Netflix will rely on content – both original and licensed – for growth in the next couple of years, executives said during the company’s earnings call earlier this week. And the company will focus its marketing efforts on building its brand around content, notably its flagship production House of Cards.
You could think of Netflix’s original series as brand publishing at a very elevated level. “Original shows are content marketing; the whole idea is to create unique experiences that are original, add value, and connect with your target audience. And then they are also able to mine the consumption patterns to influence the programming they’re going to create,” says Matt Kumin, chief executive (CEO) of content marketing platform, PublishThis.
Aside from its deep pockets, Netflix has another edge, according to Kumin – its viewing data.
“Their content recommendation engine, combined with viewing patterns showing when they watch and what they watch, puts them at a big competitive advantage when it comes to recommending content and targeting their viewers,” Kumin says. Netflix could do even more content merchandising, he thinks, such as streaming teasers or extras to people most likely to be interested in them.
Netflix did not respond to multiple interview requests. However, in the earnings call, CEO Reed Hastings said that most of Netflix’s subscriber growth has come through word of mouth from satisfied consumers.
Hastings said that the company would be moving from direct-response ads offering free trials to “more emotive” advertising. They have already aired several TV commercials, including “Unlimited” and “Catch Up,” which showcase the breadth of content. The most emotive to date is “Holiday Tree Topper,” created by Deutsch LA.
While the move to brand advertising makes sense, ultimately, says Kumin, the focus should remain on content. “In a world where everyone is price-sensitive and distracted, being content-oriented allows them to speak to the quality of their service, speed, and investments they’re making. By investing in the content, they are offering more and people are embracing it by tuning in.”
Deluxe TV spots aside, Netflix has not done a good job of activating those satisfied consumers, according to Andrew Solmssen, managing director of Possible Los Angeles. Possible LA has done work for Netflix, including the redesign of the user experience for TV users.
“I think brand advertising is important, but not as important as trying to activate their existing user base to be brand advocates,” Solmssen says. “And they haven’t been able to do that particularly well. They have a really strong community, but they have not historically given people avenues to tell friends about Netflix. They don’t use social media marketing particularly well. When you have a great brand, that’s a lost opportunity.”
Two deals announced this week illustrate how hot the TV content war is. On Wednesday, multiple news sources reported that Netflix had signed Mitch Hurwitz, the creator of Arrested Development, to a multi-year deal to create new, original series, as well as to produce other comedies.
Also on Wednesday, Amazon announced its own content deal with HBO that gives Prime Instant Video exclusive, online-only subscription access to some of HBO’s flagship programming, including The Sopranos, Six Feet Under, The Wire, and Deadwood. Previous seasons of series that are still running, including Girls, The Newsroom, and Veep, won’t become available until approximately three years after they air on HBO. The deal also includes movies and original HBO productions.
In the Netflix earnings call, Hastings said he didn’t see Amazon as a competitor; rather, as streaming services, they’re both competing against cable TV, especially HBO, with its roster of must-see shows.
But Netflix and Amazon are very different, according to Solmssen. “Lots of content owners are nervous about Netflix,” he says. “Amazon has been the Trojan horse in all this, very slowly building up Prime streaming and making it free [for Prime members].” While an Amazon Prime subscription costs about the same as a year’s Netflix membership, he points out, the Netflix brand is about video content, while the Amazon Prime brand stands for free shipping. “Amazon has moved very carefully. By making [streaming video] a value-add service, it’s less of an affront.”