Netflix is the only big company to successfully marry tech and content
When you hear about Netflix in the news, it’s usually in reference to the content on its platform, whether it’s the $8 billion it plans to spend on content next year, critical acclaim for its original shows, or its ongoing negotiations with Hollywood studios.
But what receives less coverage is how successful Netflix has been from the technology side, specifically the engineering hurdles it’s overcome in seamlessly delivering high definition video to over 100 million customers. In a great article published to Medium, Mayukh Nair detailed how Netflix solved these hurdles by creating hundreds of microservices that operated independently from one another, establishing a network of servers around the world to speed up load time, and making its content adaptable to virtually every screen.
Its engineering was so impressive that it vastly improved the offerings of Amazon Web Services by constantly innovating on the platform. As Nair wrote:
Netflix turned out to be AWS’s most advanced customers, pushing all of their capabilities to the maximum and constantly innovating upon how they can use the different servers AWS provided for various purposes — to run microservices, to store movies, to handle internet traffic — to their own leverage. AWS in turn improved their systems to allow Netflix to take massive loads on their servers, as well as make their use of different AWS products more flexible, and used the expertise gained to serve the needs of thousands of other corporate customers. AWS proudly touts Netflix as its top customer.
This is what makes Netflix truly unique. It’s one of the only large companies that can lay equal claim to being both a content company and a tech company.
That’s not to say that others haven’t tried to achieve this distinction. As I detailed in a 2015 article, after years of tech companies eschewing original content because of its lack of scalability, they’ve recently begun embracing it as a means of differentiating their services from others and creating user lock-in. “[Funding original content] is a means to an end,” I wrote, “a way to keep the business flowing in the front so that the unwashed masses of amateur users can be lured into joining the party in the back.” Two years later, nearly every company, from Twitter to Amazon to Facebook, has been spending millions or even billions on producing exclusive, Hollywood-quality content.
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But thus far, most tech companies have stumbled in their content efforts. In a recent piece for the New York Times, tech columnist Farhad Manjoo details how tech companies have often come up short, in Hollywood and elsewhere, to the point where they’re often referred to in LA as “dumb money” because of their propensity for shelling out huge sums for complete duds. “The Five’s struggles in entertainment, if they persist, suggest that they can be as clueless about the changes wrought by technology as the rest of us — that they do not quite understand, and haven’t yet begun to master, how to translate their technological power into wider cultural power,” Manjoo wrote.
Here are just few of the content efforts that have so far not panned out:
- Amazon, possibly Netflix’s biggest rival on the tech side, has invested millions in original shows. But other than Transparent, which received critical acclaim, most of its shows have been panned by critics and it’s yet to produce a blockbuster hit.
- Apple keeps sending signals that it’s about to get into content, even claiming it’ll spend $1 billion next year, but its one major show, a knock-off of Shark Tank, was widely panned by critics.
- Facebook is funding original video for its Watch tab, but the jury is still out on whether it’ll be successful.
- YouTube, while it’s created a great revenue-sharing platform with content creators, has for the most part remained at arm’s length when it comes to commissioning original, exclusive content. In fact, its first foray into funding channels directly so they could improve the quality of their content, the YouTube Original Channel Initiative, was ended after a year. Recently, YouTube launched YouTube Red, a subscription pay service meant to compete with Netflix and other streaming offerings. But it’s yet to produce a breakout hit and hasn’t released subscription numbers.
That’s just a sampling. So what does this tell us? That it’s much harder to create Hollywood-quality content and isn’t as simple as opening up your checkbook. Given that we live in a “golden age of television,” then that means the bar is extremely high for studios that want to create shows that consumers will spend an entire half hour or an hour with.
And the fact that Netflix has cleared that high bar while also keeping its tech bonafides, in the process disrupting at least two major entertainment industries (first video rentals, then television), shows why it has true staying power. A company that’s much smaller than the Big Five continues to out-maneuver them. That’s a claim not many other companies can make.
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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.
