How Netflix Creates Cultural Relevance

Tidying up with Marie Kondo is more than a Netflix reality television series about an organizing consultant who helps people de-clutter their homes. It’s a cultural phenomenon. Since Netflix aired eight episodes January 1, Tidying up with Marie Kondo has sparked a discussion about Japanese culturethe role of books in our livesour societal pursuit of happiness, and materialism, among other topics. The show also demonstrates a major advantage Netflix wields against Amazon Video and Hulu: cultural relevance.

Tidying up with Marie Kondo is one of many examples of how Netflix seeps into our everyday culture by creating relevant content and even shaping our behavior. Netflix is not the only streaming service to create content that taps into the cultural zeitgeist – Hulu does so in spades with The Handmaid’s Tale. But Netflix creates cultural relevance more consistently and in more ways.  

Prophet Brand Relevance Index

According to the Prophet Brand Relevance Index, Netflix is the fourth-most relevant brand in the United States, behind Pinterest, Amazon, and Apple and ahead of companies such as Google and Nike. Amazon ranks ahead of Netflix not because of its streaming service but because of its ecommerce leadership – an important distinction. Amazon Video creates original content as a means to an end – to gain more Prime members for Amazon. Netflix lives and dies by the strength of its content. And the difference shows.

According to Prophet, “[Netflix’s] relevance comes from knowing what we want to watch, which means old favorites and $12 billion worth of exciting new projects, including contracts with executive producer Shonda Rhimes, director Spike Lee and former President and First Lady, Barack and Michelle Obama.”

Creating Cultural Relevance

Prophet focused on consumer relevance. Netflix’s cultural relevance goes beyond knowing what we want to watch although content is one important element. Cultural relevance means influencing how we talk, how we behave, how we work, and, yes, what we watch. Here are some examples:

Netflix and Chill

Netflix is part of our everyday vernacular. You don’t hear anyone refer to “Hulu and Chill” or “Amazon Video and Chill” as a euphemism for having sex. And let’s not even consider a world in which “Disney+ and Chill” catches on once Disney launches its own streaming service, Disney+. “Netflix and Chill” has become so common we don’t necessarily equate the phrase with its original meaning. The article “Netflix and Chill . . . and Share it on Instagram Stories” by Geoff Desreumaux certainly does not refer to hooking up.  And I’m pretty sure investor Dan Victor wasn’t thinking about getting some afternoon delight when he wrote the Seeking Alpha financial analysis of Netflix, “Buy Netflix and Chill – It’s Going Back to $400.” 

“Netflix and chill” is not the only example of Netflix-related phrases that have worked their way into our vocabulary. For instance, “Netflix cheating” is the act of watching  episodes of a Netflix series ahead of your partner. Netflexting occurs when two people watch a Netflix show in different locations and text each other at the same time. Netflix block happens when you scroll through your Netflix queue and cannot settle on something to watch. Here are more phrases that demonstrate Netflix achieving cultural relevance through our vocabulary.

Stranger Things

Netflix is capable of creating a cultural phenomenon, as seen with Tidying up with Marie Kondo and Dear White People, the latter of which has attained relevance through the ongoing societal conversation about race and white privilege. Perhaps the best example of the Netflix effect is the popularity of Strangers Things, which has become a catalyst for 1980s nostalgia, an inspiration for cosplayers, and a musical tastemaker (to the regret of “Africa” haters everywhere). In fact, it’s a global phenomenon.

The cultural relevance with content occurs two ways:

  • Creating content from another medium that has already attracted an audience (Tidying up with Marie Kondo was already a well-known book, and Dear White People was a notable movie first).
  • Releasing content that becomes so popular that its success transcends its original medium, which is what happened with Stranger Things

In fact, most of Netflix’s original content does not enter the cultural mainstream the way Stranger Things has done. But Netflix hits the mark more than anyone else.

Binge Watching

Netflix is actually changing our behavior. When Netflix began dropping all episodes of its new TV shows simultaneously, we responded by changing how we watch TV. Thanks to Netflix, we consume show after show for hours at a time. We now watch what we want when we want it, instead of a network making us wait for a weekly broadcast. The phrase “binge-watch” became the Collins English Dictionary word of the year in 2015. Four years later, we’re still talking about binge watching. Mashable devotes a section of its news content to binge watching. And you can get paid to binge watch. Binge watching is bigger than ever.

Highly Aligned, and Loosely Coupled

Netflix is also culturally relevant to the workplace. Netflix is well known among management consultants and the HR community for the way the company operates. Netflix is known for its “highly aligned, loosely coupled” approach of setting a clear strategy but empowering work teams to act autonomously. We now have PhD-level management consultants extolling the “7 Aspects of Netflix’s Company Culture That You’ll Want to Copy.” Its 2009 Culture Deck is called “the BIG DADDY of culture decks.” Its technology blog is also popular among product developers and engineers throughout the workplace. Amazon is also closely followed for its management practices – but here again, I’m focusing on the streaming business, where Amazon Video doesn’t create the kind of conversation for its business practices that Netflix does.

What’s Next?

But cultural relevance is fleeting. You can’t manufacture cultural relevance on demand although you can improve your odds by adapting already-popular content that has been tested in another medium, as with Tidying up with Marie Kondo and Dear White People. So far, Netflix sets the paceBut it will be interesting to see what happens when Disney launches Disney+. Disney wrote the book on cultural relevance and is well positioned to challenge Netflix with its Disney, Marvel, Pixar, and Star Wars brands (Star Wars created the template for phenomenon such as Stranger Things). The key will be how well Disney draws upon these popular names to create new content, which it plans to do with shows such as original episodes coming from Marvel. Disney+ will be an extremely costly venture. But Disney has very deep pockets, while Netflix is under constant pressure from investors for its spending. Netflix CEO Reed Hastings has his work cut out for him. But I think he’s up for the challenge. And he’s operating with a big head start and an ability to do things that no one else sees coming, such as introducing binge watching.

The next frontier for Netflix will be to create cultural relevance in international markets such as India, which is proving to be an enormously difficult task. In India, Netflix also has its hands full with local competitors such as Hotstar. Because of its cash burn rate, Netflix is under more pressure to ramp up faster in markets such as India. The race is on – and the next several months will prove to be exciting.

How Netflix Is Changing Your Behavior

Being a Netflix investor (which I am) is not for the faint of heart. Within the space of a few days recently, Netflix stock reached an all-time high, then fell off a cliff after Netflix reported disappointing quarterly earnings, only to rebound in stunning fashion the following day, before dipping the day after. The wildly gyrating stock price certainly makes for dramatic headlines. But the real legacy of the company is not its market capitalization but its ability to change human behavior.

Netflix CEO Reed Hastings is a market maker. Market makers do more than make money. They shape behaviors of people and companies. Netflix is undeniably shaping how people live going back to its founding in 1997. Along with Amazon, Netflix ushered in the era of on-demand living. If Amazon made it possible for people to buy things on their own terms, Netflix did the same for entertainment. Arguably Netflix and Amazon laid the groundwork for Uber’s disruption of the transportation industry through on-demand ride sharing. Together these companies ushered in an economy based on on-demand living.

A Cultural Phenomenon

The idea of giving viewers a digital catalog of movies to stream not only knocked Blockbuster out of business but made Netflix a cultural phenomenon as viewers embraced a new way of experiencing entertainment on demand. In 2009, Twitter users began using the phrase “Netflix and Chill” to describe the increasingly popular practice of simply hanging out with Netflix like a friend. Soon, “Netflix and Chill” became a euphemism for people hooking up to have sex, which is how we commonly think of the phrase today. The phrase “Netflix and Chill” became an internet meme and topic of much analysis and controversy. Netflix was shaping how we communicate as Google has done (“I’ll Google the movie time”). Continue reading

The New CEO Job Requirement: Social Media

JDRichard

The sad results are in: 70 percent of all CEOs have no presence on social networks. And John Mackey of Whole Foods is the only CEO of a Fortune 500 firm who maintains his own blog — yeah, the same John Mackey who stepped in it by comparing Obamacare to facism in an interview with NPR. Hey: it’s time for CEOs to rethink their approach to social — or should I say get an approach since I doubt they think about social very much. Social media is a job requirement for the CEO.

In 2012, George Colony, CEO of Forrester Research (and an excellent blogger), delivered a presentation about why CEOs don’t use social media, and the reasons apply today: a general aversion to risk, lack of time, a generational bias against social, and the existence of regulatory constraints (as Netflix CEO Reed Hastings recently reminded us). Those constraints are understandable — but CEOs need to get over them. The fact is, CEOs need social media. Social helps CEOs better understand their market, their customers, their employees, and their own brands. Even better, social can help CEOs run their companies more effectively. An IBM study says that brands without social CEOs are less competitive, and according to Social Media Today, eight out of 10 employees want to work for social CEOs.

Recently, I sat down with Jermaine Dupri, to discuss how social media helps him be a better CEO of So So Def Recordings. As you might know, Dupri blew up the So So Def Recordings website and replaced it with his own social media community, Global 14. Dupri and I published the outcome of our conversation as a byline in Fast Company, available here. The byline discusses five ways social helps him run So So Def, an example being the way Global 14 gives him insight into up-and-coming musical talent. We also cite other CEOs who use social media effectively, such as Richard Branson, whose use of platforms like Twitter humanizes the Virgin brand.

If you are a CEO (or aspire to operate at that level), I hope our byline helps you embrace social, even if all you have time for is the occasional tweet. Just don’t blow off social.

Netflix: You Can’t Always Get What You Want

netflix-for-windows-8-app-review-0

If the ultimate measure of a brand is what you do, not what you say, then Netflix is underperforming seriously. The company brags that “Netflix members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen” and that members have can “instantly watch unlimited movies and TV shows streaming over the Internet.”  But in reality, members have access to a very limited streaming inventory a problem exacerbated by the newly announced HBO/Universal Pictures agreement that will box out Netflix for the next decade. And recent high-profile service outages have made a mockery of the promise of “anytime, anywhere” viewing. Netflix would do well to start taking accountability for its brand and consider revising its brand promise to manage the expectations of its members.

As has been widely reported, Netflix suffered embarrassing service outages on Christmas Eve and New Year’s Eve. Netflix blamed Amazon Web Services for the Christmas Eve outage, and Amazon took accountability by apologizing and explaining the outage. Well, blaming Amazon Web Services helps members understand what happened, but the problem is that no one really wants to hear explanations, nor should they. We don’t need to know how the sausage is made; if we get a faulty product, we need accountability.

But for all the bad PR the services outages caused, a bigger, more ongoing threat to the Netflix brand consists of limited streaming inventory — a shortcoming Netflix attempted to redress with its December 2012 play for exclusive rights to Walt Disney Studios, only to suffer a setback in January 2013 when HBO and Universal agreed to a distribution arrangement that blocks Netflix from crucial content for years.

You don’t stream movies on demand on Netflix; you watch whatever Netflix can make available to you. In recent days, I wanted to watch four movies that Netflix lacked online: Breakdown, The Dead Zone (the 1983 version), Executive Decision, and Waiting for Guffman. In three out of four cases, the movies I wanted were available on DVD only, and the fourth, not at all. These are just recent examples. Too often, Netflix is not a place for me to stream a specific movie that I have in mind, especially with catalog titles — a major problem for the affluent and growing Baby Boomer population, which has money to spend and movie memories that date back a lot farther than The Hunger Games. Clearly, Netflix has a long way to go in order to fulfill its brand promise for people who want to stream movies. And remember, Netflix wants you to stream movies. This is the company that tried to foist streaming on its customers in the first place.

So what’s the solution? I think Netflix should take accountability where it matters: price. When a movie you want is not available, Netflix should offer you a rebate. When Netflix suffers an outage, Netflix should offer you a price break. Would putting its money where its mouth is motivate Netflix to become a high-performance brand? Moreover, Netflix could address the shortage of streaming inventory by revising its brand promise and setting expectations. For instance, movie service Fandor sets expectations by promising members “an online destination for watching amazing independent films from all over the world.”

welcome-to-fandor-where-great-movies-live

You won’t find Die Hard on Fandor, but you’ll have success with more esoteric movies such as the 1921 Buster Keaton comedy Hard Luck. By contrast, Netflix has engineered itself to disappoint by positioning itself as something of an all-purpose movie rental destination, which it certainly is not. Is Netflix the preferred brand for television enthusiasts? For recently run movies? I don’t know, but I’d like for Netflix to tell me. Unless Netflix does a better job protecting its brand, ironically Amazon will eat Netflix for lunch.