Netflix is kicking off 2019 with a bang—or two or three or four.
The stock is up 20% so far in the new year and up 50% in the past 12 months. Last week, Goldman Sachs added Netflix to its “conviction buy” list, writing, “We see a path for Netflix (NFLX) to both double its annual content investment and generate positive cash returns by 2022.” This week, UBS upgraded the stock to Buy and Raymond James upgraded it to Strong Buy. To cap it all off, Netflix took home five Golden Globes on Sunday: two for its original film “Roma,” two for its original series “The Kominsky Method,” and one for “The Bodyguard,” a BBC series that Netflix distributes outside of the U.K.
And signs point to Netflix delivering another killer year in 2019.
But the Netflix success story right now is about a lot more than awards, or analyst upgrades, or even “Originals.” It’s about the granular details of how Netflix markets its content, and what the service now stands for.
The real “Golden Age” of television
Media pundits and film/television critics love to throw around two terms: the “Golden Age of TV” and “Peak TV.”
The “Golden Age” typically refers to the streak of high-gloss dramas on premium networks like HBO, Showtime, and AMC beginning with “The Sopranos” in 1999 (observing the 20th anniversary of its premiere this week) and highlighted by “The Wire” (premiered in 2002), “Six Feet Under” (2001), “Dexter” (2006), “Mad Men” (2007) and “Breaking Bad” (2008).
But any use of the “Golden Age” term that implies the period has ended is a fallacy.
That period didn’t end. There have been original series on the same quality level into the 2010s as well. “The Walking Dead” premiered in 2010. “Game of Thrones” and “Homeland” both premiered in 2011; “Billions” premiered in 2016 and “Succession” came along last year.
And now Netflix is in that conversation too. “House of Cards” and “Orange is the New Black” premiered in 2013 and put the “Netflix Original Series” label on the map. Then “The Crown” and “Stranger Things” premiered in 2016. Of course, there are plenty of Netflix original shows that don’t rise to that level of excellence, don’t get recognized with awards, and don’t attract as many eyeballs. But that’s the case for HBO and Showtime as well; many of their original series don’t last beyond two or three seasons.
That brings us to “Peak TV.” The term is generally credited to FX Networks CEO John Landgraf, who said it on stage at a Television Critics Association event in 2015. He was referring strictly to the number of original shows being created per year, and theorizing that it would peak. But the total number of original shows has continued to rise each year, and last year Landgraf had to acknowledge that we are still a “ways off” from the peak.
The reality is that with Netflix spending more than $10 billion on original content in 2018, there’s no reason for high-quality television to peak any time soon. The spend keeps going up, the volume keeps going up, and most notably, audiences are making time for these shows. It now looks silly for pundits to try to draw any line in the sand for a time when this trend will end, because the opposite is happening: more companies are rushing in to the original television race, rather than peeling back. From HBO and Showtime, which now offer standalone subscriptions (HBO Go and Showtime Anytime) without a cable package, to Hulu, Amazon Prime, and even Sony PlayStation Vue, everyone wants in.
And the actors understand it.
In a 2016 interview on “The Rich Eisen Show,” Matthew McConaughey, discussing the success of the first season of HBO’s “True Detective,” said, “People have said, ‘What about you going from the big screen to the small screen?’ That used to be a little more of a sort of taboo idea to do. Not anymore. Plus, if it’s great quality, you’re actually getting better quality dramas on the small screen today than you ever have been, a lot better than you get on the big screen sometimes.”
Indeed, any notion that doing television is in any way less prestigious than film is dead and gone—especially when the most culturally relevant films are superhero movies anyway. Julia Roberts stars in the Amazon Prime series “Homecoming,” and already got a Golden Globe nomination for it. Streaming television is where many of the cultural conversations are originating, and Netflix is at the heart of it.
Not just about ‘Originals’
Yet with all that said, Netflix is also making the right decisions with what it buys, rather than creates. “The Bodyguard” is a BBC series, but Netflix paid to be the U.S. distributor, and is now earning raves (and Golden Globes) by association.
Similarly, many of the eyeballs on Netflix are going to old hit sitcoms like “The Office,” “Friends,” and “Parks and Recreation.” A recent Vox story highlights that fact to make the argument that this is a problem for Netflix, but it actually only shows that Netflix is hedging its bets by spending on distribution rights to established hits while it also spends boatloads (too much, critics say) on original content.
In other words: Netflix was once first known for “House of Cards” and “Orange is the New Black,” but it is now a place where people watch an incredibly broad range of content—television and film, “Original” and not.
Timing + placement
The other key, under-the-radar brilliance of Netflix’s strategy around original content is the way it times the social media marketing and launch of that content.
Netflix announced the July 4 release date for “Stranger Things” Season 3 just minutes after midnight on New Year’s Eve, along with a single teaser image. Even as people all over the U.S. were partying, the tweet went viral and was a major media story over the first few days of the new year.
It was an example of Netflix’s clever timing and its ability to own the conversation online. Another example was when Netflix dropped a new “Cloverfield” original movie, “The Cloverfield Paradox,” completely by surprise right after the Super Bowl last year. The movie may not have been a critical hit, but football fans flocked to Netflix in droves looking to unwind after watching the big game.
Netflix is also extremely savvy on Instagram, where its voice is unique and often bawdy. For just one example, look at this post where Netflix applied the “Bandersnatch” concept to famous movies and shows like “Titanic” and “The Office.”
The latest example of the Netflix marketing machine is “Bird Box,” the Sandra Bullock thriller that Netflix released in the final week of 2018. Netflix said 45 million accounts watched it in the first 7 days. (Netflix defined “watched” as getting through at least 70% of the movie.) While it’s fair to question that number because it would amount to nearly one third of all U.S. Netflix accounts and because no one can confirm it but Netflix, it is a remarkable figure even if slightly inflated.
And the most impressive part is that Netflix reportedly did no outside marketing of the film ahead of time: no cable ads, no billboards, no subway signage. As many have pointed out, it merely slapped the movie onto its home screen, which is now among the most valuable real estate space in television advertising.
As a Raymond James research note on Friday concludes, “Bird Box's 45M unique viewers highlight Netflix's advantages in film: convenience, cost, and global distribution. Per our survey work, these advantages helped Netflix gain share against linear TV. We see meaningful potential for Netflix to succeed in film, and believe this should aid subscriber growth/retention.”
4/ The reality is that the most valuable real estate in the world is the top fold of Netflix home page. And Netflix not only controls it, they don’t rent it to anyone. You can buy a billboard, Amazon’s homepage, Facebook, Snapchat. Not Netflix. It’s only for Netflix.— Matthew Ball (@ballmatthew) December 31, 2018
All of these milestones and achievements have happened just at the end of 2018 and in the first days of 2019. Think about what else might come from Netflix this year.
To be sure, there are concerns on the very-near horizon because Disney launches its much-anticipated Disney+ streaming service late this year—that launch will mean Netflix loses a lot of Disney content.
But there are obviously myriad reasons to be bullish on Netflix even as competitors keep rushing in.
Daniel Roberts is a senior writer at Yahoo Finance and closely covers streaming tech. Follow him on Twitter at @readDanwrite.