Take a Bow, Netflix: How the streaming service won 2016

2016 has been a damn good year for Netflix, with a number of award winning programmes being launched. We take a look at what has gone well for the streaming service and what is still to come

Let’s have a round of applause for Netflix. In July the streaming service gave us Stranger Things; in August the stylish The Get Down launched; in September we (spoiler alert) briefly caught up with Pablo Escobar in Narcos, and in October Marvel’s Luke Cage made his debut as a series lead in the imaginatively titled Marvel’s Luke Cage. To have one hit show in a year would be good, two is great, but to have four in half a year – and we haven’t even mentioned Black Mirror – is unbelievable.

2016 has undoubtedly been the year that Netflix has achieved supremacy in home entertainment, but the streaming service remains essentially a technology company and it’s this – the ability to analyse vast amounts of data about its customers’ viewing preferences, so it can decide what content to buy and how much to pay for it – that is separating it from traditional television networks. But with each successful launch, it’s hard to argue against the fact that Netflix is becoming more than just a technology company; it’s becoming a media giant.

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Image courtesy of Maxx Satori / Shutterstock.com. Featured image courtesy of Twin Design / Shutterstock.com

Thanks to its new status, Netflix finds itself in the unenviable position of having to compete with companies with much larger resources because being a television network comes at a cost. A massive, eye-watering cost. In a letter to shareholders that detailed Netflix’s results for the third quarter of 2016, the company announced that although quarterly global streaming revenue had exceeded $2bn for the first time, its net income for the same quarter was only £52m and streaming content obligations – the money Netflix pays to license, acquire and produce content – just reached £14.4bn.

Being a technology company, Netflix seems to see innovation as the answer to any problems it has, so in 2017 we’ll see at least another 400 hours of original content – from 600 hours to over 1000 – and rumours suggest that Netflix may introduce downloads by the end of the year. But can Netflix thrive in the new media world it has created? And more importantly, can Netflix continue to hit home runs when it comes to content?

Room to create

Netflix explains that it is able to create award-winning content because of its ability to “support programs for both mass and niche audiences alike”. In a letter to shareholders the company said: “Since we are not shelf-space constrained nor reliant on advertising, we have the luxury to tell all kinds of stories in less traditional ways. The growth of internet TV globally has ushered in a new golden age of content, with consumers everywhere enjoying unprecedented access to amazing amounts of high quality programming.”

Like any good technology company, Netflix monitors streams of data to predict what shows will work and what won’t. But it isn’t all about data. Netflix, unburdened by genre, advertising revenues or ratings, can pretty much commission what it wants.

“The worst thing you can do at Netflix is say that you showed it to 12 people in a focus room and they loved it,” said Todd Yellin, the company’s vice president of product innovation, in an interview with the New York Times.

Marvel's Luke Cage. Source: Netflix

Marvel’s Luke Cage. Image courtesy of Netflix

Netflix doesn’t have adverts, so it doesn’t need to aggregate viewers for advertisers, care about ratings or make programmes that are written, shot and edited to accommodate commercial breaks. All of this means Netflix can afford to be bolder with its content. There aren’t too many media companies who will give a home to foreign language television programmes (Narcos) or programmes that have female or black leads (Jessica Jones, Luke Cage), but Netflix does.

There also aren’t too many television networks who give creatives the amount of freedom Netflix does. What started as a way to beat HBO to House of Cards has become Netflix’s standard practice, so shows no longer need a pilot and can be commissioned for multiple series without having to worry about ratings.

“Netflix are daring and try to tell stories that would never be aired on linear TV,” a spokesperson for Netflix told Factor.

Netflix eyes China

As Netflix attempts to get a foothold in new territories, like China, we’ll see more shows that cater to different nationalities and cultures. Netflix CEO Reed Hastings said at the DealBook conference in New York that the company is “hopeful that we’ll over time make a great Bollywood show, make a great anime show”.

The company is already experimenting with this. Narcos is produced in Bogota, Columbia, features Brazilian actors and is directed by a Brazilian, but most importantly is delivered in English and Spanish, which allows Netflix to target its Spanish-speaking audience.

50%, and growing, of nearly 1.4 billion people is the equivalent of hitting oil to Netflix

But it’s China that the company is really targeting because, as subscriber numbers plateau in Netflix’s established markets, China represents an untapped well. In a dollar bills appearing in Reed Hastings eyes and the sound of tills opening kind of way.

If Netflix wants to continue to spend lavishly on its own programming as well as secure licences for shows like Star Trek: Discovery and The People vs. O.J. Simpson: American Crime Story then it needs the increased revenue breaking the Chinese market would present. There’s a reason everyone from Disney to Apple wants to get into China: internet usage in China currently stands at 50% of the population, according to the World Bank. 50%, and growing, of nearly 1.4 billion people is the equivalent of hitting oil to Netflix.

“The regulatory environment for foreign digital content services in China has become challenging,” reads Netflix’s statement to investors on the subject of China. For the minute Netflix is attempting to solve its China problem by licensing content to existing online service providers, rather than operating its own service in the country, but the modest income this will accrue is nothing compared to the potential earnings that would come with getting Netflix into the country itself.

The Pill

In Bill Hicks’ Revelations stand-up performance he ruminates on how the stunts in Terminator 2 are ever going to be topped. Netflix may be in a similar position now because it’s hard to come out with hit after hit after hit. Hicks suggested using terminally ill people as stuntmen; this isn’t an avenue Netflix is expected to go down, but the company has some, only-slightly less, outlandish plans.

Speaking at The Wall Street Journal’s WSJD event, Hastings said that in the long term “movies and TV shows will be like opera and the novel…There will be substitutes”. One possible substitute mentioned by Hastings could be “pharmacological” meaning Netflix is possibly considering an entertainment drug that viewers could use to put themselves in the midst of a story.

factor-archive-30To be honest, the idea sounds like something borrowed from Bill Hicks, but it is indicative of what makes Netflix great. It’s a company that isn’t planning on letting its product become obsolete, and even though it becoming a television network, Netflix will never forget that at heart it is an innovative technology company. So while there probably aren’t any chemists working on Netflix’s pills yet, don’t expect the company to be satisfied with just producing hit television in the years to come.

Russia announces testing of country-wide drone control network, paving way for commercial boom

Roscosmos, the Russian space agency, has announced that it will begin testing a vast drone control network that will run across the nation.

The network, which is based on the country’s extensive existing satellite system, will allow small UAVs to safely operate in massive numbers within Russian airspace.

Once established, it will likely lead to an explosion in the commercial use of drones in the country, with drone deliveries in particular becoming viable on an unprecedented scale.

The announcement was made at Navitech 2017 in Moscow yesterday by experts from Russian Space Systems, a space hardware company owned by Roscosmos. Outlining the details of the system, they said that testing would begin this year, but did not provide a precise date for its start.

Each drone in the network will follow a route determined by the system, with ground-based infrastructure continuously receiving real-time data about its location and flight parameters.

This will immediately be processed and disseminated across the network, to ensure that large numbers of drones can be safely flown at any time, without interfering with both each other and traditional airspace traffic.

The network will not require the establishment of major new infrastructure, as all data will be transmitted through a combination of existing systems: FM transmitters, the country’s established cellular communication systems and GLONASS, Russia’s global satellite navigation system, which has provided 100% coverage of the country since 2011.

The system will also provide real-time data about no-fly zones, allowing routes to be adjusted immediately in response to changing information, and will offer a “platform of integrated applications” to UAV operators, content providers and insurance companies.

Roscosmos believes that the system will significantly reduce operating costs for drone owners by limiting the risks involved with running a commercial drone operation, as well as creating the conditions for new industries to emerge.

Among the industries the space agency expects to blossom through the adoption of the network are drone insurance, cloud software that would increase the capabilities of drones and what it calls “convenient services” – a term that likely refers to drone deliveries.

If the platform does deliver on this hope, it is likely Russia would become the first country with an extensive drone delivery network, realising a dream that was first brought to prominence by Amazon back in 2013. However, the US-based company is unlikely to become the main player in the Russian market, having as yet shown little interest in the country for its Prime Air operations.

As with many countries, drone deliveries are currently a rare occurrence in Russia, with notable exceptions including DoDo Pizza, a Syktyvkar-based company that began delivering pizzas to local residents back in 2014.

NFL players’ union signs historic deal that will enable players to sell their own performance data and make them “healthier and wealthier”

The NFL players association (NFLPA) has signed a landmark deal with human performance company WHOOP that will give players access to, ownership of and the option to sell their individual health data.

All current and future NFL players will be issued with a WHOOP Strap 2.0, which allows them to, without interference from their clubs, monitor their own performance, recovery and sleep.

WHOOP’s strap contains five sensors that measure data 100 times per second and automatically transmit it to accompanying mobile and web apps. WHOOP has also developed a Team Dashboard, which it says has “27 levels of privacy to ensure sharing data is completely secure and comfortable for all parties involved”.

“Our mission at WHOOP is to empower athletes. This partnership with the NFLPA is truly the first of its kind in that athletes will finally become both healthier and wealthier by collecting, controlling, and ultimately having the ability to sell their own health and performance data,” said Will Ahmed, founder and CEO at WHOOP.

“We applaud the NFLPA’s vision and share its commitment to work with athletes to better monitor their recovery and enable longer careers.”

Image and featured image courtesy of Alan Kotok

The partnership between the NFLPA and WHOOP is the first of its kind and was secured through the OneTeam Collective, which is an initiative designed to give companies like WHOOP the opportunity to leverage the NFLPA’s exclusive player rights.

WHOOP has hinted at seeking further partnerships with players’ unions in future.

In addition to owning their own data, as part of the agreement NFL players can design custom licensed bands for the WHOOP Strap, which will be made available commercially and allow players to further monetise the arrangement between the two parties.

“Every day, NFL players produce data that can translate into physiological and financial opportunities. We see partnering with WHOOP as the first step in harnessing this exciting technology,” said Ahmad Nassar, President of NFL Players Inc.

“We are excited to have WHOOP and its innovative, holistic monitoring technology serve as our first OneTeam Collective deal. Together, we’re paving the way towards a new frontier where athletes are empowered by data.”

Russell Okung playing for the Denver Broncos in 2016. Image courtesy of By Jeffrey Beall – Own work, CC BY 4.0

Along with the commercial opportunities WHOOP will offer players, the partnership also promises to help players optimise training and recovery, improve performance and reduce injuries.

The NFLPA and WHOOP will both study the effects travel, sleep, scheduling and injuries have on recovery and generate reports for players aimed at boosting athletic performance.

“WHOOP and the NFLPA are putting the power of data directly in the players’ hands. I want to recover faster, avoid injuries, and have a longer career. This partnership has the potential to contribute to my health, which is imperative to my career in football,” said Russell Okung of the Los Angeles Chargers.