When Netflix started streaming TV shows and movies in 2007, it had the market more or less alone. At that time, the video on the Internet meant YouTube, where you could see dogs on skateboards or shorts SNL clips.
Now everyone is racing to catch up on Netflix and launch their own streaming services. But the big media companies are far away.
That is your fault. They watched Netflix build their streaming power right in front of their noses, and even worse, with their help.
That’s one of the stories that we tell in this week’s episode The land of the giants: the effect of Netflix, which focuses on the impact Netflix has had on Hollywood and the people who run and work on it.
It is a story that begins with a stroll down Sunset Boulevard, where the presence of Netflix is physically manifested. Billboards that used to advertise movies and TV shows from a variety of studios and networks are now exclusively dedicated to Netflix products because Netflix bought the billboards directly.
But the story really begins in 2008, when Netflix entered large-scale streaming, through a back door: it bought the digital broadcast rights to movies from Disney and Sony – that is, movies you’ve heard of, like pirates of the Caribbean – from Starz, the pay TV channel. Starz had ambitions for his own streaming service, but those failed, so you’ve probably never heard of Vongo.
And that’s why Netflix got those movies for a song, about $ 30 million a year, and it became a pretty good streaming service almost overnight. By context: In 2012, when Netflix wanted to make a new Disney content streaming deal, which by then had realized the streaming was real, Netflix paid an estimated $ 300 million a year.
A contractual loophole allowed Netflix to get things from Disney and Sony without coming to terms with Disney and Sony. But very soon, media companies were quick to sell their stuff directly to Netflix: They saw Netflix as an easy source of almost free money; If Reed Hastings and the company wanted to pay them for old shows and movies, they were already selling other places, then they would be happy to do so.
But that free money wasn’t really free: Netflix took the things Hollywood considered its remains and built a giant business out of it, and ended up competing directly with established media players, using its own content. Which brings us to today, where the world’s largest media companies are years behind what used to be a Silicon Valley upstart.
It is a fascinating story, and you can listen to it now.
Subscribe to Land of the giants on Apple Podcasts, Google Podcasts, Spotify, Stitcher or wherever you listen to podcasts.
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