have it stretched out over six days. When I watch a show, I DVR them, and sit down and watch them all at once.”
It takes a forward-thinking executive to deal with this type of production, and Sarandos is adamant this isn’t just a lark – something he needs to tell Hollywood directors and filmmakers.
“There’s a million reasons not to do this at Netflix, and I wanted to give [Hollywood director David Fincher] one rock-solid reason to do it,” Sarandos says today. “I wanted him to understand that his wasn’t a toe in the water — that we were really moving forward on original series, and that we were going to do it well by not doing what everyone else does.”
Netflix is in a bad position at the moment. But by leading the charge in new ways to generate and distribute content, it may just claw itself out of a hole.
The question mark over Zuckerberg’s property
Mark Zuckerberg cashed in big last week during the Facebook IPO, but there was another big story the day afterwards – he married his long-time girlfriend Priscilla Chan.
The timing of the marriage is interesting, given California’s 50-50 law. Some speculators have questioned whether Zuckerberg delayed tying the knot in order to avoid having to pay up if the relationship turns sour.
This piece over at the New York Times explains his position. California has community property laws, and is one of less than 12 states to do so. The law states that whatever each spouse had before the marriage remains separate.
However, there are still questions as to whether Chan has any claim to Zuckerberg’s plunder, given the value of that stock is going to rise over time – presumably.
“The bigger grey area is the growth of value during the marriage,” Chris Donnelly, head of the family law department at Leland, Parachini, Steinberg, Matzger & Melnick, told the publication. “That is the 800-pound gorilla, or in Mark Zuckerberg’s case, the 800-ton gorilla.”
14,000 venture capital investments in a map
The investment capital scene is well-connected – that much is obvious. But until now it’s been hard to keep track of who has money where.
Over at The Atlantic, analytics company Activate Networks has managed to map out more than 14,000 investments and the firms that invested. The connections may surprise you.
Chief executive Larry Miller told The Atlantic there are some pretty clear connections that start to emerge.
“There are clearly a number of venture firms that invest very frequently with others – and often with the same group,” Miller said. “And there are a lot of firms that invest either occasionally, with just a few firms, or almost always by themselves.”
…and speaking of Netflix
Netflix may be pioneering content produced for the web, but the company is also innovating in another area – Twitter sentiment analysis.
With the backlash against the company pouring out onto social networks last year, the business is taking a stand and working on a new system that can identify negative sentiment on Twitter. Among its many uses, this can even help the company identify when the IT system is down.
“The SPOONS system hints at the new dynamic developing between companies and their customers – one in which customer feedback forms and similarly wretched relics of analogue consumer life will be complemented, and maybe even superseded, by the implicit feedback of social media.” An article on The Atlantic describes.
“Why take the time to tell a service how horribly it’s let you down when that service can see for itself how horribly it’s let you down?”
The article features an explanation of how the system works – a keen reminder that all businesses should be tracking what’s being said about them on Twitter.