Three things Netflix can do right now to improve CX

The debut of House of Cards back in 2013 seems like an age ago now, and for Netflix, it was. The service was then in its relative infancy, or perhaps adolescence, emerging from their more traditional role, provider of hard copy movies via post (how quaint that sounds now!). The entity in 2017 is truly global (in more than 130 countries with over 80m subscribers [April 2016]) and has commissioned myriad original content, including the popular Stranger Things.

That new content comes with a $6bn price tag though, and low margins.

Fortunately, there is much more to be done though. Here are 3 quick things that Netflix can do quickly to dramatically improve the Customer Experience.

1. Zeitgeist has been wondering for months why Netflix had not been supporting the ability for offline downloading and viewing. Yes, there are piracy concerns such a new approach would bring, but piracy is pretty pervasive anyway. Presumably there are contractual arrangements to be made / re-negotiated with content partners to allow viewing in a different mode. As it is, before we could post, Netflix sagely announced at the end of November that offline viewing would be a thing, though only available on Apple and Android mobile and tablet devices for now. Reassuringly, their public statement for doing so was due to customer demand, not anything regarding retention efforts or value chain management (i.e. shareholder-facing spiel). Titles not currently available for download include, unsurprisingly, content from Disney, which is trying to build its own walled garden with Disney Life.
2. Transparency forms a key part of the next two points. Netflix needs to be much more upfront about what content is going to be available when. This is in a studio’s interest too. A filmgoer might want to see a film again after seeing it at the cinema. But why risk buying it as a single copy when Netflix might have it in their library soon thereafter? Why not keep the Netflix subscriber base more informed about films that are being considered, or better yet, allow people to have a say. If I search for a title not in the Netflix library, then let me submit it to be bought. Once a certain number of vote are received, they could, like HM Government, establish a threshold that would then commit them to considering it.
3. Lastly, in a more niche way, Zeitgeist, in travelling in 2015 in France, Canada and the Middle East shone a light on the remarkably different stable of content each Netflix library holds. From an internal, local market strategy point of view, each region has different tastes and different priorities. But from a subscriber point of view, the presence of – for example – West Wing in North American libraries but not in European ones seems arbitrary at best. The problem exists even within markets. In one country, you can stream Toy Story 2 and Toy Story 3 but only order the first film through the mail. It borders on Kafka-esque, and Netflix needs to do a better job of explaining why this is the case.

This is an important time for Netflix. Series like The Crown have helped further solidify its reputation as the go-to innovative player in the market, the new HBO. It must tread carefully though. Nomura reported last year that the service’s price hikes could have created a churn of 500,000 customers in the US alone. Netflix must ensure it communicates the value of what people are paying for. Otherwise, the stellar package of content, paid for like you pay a utility bill may risk becoming similarly commoditised.

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As we celebrate our first anniversary and approach our 150th post, please join us in celebrating our 30,000th hit.

Over the past year, we’ve written on a variety of subjects. Some articles have commented on whole industries or cultural movements, some on incidents of spectacular successes or dismal failures.

We’ve written on the changing face of masculinity, and how men shop in the second decade of the 21st century. We examined why England lost it’s World Cup bid, and what the World Cup meant for the world as a whole, and the businesses that aim to profit from it.

We talked about the future of content; what it means to own something that only exists as a file on a computer, but you still have to pay for, as bookshops and videostores fade to dust and intellectual property rights evolve along an uncertain path.

How social media is used for good, for ill, for Gatorade and for Conan O’Brien.

We’ve ruminated on leadership, on how luxury justifies itself post-recession, and how antique brands like Louis Vuitton attempt to keep themselves fresh, as well as ultra-premium.

We’ve talked about how movie studios win by marketing their product, and how auction houses lost out to the pitfalls of behavioural economics.

We’ve debriefed you on our visit to the UK’s Google HQ, while waxing lyrical on Nintendo as it moves from taking on Sega to taking on Apple.  We’ve asked what it means for the future of TV when everyone has Sky+ and a broadband connection. And we’ve looked at several examples of superb brand activation.

Lastly, we’ve tried in vain to present the glory of Roger Federer.

Stick around and have a browse, we’re not going anywhere.

Product Placement’s Unknown Unknowns

Zeitgeist has commented on product placement several times before, including its bumpy ride to legality on British television (this summer the House of Lords debated its worth), as well as the contextual advertising that takes place on television sets in the US.

Advertising on British television certainly needs a jolt. The amount of money spent on original British programming by advertisers has declined £300m, from £2.9bn in 2004 to £2.6bn today. This figure comes from Mark Thompson at the BBC, at a speech given at the Edinburgh festival recently. One solution to these pains, suggests Brand Republic, is ad-funded programming [AFP].

TV executives used to be extremely snobby about working with advertisers, fearing they would want a programme about the joys of baked beans or the absorption power of nappies.
But this view is changing as programme-makers realise their ivory-tower attitude does sophisticated modern marketers a huge disservice.

This is a potentially lucrative avenue. It creates opportunities for both product and programming that are mutually beneficial. The possibilites of funding from brands for content however are potentially fraught with danger for consumers, and the article concludes quite rightly that such an approach is still a way off.

Holistically, product placement is on course for a compound annual expansion rate of 18.2% to 2014 according to PQ Media, “as a result of the economic recovery and a relaxation of formal restrictions”, as written in WARC. The difficulty will be – as Viviane Reding, EU commissioner for information, society and media said in 2006 – in getting “content to drive the advertising”, rather than the other way around. The EU’s premise for product placement transparency is to ensure that consumers always know when such a placement is ocurring while they watch the idiot box. Brandchannel cannily compares this to “how the Dutch make candy commercials display a toothbrush icon to remind kids to brush their teeth after eating sweets.” This may well be scaremongering though; Zeitgeist isn’t aware of any TV shows, rollicking with product placement they may be, where the advertising drives the content, (except perhaps for the odd clip in the video below…) Indeed, in the US some savvy work is going at the moment, for example with the NFL and Febreze. Brandchannel reports “During ESPN’s locker room interviews with NFL players, the product can be seen on the players’ locker shelves — a subtle yet effective product placement.

One of the nastier and more insipid occurrences of product placement, however, might make regulators nervous. The infamous Snooki from the similarly-infamous detritus that is MTV’s Jersey Shore has been the target of reverse product placement, as luxury brands have sought to distance themselves from any association with her by providing her with products and accessories from their rivals. Devious indeed, not to mention ingenious. All of which goes to show that regulators, broadcasters and consumers must be wary about the potential rewards and pitfalls of product placement in the near future.

Intellectual Property ReBoot

The British Library corrals some bright sparks and lights some fires over copyright protection.

At the Emmy Awards recently in Los Angeles, emcee Conan O’Brien bemoaned (or rather, celebrated, see above) the demise of old media, in particular his erstwhile host, NBC. While media fragmentation has played a significant role in this, many in the industry also complain of piracy. Intellectual Property Rights [IPR] are not sufficient they say. At the end of last month, the British Library published a paper under the Creative Commons license entitled “Driving UK Research. Is copyright a help or hindrance?”, in which 13 scholars, journalists and artists, all intimately familiar with IPR, advocate for a more relaxed approach to incentivising and regulating.

“There is a growing tension between laws designed to protect the intellectual property of writers and performers and their desire to capitalise on their own copyrighted material.”

The above quotation is from author and journalist Richard Donkin, featured in this report. The original purpose of copyright as set out in the United States is to incentivise people and to encourage innovation. Zeitgeist would argue that these original aims have been lost in a orgy of corporate overindulgence. As discussions continue on lengthening Europe’s current 50-year copyright term to equal the 95-year length in the US, one issue that many of those writing have difficulty with is the issues of ‘fair dealing’, more commonly known by it’s US term, ‘fair use’. According to this paper, it currently allows little scope for sampling for educational or critical purposes. As Professor Lionel Bently comments, “the publisher insists that I and my co-author have the consent of the copyright owner. But identifying and locating the copyright owner is not at all straightforward.” It is often very hard to track down the rights to a work as attributed to a particular person – especially if this person is no longer among the living. One of the contributors to this paper argues that people should be actively encouraged to register their copyright, rather than just assuming it as the work is created. This would not only give some authors the option of immediately making their work rights-free, but would also make the identification process that much simpler. The labyrinthine complications are echoed by Dr. Estelle Derclaye, who calls issues of IP law a “daily dilemma to some researchers”, constantly worried that photocopying this extract or inserting a video into a presentation would bring them (or the institution they work for) a step closer to a lawsuit.

‘Fair dealing’ also states that “[t]he copying of an image to make a presentation [on PowerPoint] is an infringement, as there is no statutory exemptions”. This is quite remarkable, and indicative of an anachronistic copyright structure. The notion is also hampered by issues of semantics. Professor Nick Cook writes that there are “specific problems” with ‘fair dealing’, one of which being that they “do not fully cover sound and film”, allowing only small excerpts to be reproduced. There is, however, no clear definition of ‘small’. This is stunningly inadequate. Until matters like this are cleared up, those creating, using and critiquing content will face confusion as to their rights. Cook continues,

“[P]erhaps the greatest problem… is ignorance of the law on the part of researchers (who frequently ask for permission they don’t need), publishers (whose copyright guidelines are often needlessly restrictive, and rights holders (a number of music publishers, for example, claim that fair dealing does not cover printed music – a claim for which there is no legal foundation.”

The danger of this last example of overprotective rights holders is that content does not find its way into the public domain and hence does not become used. Everyone from Picasso to Dizzee Rascal has used previous works to create their own content. Works “that people cannot access create no revenue for anyone”, comments Cook. This is no mere hypothetical abstraction. There are currently many, many films literally rotting away in the basements of various film studios in Los Angeles, waiting for their copyright limits to expire. Inaccessible, and not making any revenue for anyone. Journalist Mike Holderness argues that an alternative revenue stream could be set up to compensate creators of works for making their works available online and to anyone

The irrelevance or mere disdain people have for IP laws today is abundantly clear. Marshall Mateer, Education Consultant for the National Education Network, writes simply, “[t]oday copyright often becomes a barrier standing in the way of what it should be enabling”. Dr Gabriel Egan points out that the effort to get people to stop pirating content purely by enforcing Digital Rights Management software has failed spectacularly (not least because there are always loopholes in software). Taking an educative stance by trying to convince people of piracy’s moral corruptibility rather over-stated the case, and rather too late as well. Egan points out,

“Trailers in cinemas warning that copying a film is theft, akin to purse-snatching, strike most spectators as manifestly untrue. Stealing deprives someone of the use of their property, while copying something only adds to the number of copies in existence. The supposed loss to a rights holder is notional and dependent upon the untestable hypothesis that a consumer prevented from copying something will buy it instead.”

Richard Donkin, perhaps optimistically, writes that “[w]idespread disregard is often a prelude to legal reform”, arguing among other things that the copyright term needs to be shortened to around 20 years. It would be nice to see Mr. Donkin’s dreams come true.

TechDisrupt :: The future of content, digitally

If Content is King, then last week saw the gentry discussing how best to serve their master. The other day Zeitgeist watched a fascinating roundtable from the TechDisrupt conference, where talking heads with varied interests discussed how content would be created, distributed and consumed in the future. The below are some of the more pertinent and interesting things we managed to peel from the chat.

Sarah Chubb, president of Condé Nast Digital, noted that Apple was lending a helping hand to the sales of the publishing empire’s magazines. Since the launch of the iPad (recently revealed to have sold 2m units in 59 days), Chubb states that the device has played a significant role in boosting sales. Regarding the iPhone / iPad split, she says 60% of GQ readers are accessing the publication through their iPad, 40% through the iPhone. For Vanity Fair, fully 90% is from the iPad, which is incredible after such a recent release and given that the iPad was only released outside the US in the last week or so. In related news, it was announced today that The Financial Times “iPad app has registered three times more downloads in its first two weeks since launch, than its iPhone app managed”.

Fred Davis, founding partner of Code Advisors, ruminating on how people perceive content now, makes the declaration, “It’s not about owning, it’s about accessing”. This is crucial. This is ‘I want my MTV’ for the next generation. As we have moved away from purchasing tangible goods like CDs – and to an increasing extent DVDs and books – the pleasure of owning content dissapates. People, however, still want to be able to use that content, and use it immediately. This is where, helpfully, cloud computing comes in. Perhaps this new type of demand makes the iTunes model – when compared to Spotify et al. – antiquated. Buying a track on iTunes is about owning content. It can be bought quickly and easily over your phone via a Wifi or 3G signal, but once purchased, the song is on your phone, it is not kept in the cloud somewhere for you to access at any time from any device. It is not easily shareable.

John Hagel of Deloitte talks of companies of the future having to make a choice between what they want to excel at: product development or customer relationships. In other words, product profitability or audience profitability. Is the company’s USP going to be “Come to us because we know your product” or “Come to us because we know you“? Zeitgeist ponders whether a company, GE for example, might not be able to manage both.

The IPTV service Boxee recently signed a deal with Google to make use of its Android OS, linking with Google TV. In related news, units that the OS operates on outsold iPhone for the first time this quarter. The CEO of Boxee, Avner Ronen, was also one of the speakers present at the conference. Taking an optimistic stance, Ronen stated that one of the benefits of increased fragmentation and availability of content was that, in a free market mindset, the more content published, the more competitive the environment and thus the better the content.

Of course, piracy is an enormous factor, and Davis pointed out that there is still a problem with people not equating downloading a song illegally off of Limewire with shoplifting from WalMart. Perhaps it is now too late for any efforts at education in this matter, as the MPAA seem to have singularly failed to educate the public. Chubb countered that people were now willing to pay for things in mobile that they wouldn’t normally pay for otherwise. This dovetails with the idea of paying not for the content itself, but for the instant access to it. The film industry, in particular, has combatted the threat of piracy in other ways. Now that international box office accounts for some 65% of a film’s total gross earnings, release windows are being narrowed for simultaneous releases. “Iron Man 2” was released at the end of April here in London, a full week before the US launch. The world premiere was supposed to have taken place in Leicester Square, but sometimes even savvy film execs come up short, especially against volcanic ash.

Ultimately, the way we interpret ownership is undergoing significant change. What we used to be possessive of, with the arrival of the mp3 we suddenly felt inclined to share. Increasingly we do not have need of the physical product, merely the ability to use it when we wish. This might easily be linked to the continuing vogue for ephemeral clothing that is besetting the fashion industry, where cheap clothing is made to be worn once then tossed aside like New York Times stock. Zeitgeist thought it fascinating to watch these people prognosticate on the future of content; they may all be completely wrong, of course, but then that’s the interesting thing about the future, isn’t it?

There was much more discussed, and you can see the whole video here.