The phrase “Netflix and chill” coined by millennials has a special relevance in present times. Business couldn’t be better for the California-based company being valued at a mindboggling 170 billion dollars and streaming to 190 countries.

The former mail-order DVD company from Los Gatos, California, has indeed come a long way from its humble beginnings. But it’s not stopping there, in 2018 alone it greenlighted projects worth 12-13 billion dollars which included 82 feature films and 700 new or exclusively licensed TV shows.

The other big studio offerings in Hollywood pale in comparison to the scale of options now available from Netflix. The competition is not just with the other Hollywood studios, as it is currently producing content in 21 countries including Brazil, Turkey, South Korea and India. Case in point: the popular TV series Sacred Games — a six-part thriller starring Saif Ali Khan and Nawazuddin Siddiqui — created a lot of waves last year. It seems like Netflix has no chill as it progresses with thundering pace.

From humble beginnings to a present net worth of 170 billion dollars, Netflix is streaming both feature films and new or exclusively licensed TV show to 190 countries globally. It is now eyeing Pakistan as part of its expansion plans

The on-demand streaming model may be the biggest change to hit broadcast television since the advent of colour. In this brave new world, the traditional business model — where advertisers subsidised content for the average viewer by placings ads in between programming — has been turned on its head. Netflix releases all of its content ad-free, the monthly subscriber fee paid by its subscribers being its only major source of income. Amazon Prime, Netflix’s competitor, went a step further, producing pilot episodes of programmes after which the subscribers decided by popular vote whether more episodes should be produced or not. This radically democratised the process of how content is produced, although it has discontinued the practice in 2018.

Witnessing the runaway success of Netflix, many from traditional and new media are lining up for a slice of the pie. HBO was expected to spend over 2.5 billion dollars on content this year. HBO Go is a complementary app for its existing cable TV service subscribers that aims to compete with Netflix. Hulu, a US-only streaming service co-owned by four studios (The Walt Disney Company, Comcast, AT&T and 21st Century Fox) and best known for its drama The Handmaid’s Tale, also plans to go the same path, having spent 2.3 billion dollars on content in 2017. Apple has also enlisted the services of Hollywood talent and committed one billion dollars for its own offerings. YouTube Premium formerly known as YouTube Red is an ad-free, paid alternative to its popular free offering. The subscribers get access to original content for a monthly fee.

However, the biggest challenger to Netflix’s domination could be Amazon which has earmarked four billion dollars for its Amazon Prime service for original programming. The company CEO Jeff Bezos wants hits as big as Game of Thrones — the hit series from HBO — and has already commissioned a Lord of the Rings adaptation for the small screen for 250 million dollars. And lastly, Disney is pulling content from Netflix as part of its broader strategy to start its own streaming service. Netflix, in response, is planning a whole series of programming geared towards children, beginning with adaptations of famous Roald Dahl books.

A part of why Netflix is so successful is because of the business intelligence it gathers on its subscriber base. The computer algorithms it has in place go to great lengths to analyse the viewing habits of its users. No wonder it knocked off its erstwhile arch-nemesis Blockbuster from its dominance many years ago. Even though Blockbuster came up with its own rival online streaming service, it was a poor knock-off of Netflix’s product. On the Netflix app, programming is individually tailored according to the user profile. Considering that Netflix has 125 million subscribers (and increasing) that’s a tall order. Case in point for its documentary series Wild Country it had different posters for different subsets of users to entice them to watch it.

Another reason is that Netflix was simply there at the right place and at the right time. Just a few years back it was inconceivable that one could stream entire TV seasons on the web. But as bandwidths increased and the cost of internet data plans went down, online streaming became technically feasible. The introduction of hi-speed optical fibre internet coincided with the roll-out of fast 4G LTE-based mobile internet. The change took place first in the developed world and now the developing world is following suit.

The on-demand streaming model may be the biggest change to hit broadcast television since the advent of colour. In this brave new world, the traditional business model has been turned on its head.

It bears mentioning that Netflix is not available in China at the moment. Despite this, as far back as September 2017, 20 percent of the world’s downstream bandwidth was being used up for Netflix streaming, according to the networking equipment company Sandvine. There seemed to be a digital divide where on the one hand were television networks and big studios in Hollywood with their antiquated forms of content delivery too complacent in doing business the old way; on the other hand, a whole ecosystem of streaming and torrent websites proliferated, giving away content for free.

Netflix came to fill the gap left in the middle, where there was a willing user base wanting to spend on an economically-priced service which could stream content wherever and whenever. Similar dynamics operated in the music industry as well, where the record labels duked it out with the likes of Napster, Kazaa and torrent websites. But the coming of streaming apps with copyrighted content such as Spotify, Tidal and Deezer, among others, mitigated the piracy problem, if not solving it altogether.

The hit TV-series House Of Cards was a game-changer in this respect, since users could stream all the episodes on their mobiles, tablets, laptops or internet-connected smart TVs. A revolution was underway and that revolution, slowly but surely, is coming to Pakistani shores as well. Not only has Netflix signed a partnership agreement with PTCL — giving Netflix access to PTCL’s “advanced caching servers and technical pairing with Netflix to offer the superior viewing experience” to Pakistani subscribers — there are also plans to air original Pakistani-produced Netflix content. 

While the likes of Hulu and HBO Go are not available in Pakistan, Netflix still has to contend with Malaysia-based IFlix which, as of December 2017, had 6.5 million subscribers globally. Then there are also the online streaming websites that are streaming pirated content, while many TV drama watchers are flocking to YouTube to catch up on their favourite drama serials.

What remains to be seen is that whether Netflix can maintain its domination on the web space in Pakistan, as well as globally, in face of such stiff competition. Its revenues at 11.7 billion dollars are impressive, but so is its debt, which stands at 8.4 billion dollars. The borrowing binge — pardon the pun — would doubtless increase in the coming times as it scales up operations.

This is aside from the fact that Netfilx’s near monopoly on the web may raise the ire of regulators, something which may embroil it in legal wrangles in the future, similar to the ordeal Microsoft had to go through and which resulted in it coming to within a hair’s breadth of being broken up by antitrust regulators.

Whichever way the battle for online streaming pans out, one thing’s for certain: Netflix has changed the way we quite literally view our entertainment choices. And it has disrupted the entertainment business in the process.

The reviewer has worked as a producer in news media, an analyst in the NGO sector and is currently a lecturer at Szabist University. He tweets at @HadesInShades

Published in Dawn, ICON, January 20th, 2019