Page 65 - AC/E Digital Culture Annual Report

product (I am paying for access to a range of products, from among which I may later choose).
Image: LIFESTYLE. Source: Netflix.com
• The profit is proportional to the number of subscribers (Gómez-Uribe; Hunt, 2015), and so traditional benchmarks for deter- mining popularity and business performance (viewership, playback statistics, sales or rental figures, etc.) have become ineffective as a way of measuring the success of the contents. In fact, there is a reluctance
with these models to report statistics to the traditional industry players. Netflix, in particular, has been harshly criticized for refusing to release its viewership data but there are no grounds for obliging it to do so. The rights to stream third-party content are acquired for a specific period for a fixed amount. Since there is no payment of royalties for individual use by the consumer, internal reporting on how the program performs on the platform
is no longer necessary. People who have done business with the company say that they receive more qualitative information2 such as how the program has started off
as compared to another similar show, or
its basic user demographics. This practice makes it difficult to assess the value of each of the contents in simple terms, such as
the number of times an episode has been viewed. However, as we will see further be- low, the wealth of data they collect would allow them to conduct more sophisticated assessments (Lozt, 2017). The rationale for
not publically disclosing their viewership statistics, as traditional television does,
also applies to their original productions. Since the model depends on subscriptions and not on advertising investment, they do not need to negotiate with advertisers or media agencies (Fernández-Manzano; Neira; Clarés-Gavilán, 2016). This does not mean that the number of playbacks of the content is irrelevant to the company. It must ensure optimal viewing rates3 so that acquiring
the rights to the content is profitable, and these rates are given careful consideration in the production, negotiation, acquisition and renewal processes for each program available on the platform.
• The value does not depend solely on the contents but on a good user experience
as well. Netflix’s success, and that of other companies with the same model, is due in large part to its user-centric approach. Con- ventional business strategies have focused on increasing the value of the product vis-à-vis the competition. With these new models, it is not enough to offer content that the user wants to enjoy. The service must have an additional value so that its use generates a high rate of overall customer satisfaction. Whether it’s listening to music, watching TV series or reading a book,
the ability of this type of service to retain subscribers and attract new ones is based on a simple metric: the time the customers actively use it. Conversely, the reason
for cancellations is a lack of use. Cultural consumption on the screen through sub- scription services has redefined the concept of customer loyalty. In the case of Netflix, this engagement is measured by the number of hours of content playback. Indeed, this is one of the few statistics that the company publically discloses. The connection time is based on elements that are already part of the Netflix access experience, such as the ability of the content to generate intense and recurring use (so-called binge watch-
AC/E DIGITAL CULTURE ANNUAL REPORT 2018
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Digital Trends in Culture