This week on the Magical couch of truth bombs Kim and Adrian talk about Netflix! (and chill). 🙊 Netflix plans to spend 7 Billion dollars on creating their own content! Can you believe Netflix started as a DVD rental service?! 😲 Find out how they’ve created a cult following. Don’t build a startup, build a cult!
- Recently read that Netflix is spending 7 billion dollars on creating their own content. So Netflix original series, they are making--
- Like Perineum?
- Perineum, that's a lot of money.
- That's a lot of content. That's a lot of production.
- That's a lot of TV. That's a lot of hours of television. They also though, are on track to make 11 billion in revenue so they're still profitable. And a big part of that creating more content is that obviously if you don't create your own content and you don't own your own content then you're kind of at the mercy of other people's production, licencing, whatever costs.
- Yeah, so it's like you're just an aggregator if you don't own your own content. So where does the value sit, that's a good point.
- So what are your thoughts around Netflix choosing to put such a big portion of their budget, of their revenue towards creating content versus being the aggregator or the player that has all the content in the world?
- I think at that level they must know what they're doing and they're tripling down on something that's working for them. Interestingly, we were just hanging out with some machine learning AI guys, Max Kelsen. Check him out, very cool. They were talking about the AI that's used in Spotify. The value for them really sits in their algorithm. Crazy AI that processes every song and then knows what to suggest to you. And it's not dumb AI like oh your friends might like this it's actually based on exactly what the song sounds like.
- He used the word acidics like exactly how it sounds breaking down all the components. Not genre, not language, even.
- One opinion that I've got on Netflix is that at that revenue and the fact that they are profitable I feel like they should be doing more in that front like the guys brought up that Netflix isn't doing much on that front yet on their recommended system. So you can go, there's deep tech way or there's a content creation way. Spotify hasn't gone into content creation really, Netflix has gone not that smart, but deep, deep into content creation. The interesting way of looking at it is picture Netflix as this hub, the mothership really each of these shows they create is an asset that they can create merchandise and toys and clothing, events, all this stuff so things like Stranger Things and these shows that they've got, they really are starting a bunch of their own cults. We talk about cults a lot, their own little mini religions. And each of those assets can then generate a shipload of their own revenue way outside of Netflix subscriptions. So it's really like they're really an incubator that's incubating their own assets. And those assets can turn really valuable in their own right. How sustainable that is, it's another question I'm interested to know how-- Zach actually mentioned when he put us on the spot with his video that how long can you create they've got like 20 ME's or something Netflix shows so how sustainable is it to keep creating fucking amazing shows like will they just keep doing it, do you think?
- I think I actually did read something about how House of Cards was made and that was like a formula. They knew shows with that story line, with this kind of actor, so I think because they've got so much insight and so much data around, what people like to watch, whether it's their own shows or stuff that they've licenced, they actually can put together shows that are predicatively going to do really well.
- I do have a gripe with them, though, there's been a bug on the app. And the app hasn't been fucking working for like--
- Yeah, that's why you've been using up all my data.
- Yeah, but you know am I gonna watch Mick and Morty? So I'm a paying customer, but I'm a disgruntled customer currently.