Abstract
The different technological affordances and revenue models of subscriber-funded, internet-distributed video streaming services have altered the competitive environments of audiovisual services. One category of these services, multinational SVODs (subscription video on demand), are changing the dynamics of transnational video distribution. Although having subscribers and offices, and commissioning content from many countries, are obvious measures of these services’ multinational status, the extent to which the distinct affordances of these services diminish the national lens through which all other international television trade occurs may be the most profound measure. The article explores how this too becomes a distinguishing competitive tool for Netflix that enables uncommon content strategies, such as the ability to program for tastes and sensibilities too small to effectively form a viable market for services limited by national reach.
According to its investor filings and other self-identifying rhetoric, Netflix is the ‘world’s leading internet entertainment service with over 167 million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages’ (Netflix, 2019: Form 10-K, emphasis added). Although such articulations of self-identity should always be read critically, this one is fairly apt. Perhaps more precisely, Netflix is the world’s leading curated video entertainment service, to distinguish it from YouTube and print, audio, and gaming entertainment services. This article mainly takes up the questions raised by its assertion of being world leading. Though video production and distribution have long transcended national boundaries, multinational SVODs (subscription video on demand services) represent a different mechanism of such internationalization, and it is necessary to acknowledge and frame their specificity.
The choice to identify as an ‘entertainment service’ is notable and appropriate, though novel for a service based on distributing television and film. A combination of technological and economic affordances enables internet-distributed video services to use strategies that profoundly differentiate them from linear channels (Lotz, 2017). Features such as on-demand access and subscriber funding differentiate the core business of SVODs, diminish the scarcity that serves as a core constraint of linear distribution, and exchange the priority of gathering the most viewers – to be sold to advertisers – to creating content people are willing to pay for. In its evolution from a US-based service to one with multinational reach, Netflix has taken that distinction even further. Although multinational distribution of audiovisual programming and channels is not new, Netflix has leveraged the particular attributes of internet distribution to distinctly define itself – at least as of 2020 – as a zebra among horses. SVODs may appear comparable to broadcast and cable/satellite channels, but are industrially differentiated, and several features of Netflix’s industrial strategy are further distinctive within the SVOD sector.
To be clear, SVODs are like channels in their capability to distribute video content, but they are sufficiently dissimilar as to warrant distinctive analysis. Moreover, though Netflix shares the categorization of multinational SVOD with services such as Amazon Prime Video, Disney+, Apple TV+, and others, it is also differentiated from these services as a ‘pure play’ video service. Netflix’s only meaningful business is providing video to subscribers; the other SVODs listed use video in the service of another, more primary revenue stream (Lotz and Lobato, 2019). Further, although Netflix and other multinational SVODs circulate common content to a multinational audience simultaneously (though not all of the available content is available to viewers in all nations), only Netflix commissions and produces a significant amount of programming outside the US. Admittedly, this may be a short-term distinction, and it is the case that Amazon Prime Video also pursues some targeted non-US commissioning that is closely aligned to the countries in which its retail service is most developed. 1 But an article about the challenges of examining and theorizing multinational SVODs written in 2020, must focus on Netflix. The dilemmas and approaches identified here may come to be more widely applicable, but the extent of this phenomenon is currently exclusive to Netflix.
Multinational video services are not unprecedented, but the distinctive characteristics of SVODs warrant investigation of how a deliberately multinational service challenges the nation-based frames of theorizing audiovisual content and industries. Their particular technological conditions require exploring the varied geographies through which they define themselves and how they can – or shouldn’t – be understood as multinational. For example, Netflix may be available in many nations, but in order to understand it with meaningful cultural detail, it must be investigated as a federation of national services (Lobato and Lotz, 2020). It may have a multinational base of subscribers, but the sustainable claims and depth of understanding available at that level are thin: the aggregation of on-demand viewing across hundreds of millions of users, nearly 200 national or regional libraries of content, and titles counting in the thousands (perhaps tens of thousands) obscures a lot of nuance.
At the opposite end of the analytic spectrum, studies about Netflix grounded in particular national contexts offer much richer information. Such studies reveal behaviour and practice set in specific cultural environments, particular audiovisual ecosystems, and norms of internet accessibility. Lobato (2019: 184) aptly describes Netflix ‘as a collection of national media services tied together in one platform’. But such national-case approaches also have their limitations. They fail to engage the service’s simultaneous multinational dimensions that profoundly distinguish its peculiarities as a single multinational video service. Consequently, approaches are needed for investigating, analysing, and theorizing beyond the single-nation case. Frameworks that moderate the poles of multinational scale and national specificity of these services must be developed.
This article uses Netflix to explore the multiple dimensions through which an SVOD service can be considered multinational and evaluates the cultural implications of this multinationalism. It provides preliminary analysis of the distinctive strategies evident in Netflix’s content commissioning that is built from an original dataset of Netflix commissioned series. To be clear, the analysis uses Netflix to illustrate how and why multinational SVODs are a mechanism of audiovisual internationalization that is distinct from well-explored mechanisms such as foreign sales of programs and formats, and international satellite channels. Although the article provides significant evidence-based analysis of Netflix, the primary aim here is to assess how multinational SVODs require bespoke frameworks from other mechanisms of multinational strategy. The second section of the article explores how the affordances of internet distribution diminish the implicit national lens through which other transnational distribution technologies confer value on audience tastes. It then explores how this too becomes a distinguishing competitive tool for Netflix that enables uncommon content strategies, such as the ability to program for tastes and sensibilities too small to form a viable market for services limited by national reach. Data about the use of Netflix remains limited, but the article explores hints about broader patterns of use, and how the service is valued in different national contexts based on data Netflix has made available about its most-watched titles.
Although significant continuities with other forms of video production and distribution practices and strategies can be identified in SVODs, it is also crucial to understand the differences between these services. Subscriber-funded, internet-distributed video services rely on distinctive metrics of success and access different content strategies than the linear channels that have formed the basis of the industrial conditions critical analysis commonly presumes. Those differences have the potential to alter the field of cultural production. Of course these services too are constrained by commercial boundaries, but their sizeable industrial adjustments warrant assessment of how and why they may produce content differentiated from legacy industries, how the features of catalogue access create different cultural experiences, and how their multinational customer base troubles the role of the nation in established understandings of video production and circulation.
Different dimensions of multinational status
One way that services are multinational is through the location of their subscribers. Netflix has a strong claim in this regard, and reports to have subscribers in 190 countries. Netflix began as a US-only service and gradually expanded its reach through January 2016 when it announced near global availability (remaining exceptions are China, Syria and Crimea). Unsurprisingly, Netflix has the most extensive base of subscribers in the US. Netflix has not released subscriber counts in other countries – only rest of world (ROW) and by region in 2019 – but business analytics firms have developed estimated counts. Data from Ampere Analytics identifies the ten countries with the most subscribers (Broadband TV News, 2019). The penetration rate – the percentage of the population that subscribes to the service – might be a more meaningful indication of its infiltration of different national cultures (notably actual rates are much higher than these because a Netflix subscription typically makes the service available to more than one person). Of the countries with the most subscribers, Netflix is most highly penetrative in countries where the English language is dominant. But notably, as Table 1 indicates, it counts countries across five continents and six different primary languages among its most subscribed countries.
Countries with most subscribers and by highest penetration a .
Subscriber penetration has been calculated manually using national population data, which is misleading given that households gain access with a subscription and typically have 2+ people; but household data is less reliably consistent and available. The penetration is thus likely 2+ times these figures when considered at a household level (and that doesn’t factor in password sharing). Also, it is based on markets with most subscribers; it is possible (probable even) that other countries have higher penetration than the bottom half of this list.
Netflix has also released data regarding subscriber counts allocated by the map it uses to regionalize the globe (see Figure 1). Netflix has been available longer in the US and Canada, which helps explain the high proportion of the service’s subscribers in this self-determined ‘region’ (though it does not explain Canada’s absence from the map). Notably, the growth rate here (see Table 2) is considerably lower than other regions, an indication that it has nearly reached maximum penetration. Netflix reaches more than half of US homes, which is significantly greater than any other direct-pay service has accomplished. Although free-to-air services and channels that are part of multichannel packages have greater reach, it is notable that more than 167 million subscribers worldwide (as of Dec. 2019) pay a monthly fee specifically to receive this service.
Netflix’s regionalization of the globe: APAC, EMEA, UCAN, LATAM.
Netflix subscribers by region (millions).
Source: From Netflix Fourth Quarter 2019 financial statements: https://www.netflixinvestor.com/investor-news-and-events/investor-events/default.aspx
Growth column measures change between 2017 and 2019. Subscriber and revenue percentages are computed for 2019.
Netflix is arguably at a somewhat different stage in creating an adequate value proposition and in consumer acceptance in other regions. Its subscriber count in the Asia-Pacific region has grown the most in the last two years, but this remains its least penetrated region, even setting aside its inability to offer the service in China. A notable comparison emerges from considering the data in the last two columns of Table 2 that indicate the percentage of subscriber base by region relative to the revenue produced by the region (data supplied by Netflix, percentages calculated by the author). This is due to differential pricing and offers. The established UCAN region produces 51% of the service’s revenue although it only accounts for 42% of its subscribers; all other regions account for a smaller percentage of revenue than the percentage of their subscriber base. In comparing the regional subscriber numbers with the populations of the regions, significant opportunity for growth exists in all but the UCAN region. Nevertheless, in terms of subscriber location, Netflix is reasonably described as having multinational availability, and significant – though variable – take-up around the globe.
Subscriber counts and their locations help to explain the service’s content strategies and priorities. Such data is very useful for business analysis, but, beyond providing a context for the service’s differential commissioning and investment strategy, it is of limited use for cultural analysis. These regional tallies help illustrate patterns of where Netflix is, but defy simple explanation, and the patterns of adoption alone reveal little. In many cases, the high rates of adoption provide evidence that Netflix offers a desired supplement to existing audiovisual services, but these rates should not be interpreted as a sign that it is overtaking or replacing national linear services. Of course the ability to adopt supplementary services requires populations with disposable income and the availability of an affordable internet service. It also thrives on underlying dissatisfaction with available options.
Another measure by which Netflix can be viewed as multinational derives from where it opens offices and employs people. Netflix currently has offices in 16 countries: US, Brazil, Mexico, Taiwan, Philippines, India, South Korea, Singapore, Japan, Australia, UK, Netherlands, Germany, Spain, France, and Italy. The location of offices reveals the importance of particular markets, though it is important to consider not only where the company bases offices but also what is done in them. Examining the locations in which Netflix has established production facilities shows a multinational presence, however, it is less multinational by this measure than by subscribers or in terms of its content commissioning. Netflix owns or leases considerable production facilities in the US, UK, Spain and Canada (Clarke, 2019). Also, its multinational engagement can be considered through established agreements with national broadcasters and production companies in different countries. Netflix has such agreements with entities in the UK, India, South Korea, Italy and Colombia.
Unsurprisingly, these organizational and corporate infrastructure geographies in many ways overlap with the subscriber geographies. The exceptions suggest priorities – for example in India, where Netflix’s commitment of human capital is outsized relative to its subscribers, and market conditions warranted offering a lower-cost ‘mobile-only’ version of the service. These data points reveal insights into some of the challenges of trying to develop a multinational entertainment service. For example, multi-series production deals may indicate a strategy for partnership in markets in which the service struggles to establish a foothold. Moreover, the underlying cultural and economic norms vary widely by region and nation. Rather than fighting cultural norms – such as an aversion to paying for content in many Asian countries (Tse, 2017) – the service may use different strategies in different places that are aligned to the differences in competitive environments. Also, these discrepant commitments in offices, production facilities and joint program ventures tie up with factors such as the characteristics of existing production industries, different national incentives, and varying embrace of the service at a national policy level.
Like the data about the location of Netflix subscribers, these organizational geographies provide valuable context, but offer minimal critical evidence through which to consider mechanisms of multinationality. It is clear from data released by Netflix that the company uses geographic regions as an organizational structure. Clustering by geographic region also offers some value for critical analysis and reveals market prioritization tied to patterns of adoption. However, geographic regions are of limited use in trying to achieve a more middle-range understanding of Netflix. Regions feature significant internal variation in language, existing video ecosystem development, and internet access – features crucial to service adoption.
A third measure of a service’s multinationality – and the measure by which Netflix distinguishes itself – is in its program sourcing. As attracting non-US subscribers became a corporate priority, so did diversifying its library – or libraries – of content. In its early multinational years, significant criticism derived from the limited content available on the service outside the US because the initial commissioning deals the service made did not anticipate its multinational growth and it did not acquire non-US rights for series such as House of Cards or Orange is the New Black. As its multinational strategy came to dominate, Netflix prioritized global rights for its commissions and significantly diminished the sense of libraries outside the US being lesser than that of the US. By 2020, some US viewers even regarded the ‘foreign’ libraries as superior, because Netflix was able to continue to license content outside the US that instead was allocated in the US to streaming services such as Hulu and HBO Max.
In addition to its availability in multiple countries and the sense that the bespoke national Netflix libraries offer a value proposition equivalent to the US service, Netflix’s pivot in strategy towards becoming a multinational service can also be identified based on evaluating its program commissions. First, a word about vocabulary. There are three different conditions by which titles come to be in a Netflix library: commissions, co-commissions, and acquisitions. All titles are important and they indicate priorities and strategies of the service, but these categories highlight different levels of economic allocation and creative control, characteristics that are particularly significant for analysis. Commissions (sometimes called ‘originals’) are programs for which Netflix funds production. Not all series commissions are ‘produced’ by Netflix. Given the volume of its commissions, Netflix largely relies on contracting other production companies to make its series and films. Because of Netflix’s multinational availability and ability to offer programming via an on-demand library – bound only by Netflix’s licensing budget, not the constraint of a 24-hour schedule – the terms of Netflix’s commissions are quite different than those typical of channels (see Lotz, 2019). Netflix seeks exclusive global rights and to hold those rights in perpetuity or at least a period of 10 to 15 years. This is very different from linear television norms, in which a commissioning channel likely pays about half of the production cost in exchange for the right to air it first, rights that typically expire within a year. The remaining cost is either borne by the production company that aims to recoup that deficit because the commissioning channel is only buying limited rights and the company can sell to other markets, or it is composed of money from companies securing distribution rights for other markets. In some cases, government incentives might also cover production costs.
A second licensing condition, co-commission, involves Netflix splitting the rights and the costs of production with another entity. The most common case is for Netflix to partner with a national broadcast service, for example, the UK’s Channel 4. In a typical arrangement, Netflix’s contribution buys the rights to a series co-commissioned with Channel 4 in every country outside the UK, while Channel 4 has rights in the UK. Often Netflix gains internet distribution rights within the UK as well after a first year. Very little public information exists about the cost splits characteristic of these deals and there is likely considerable variation. Information given on background has suggested that Netflix often pays more than half of budget costs and their paying as much as 80% is not unusual. For this reason, much of the analysis below combines commissions and co-commissions, although they are separately coded in order to identify more precise patterns in development.
Commissions and co-commissions (hereafter co/commissions when both intended) are strategically valuable because Netflix has creative input on these series that it cannot exercise in acquisitions. As with the commissions made by linear channels, these are the programs through which the service can most precisely articulate its identity or pursue a content strategy, and thus can be considered as titles particularly beneficial to the service’s strategic aims. Very few of the SVOD services – multinational or national – can afford the cost and financial risk involved in commissioning programming, especially scripted programs. Also commissions are an important category of programming for critical analysis because these are programs that may not exist were it not for Netflix funding. Thus, co/commissions are an important category for cultural analysis that investigates what new or particular stories Netflix may make available and as a tool for divining the peculiar characteristics of its content strategy.
Acquisitions account for the third licensing condition. A deeper analysis would subdivide this condition between standard acquisitions and ‘exclusive acquisitions’ that provide Netflix exclusive rights – either in country or at the level of service category (internet-distributed services). However, the data necessary to make this distinction are not readily available. Exclusive acquisitions typically cost more, and Netflix often treats these series similarly to commissions in promotion and marketing through its hazy and self-defined category of ‘Netflix Originals’. Exclusive acquisitions are an indication that the service views the content as strategically valuable to a greater extent than a standard acquisition.
These different licensing conditions help in constructing nuanced analysis of the role of multinational program commissioning. To better appreciate the extent of Netflix’s multinational content development, our research team constructed a database that sorts Netflix’s commissioned and co-commissioned scripted, non-children’s, series by country. A notable finding is that 177 of the 306 co/commissions originate from outside of the US (58%). This indicates that multinational commissioning is not simply lip service, but can be regarded as a core strategy of the service. Figure 2 displays the number of completed and available commissions and co-commissions by the 27 countries, excluding the US, by February 2020. 2
Netflix commissions/co-commissions by country.
Table 3 provides another lens through which to assess the co/commissioning counts by ranking the countries with the most co/commissions relative to the data of countries with most subscribers and their penetration of subscribers. Nine of the ten countries with most subscribers appear at the top of the list of countries with the most co/commissions. Australia does not appear, replaced by India. This data reveals further priority on developing India as a Netflix market, and is likely an acknowledgement that cultivating an Indian subscriber base requires ‘culturally proximate’ programming (Straubhaar, 1991). In contrast, many of the co/commissioned titles from the US, UK and Canada are comparatively more culturally proximate to Australian audiences.
Ranking of subscribers and co/commissions.
Another comparison is along the organization’s regional divisions. Figure 3 compares the number of co/commissions by region and Figure 4 illustrates the share by region.
Number of co/commissions by region.
Share of co/commissions by region.
In comparing these shares with regional data of subscribers – UCAN: 42%; EMEA: 30%; LATAM: 19%; APAC 9% – or revenue UCAN: 51%; EMEA: 27%; LATAM: 14%; APAC 7% – Netflix’s co/commissioning strategy in the Asia-Pacific region appears particularly aggressive in comparison with Latin America and Mexico. Of course there are complicated reasons that might explain this data. Netflix undoubtedly evaluates markets based on computations of possible subscribers that account for income levels, internet accessibility, and cultural features that prescribe the potential of different markets discrepantly from what population alone would suggest. Multinational SVODs are not democratic in their differential pursuit of subscribers.
The purpose here is to note the challenges to understanding how multinational services are ‘multinational’. Although a distribution technology such as the internet may make it feasible for a service to be available to subscribers is 190 countries, the reality of limited program budgets means that commercially driven services cannot service all these markets equivalently with local commissions. Many factors contribute to prioritizing different countries and regions. The data presented here suggest that there are clearly national biases in Netflix’s strategy, but, notably, these biases are not simply described as uniformly ‘Western’.
These data patterns illustrate very broad-level insight into how program sourcing makes Netflix multinational. Without question, the data illustrate that Netflix is engaging in far more extensive multinational co/commissioning – 177 series from 27 countries – than has been the case for previous services or channels. Further, Netflix commonly distributes these commissioned titles across national libraries. Deeper analysis might investigate the textual characteristics of commissioned series and look for patterns in their production. Comparisons between US and non-US commissions might be insightful, likewise comparisons of the characteristics of Netflix commissions with the series being produced by national channels and services in particular markets. Further comparison among commissions and co-commissions within a single country might reveal different strategies at play, as might their comparison with exclusive acquisitions.
As these questions indicate, neither ‘global’ data, such as the billions of dollars Netflix spends on programming nor aggregate lists of the number of series commissioned really provide much insight about the service or how it is mimicking and reshaping multinational video cultures. More can be learned at the national level – especially in terms of appreciating content and library strategies – and about the role of multinational SVODs amidst the array of other video choices particular viewers choose among. But a better appreciation of these nation-level insights emerges when they can be federated with similar analysis in other countries or compared and contrasted with analysis that appreciates the fine details of national competitive environments and cultural, economic and regulatory contexts.
Each of these lenses of multinationality – subscribers, offices, facilities, production commitments, and program sourcing – offers ways to consider the variable dimensions through which the multinationality of SVOD services can be assessed and compared, as well as suggests some hints at the types of questions that might allow more nuance than considering the full expanse of a service. Different kinds of multinationality are evident in different streaming services because having multinational audiences and sourcing programming multinationally are different things. In the same way that much of the meaningful nuance is evacuated in claims true of Netflix globally, it is similarly difficult to make claims true of all multinational streaming services. As theory building for multinational SVODs develops, it must recognize distinctions in how, and to what extent, services are multinational rather than assume all internet-distributed services function in the same way.
Cultural implications of multinational streaming strategies
Having subscribers and offices, and commissioning content from many countries, are obvious measures of these services’ multinational status. But the extent to which the distinct affordances of these services diminish the national lens through which all other international television trade occurs may be the most profound measure of their multinational distinction. The ways in which Netflix is multinational and the blend of affordances that allow it to be a zebra among horses enable a distinctive content strategy. Though strategy may seem more a business than cultural term, the interest here derives from a blending of the two. With the exception of public service broadcasting, video production and distribution are resolutely commercial (and even the independent production of content for those public service broadcasters is commercial). The universe of cultural production is consequently strongly determined by what is commercially viable. One of the reasons Netflix is an interesting and important site of study is because of the differences in its business model – in how it makes money and measures success (enticing subscribers) – the technologically afforded competitive tools it uses to do so (on demand, multinational scale), and how the availability of these tools allow it to pursue different content strategies than other audiovisual industry sectors.
From a business analysis standpoint, it is important to recognize these technological and economic differences to appreciate the true parameters of a quite fractured competitive space, and how these differences enable SVODs to be both complementary to and substitutive of linear channels. Moreover, recognizing these differences illuminates how different SVODs deploy these tools discrepantly to create considerable variation despite the available tools being commonly shared across the sector. From the standpoint of cultural analysis, these differences trouble our ability to apply theoretical and categorical frameworks established for broadcast and multichannel video to SVODs. For example, decades of scholarship have established the many ways that reliance on advertising narrows the field of cultural production and leads to the prioritization of certain tastes and audiences over others (Gitlin, 1983). But many of those concepts do not apply, or require some adjustment to explain the limits and opportunities of a service that is subscriber funded, can deliver programming on demand and – as the discussion in this section illustrates – cultivates libraries of content for subscribers in multiple countries and develops content from a multiplicity of countries.
Although there is a long history of multinational television, Netflix’s economic and technological conditions differ from those of the services that preceded it and upon which most existing knowledge is based. This variation in economic and technological conditions makes content and library strategies available to Netflix that are not available to linear, ad-supported services. To be clear, the argument is not that Netflix is unprecedented; the next discussion contextualizes its continuities with previous distribution technologies and their common competitive tools. But its novel features and capabilities must be addressed too, including the content strategies related to cultivating a multinational subscriber base, because these different content strategies have meaningful cultural implications. Parts of this analysis are inferential and speculative, as required by what remains a preliminary stage of Netflix’s endeavour to be a multinational service – which notably is the third version of the company in its relatively short existence. Rather than a definitive argument that Netflix is a particular way, it is a call to recognize SVODs’ differences and their cultural implications, and to set aside assumptions based on norms of linear, ad-supported television and movies made for a system of theatrical release and windowing.
Multinational circulation of television programs is by no means new. Havens (2006) constructs a history of global television sales that dates the practice to 1957, but multinational services that engage directly with consumers differ significantly from the apparatus of business-to-business foreign programme sales. The research of Chalaby (2005a) and contributors to Chalaby (2005b) on the rise of transnational satellite channels offer a more relevant precedent. Satellite television provided a profound change to the resolutely nation-based character of video distribution and enabled multinational audience scale (Chalaby, 2005b). Still, there are important business differences. As Chalaby notes, ‘Transnational TV channels are not entirely free from geographical impediment because most markets are local by definition and they must abide by national and regional regulations’ (2005b: 9). In addition to national regulatory structures, satellite channels typically transact with nation-specific multichannel service providers. Satellite channels can be multinational in different ways (as is the case of SVODs): some transnational satellite channels offer a fairly standard product in multiple territories (e.g. BBC World), while others distribute self-owned intellectual property ‘foreign’ to other markets while commissioning some local content as well (e.g. MTV). Chalaby (2005a: 159) argues the need to distinguish among the ‘objectives, scope of distribution, cross-border strategy, resources and audience’ of transnational satellite channels and suggests a typology of four categories to enable more nuanced claims. There are clear parallels, in this regard, between transnational satellite channels and multinational SVODs. In order to make comparisons and claims about the SVOD sector, it is necessary to acknowledge core distinctions such as whether it is a pure play service and whether the SVOD is offered by a company that owns a significant library of video rights.
A critical investigation of the geographies of Netflix and their implications on how it uses multinational reach as a competitive tool requires adaptation of the theories designed for multinational program sales and satellite channels because of the different affordances of internet distribution and the different content strategies thus enabled. Delivering an on-demand service, and one focused on attracting subscribers, rather than viewers to be sold to advertisers, has implications for Netflix as a multinational service, just as it differentiates it within a national ecosystem. But it also distinguishes its multinational-ness in a key way. Established mechanisms for reaching a multinational audience, such as program sale and transnational satellite channels, still require the construction of that audience through a national lens. When ‘foreign’ programs are acquired by local channels, it is on the basis of whether the program is likely to gather a large number of viewers within the reach of that channel – and reach is geographically defined. Likewise, transnational channels consider the audience as a national aggregate because advertisers mostly seek audiences defined by nation (Chalaby, 2008).
Netflix’s on-demand delivery diminishes that implicit national lens. Rather than trying to aggregate a nation-bound audience that can be sold to advertisers who conceive of audiences aggregated in national clumps, Netflix targets subscribers based on tastes and sensibilities that are often not sufficiently popular to be addressed by services aiming for a national ‘mass’ audience. Of course, it cannot cater to every taste; but SVOD viewers derive value at the individual, or rather household or subscriber level, not in national aggregate. As a result, multinational SVODs can service tastes and sensibilities that fail to become significant when aggregated within a nation and can thus provide for different program tastes than services that scope their audience through a national lens. To be clear, ‘the nation’ as a category is not wholly absent – Netflix libraries are often nationally specific, national regulations can dictate the company’s behaviour, and national identity likely contributes to content preferences. However, SVODs’ technologically afforded competitive tools enable them to imagine their subscribers as transnational clusters of tastes and sensibilities.
Analysis of program exports has relied heavily on the idea of ‘proximity’ in order to explain patterns of trade. Proximity basically identifies similarity. Earliest theories emphasized geographic and linguistic similarity (Straubhaar, 1991) and later theorizing attempted to make sense of cases that contradicted those frames by proposing genre, themes, and values could also be culture-based grounds of similarity (Straubhaar, 2007: 195–220). But crucially – though largely unconsidered – these proximities only became meaningful if they were evident at the national aggregate level. Netflix’s ability to distribute programming on demand to an audience undefined by nation enables it to derive value from audience tastes that might not have enough scale at the nation level. This is unlike satellite channels that must make scheduling decisions on the basis of what content is likely to gather the biggest audience by country. Netflix’s reliance on subscriber funding, and the necessity that it offer a value proposition warranting a monthly fee, undoubtedly play key structuring roles in incentivizing distinctive content as well.
In sum, SVODs are differentiated from linear channels due to their particular revenue model and related competitive tools that include subscriber funding, the technological affordance of on-demand delivery, and by virtue of their transaction with individual subscribers that reward the service with payment when it offers a suitable value proposition, not through the aggregation of mass attention. These competitive tools enable different content strategies than those feasible for channels using a linear schedule to sell a nationally bounded audience to advertisers. Even among SVOD companies, Netflix has more strategies available to it because of its scale and capitalization, thus the analysis that follows may be that of the exception rather than an SVOD norm. Netflix’s ‘zebra among horses’ status extends to its ability to simultaneously serve niche and mass tastes, which derives from its early entry/first mover status and the marketplace intelligence it developed as a DVD-by-mail service, and subsequent data accumulated about subscriber use. Its on-demand delivery allows it to service niche tastes, but its wide adoption enables it to achieve scale and ‘conglomerate’ those niches internationally (Lotz, 2017). Its scale and capitalization have allowed it a content budget that facilitates a greater extent of niche development, including its multinational co/commissioning and the development of both niche and more ‘mass’ content, which is less feasible for other multinational SVODs.
The uncertain geography of Netflix viewing
It is well known that Netflix makes public little data about its subscribers’ viewing behaviour. Such data are critical to empirical analysis of the service and would be a valuable additional perspective in this discussion of how to understand Netflix’s multinational status. In early 2020, Netflix made available two new data sets that suggest viewing preferences and viewer behaviour do not conform completely to the predictions media studies scholarship might make, although those data provide, at best, a limited view. Scholarship focusing on transnational television flows has emphasized findings about the strong preference for local and geographically proximate content (Sinclair et al., 1996; Straubhaar, 2007; Thussu, 2006). It is on the basis of such theories that Netflix’s multinational commissioning appears as a strategy to entice and sustain subscribers in particularly valuable markets. But despite Netflix’s significant endeavours in multinational commissioning and production, it is unclear that such productions play a significant role in driving subscription.
The analysis in this section draws from the limited and imperfect data available in order to suggest a narrative that explains Netflix’s significant multinational uptake that is somewhat counter to critical expectations. The analysis is speculative, but grounded, and is offered more as a suggestion of how SVODs – and Netflix in particular – may warrant flexible theorizing that recognizes how Netflix’s value proposition varies dependent on national market norms and does not precisely reproduce the norms of mechanisms of video internationalization typical of foreign program sales and transnational cable channels.
In late 2019, Netflix released lists of the 10 most-viewed titles of the year in 17 different countries (Argentina, Australia, Brazil, Canada, Colombia, France, Germany, India, Italy, Japan, Mexico, South Korea, Spain, Sweden, Taiwan, UK, US) (Kay, 2019). This was the first systematic release of such extensive viewing data, though they had many limitations. The biggest of which is that attracting viewers to a particular title, as the case of most-viewed titles, is much less important to a bundled, subscriber-funded service than other types of video distribution. Providing most-watched shows is the central goal and most important metric of an ad-supported, linear channel, and having the film with the highest box office receipts is the goal in theatrical film distribution. But the revenue of a bundled, subscriber-funded service is not tied exclusively to driving mass viewing of particular titles. Of course mass attention doesn’t hurt, but analysis of SVODs must recognize that titles need not be among the most-watched to deliver significant value to the service. We do not know how much of Netflix viewing these Top 10 lists account for, so it is difficult to evaluate their relative value to the service.
Another limit is that the data provided merely of ordinal ranking. There is no scale, no way to know if the second most-watched show is a few viewers behind the most-watched or has a mere fraction of those viewers, and the threshold of a ‘view’ is 2 minutes of viewing. Further, the list of 17 countries is unclearly chosen. All of the most subscribed countries from Table 1 are included and there is a decent amount of global representation, although Eastern Europe, the Middle East and Africa are entirely omitted.
In early 2020, Netflix began releasing daily Top 10 titles for each country as a row in viewers’ main recommendation screen. Within a few months, a start-up called FlixPatrol developed a mechanism to aggregate the data of these lists – 72 to date – and made it available and searchable through a free, web-based interface. The daily Top 10 lists offer information about more countries than the late 2019 release but, because Netflix releases only ordinal data, it is impossible to reliably aggregate daily lists into more meaningful snapshots or to compare more than a single day of viewing. Moreover, uncertainty about how much of overall viewing these lists account also persists. FlixPatrol developed a proprietary mechanism in an attempt to aggregate the daily insights, mostly in an effort to estimate total viewers, but this mechanism remains limited to the daily 10 most-viewed shows, a tiny fraction of the Netflix value proposition (Figure 5).
FlixPatrol map display, 29 June 2020.
Cognizant that these data warrant the acknowledged caveats, what might they suggest about Netflix’s geographies of viewing? As illustrated in the visualizations in Figure 6 derived from the yearly Top 10 data, Netflix commissions dominate most-viewed titles; US titles dominate the most-viewed titles in most countries, but not in India, Japan and South Korea, which deviate strongly; and movies occupy more of the most-viewed titles than series. The ratio of local titles in the most-watched lists is the most variable.
Visualization of yearly Top 10 titles in 17 countries.
Locally produced content dominates in the US, India, South Korea and Japan. We cannot be certain local content is less preferred in other countries, rather, it is likely less and inequitably available. Still, notable viewing patterns emerge: strong similarity in most-watched titles exists across the US, UK, Canada and Australia. Those similarities largely overlap with the titles in the included European and South American countries, but there are also different common titles among the European and South American countries. To stress, this is a very small sample of titles, which makes it more valuable for developing hypotheses than as evidence. But the dichotomy that emerges between 13 of the 17 countries’ data relative to the other four is relevant to this discussion about ways to scope Netflix between the national and the global.
These limited data paint a differentiated picture of Netflix across countries, differentiation that might be best described as composed of a fairly consistent market of Netflix viewing in contrast to a few distinct, variable markets that are different from the consistent market and different from each other, a hypothesis visualized in Figure 7.
Netflix variable and consistent markets.
Although this hypothetical market construction is based on very limited data, it illustrates a framework for understanding consistent coherence in how the service is used and valued by viewers at a level broader than the nation level while still acknowledging profound discrepancies among other countries for which the role of the service – and even the terms of its availability – are quite different. 3 It suggests that although Netflix may offer service in many countries, it may be valued by viewers in different ways and for different reasons.
Given the high value existing research has indicated that viewers ascribe to local content, how do we understand the scale of adoption of this service that mostly offers US content within the ‘consistent market’? Following Turner (2019), it is certainly the case that extensive and detailed audience research is needed to understand this phenomenon. But in the absence of such detailed data, consider more grounded speculation. Netflix’s viewing experience, which allows on-demand access to full series without commercial interruption, is also a key part of its value proposition. Netflix subscribers use the service to watch the same US titles available from ad-supported, linear services in their countries. For instance, a quick survey of the non-Netflix commissions ranking in the daily most-watched lists for Australia in recent months includes Brooklyn Nine-Nine, Riverdale, The Blacklist and Community. Of these, only Riverdale is exclusively available on Netflix. The other titles can be found on ad-supported linear channels, catch-up services and other SVODs. The popularity of these titles on Netflix – watched heavily enough to place them among daily 10 most-watched titles even though they are otherwise available for free – suggests the extent to which viewers value the experience it affords.
It is clear that we need additional theories about what motivates viewing. Australia has one of the highest rates of Netflix adoption, but research by Lobato and Scarlata (2019) finds only 1.7% of the Australian library is Australian content. Access to local content is not driving several million Australians to subscribe to Netflix. Another reason a service with so little local content may be valued is that Netflix may be licensing US content different from what ad-supported linear channels are likely to license. For all the reasons about how Netflix can serve tastes that are not perceived to attract significant mass attention at the nation level explained above, Netflix derives value from titles a bit outside the mainstream. Netflix’s general acquisition and commissioning strategy is based on its viewership data that allows it to identify unserved and underserved content desires, and these may be equal to or greater than a desire for local content. More extensive analysis of Netflix libraries might help reveal the extent to which Netflix offers US content that is unavailable from other services, or provide evidence that the experience it offers is really a driving factor of this viewing.
To be clear, I know this evidence is limited and I’m not suggesting it indicates weakness of theories about preferences for local content. Rather, in the context of an article aimed at identifying the challenges posed by multinational video commissioners and distributors on the scale of Netflix, I’m identifying how much we don’t know and illustrating how some indicators – in concert with SVODs’ notable industrial differentiation – suggest a need to not bring assumptions from other contexts of video distribution. Again, the challenge explored here involves developing critical strategies for negotiating between the very nationally particular role Netflix plays in a country and why people subscribe with efforts to understand a recognizably multinational service whose national parts cannot simply be summed.
As signalled, the available data allow grounded speculation, the purpose of which is to illustrate alternatives to the assumptions engendered by knowledge of legacy audiovisual distribution. The work of systematic application and identification of the content and library strategies characteristic of Netflix that is based on discrete markets remains needed. Such work cannot be done at multinational or even regional scale. Rather, such analysis must appreciate existing textual norms in a country, how the linear competitive ecosystem served and underserved different tastes, and then examine the blend of acquisitions, co/commissions, and experience Netflix brings. Simply being industrially suited for these strategies does not mean the service successfully operationalizes them.
Conclusion
Journalistic framing of Netflix has steadily misunderstood it – or rather has tried to understand it as something it is not, and those frames guide a lot of thinking about the service. Scholarship focusing on Netflix and SVODs has been multifaceted, but has rarely appreciated the fundamental differences between their business model and technological affordances and those of other channels. In contrast, Lobato (2019) notably takes up many of the concerns addressed here, and attends to issues of technology and regulation in more detail, but the scale of Netflix’s multinational commissioning and glimpses of viewing data were not available when he wrote. This article begins empirical investigation of content and content strategies characteristic of Netflix after its earlier, pre-multinational aims with regard to Netflix’s resultant cultural implications.
To be clear, the argument here is not that the revenue model, competitive tools and thus content strategies that distinguish Netflix make it somehow ‘better’, merely different. Think of Netflix as a spoon and linear, ad-supported channels as forks – both useful, desirable and limited, but in different ways. In failing to recognize and appreciate that difference, analysis has been slow and often misguided. All video providers are not the same. The frameworks and theories developed for linear, ad-supported and nation-based video services are inadequate for understanding multinational SVODs, and Netflix is arguably even uncommon among SVODs. Again, this isn’t an evaluation: it is not better, just different. This article is intentionally not about SVODs, because in 2020, a point at which internet-distributed services were shifting from being emergent to being a significant part of the ecosystem in many countries, to talk about phenomena characteristic of multinational SVODs generally would omit the innovation and distinction of Netflix, as no others offer evidence of a content strategy so deliberately designed in service of multinational subscribers. It is unclear whether any other service can – or even has reason to – emulate Netflix in its multinational, multifaceted content strategy. Moreover, it is unclear whether nation-level services can achieve a sustainable business model while reproducing these strategies. Although there is likely demand for local content that is distinct from the norms of different local linear marketplaces, in many cases, national-level services lack the economies of scale that have driven capital to internet-distributed services.
Netflix operationalizes its differentiation in industrial features into SVOD-specific content strategies exceptionally well. But part of recognizing it as a zebra among horses involves acknowledging that its success in this task is ultimately a limited threat to the broader ecosystem. Netflix is unlikely to replace national broadcasters. It reproduces only a fraction of what they do – scripted series and film, minimal reality – and does not have the capacity to develop expansive nation-specific content. It does not compete for advertiser dollars, though it does draw attention out of the market. It is unclear whether it can provide a value proposition desirable to a multinational mass audience, or whether its value resides in the differentiation it provides for those who seek it. How might cultural analysis of Netflix differ if it is perceived as a complement to previous audiovisual sectors?
Still, Netflix has inextricably changed national competitive environments. It arguably delivers a better value proposition for scripted programming than any linear service. That has implications for linear services that cannot compete in terms of the experience they can offer. However, linear services remain well-suited to serve needs for timely, locally relevant content that remains well monetized through advertiser or government funding.
Netflix’s distinctive status also makes it very difficult to know how to treat it from a regulatory perspective. This is a topic that warrants far more than can be said in a conclusion, but it might be the most precise constellation of why it is critical to devise frameworks that appreciate the different ways SVODs can be multinational and the particular content strategies they afford. Although it may seem expedient to apply existing regulations to these new services, such an approach ignores both the meaningful differences of these services and the ways they are part of irreparably changing the dynamics of the broader audiovisual ecosystem.
Netflix is doing very different things because it is a very different thing. But we’ve only begun to sort to out how and why it matters.
Footnotes
Acknowledgements
Thanks to Stuart Soroka for assistance in the visualization of data in Figure 6.
This research was done as part of an Australian Research Council Discovery collaboration with Ramon Lobato, Stuart Cunningham, and Alexa Scarlata. The data for the original programming database was gathered by Luke Daws and Claire Darling; Oliver Eklund also contributed to gathering data used in this article.
Funding
The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research was done as part of the Australian Research Council Discovery programme (DP190100978), a collaboration with Ramon Lobato, Stuart Cunningham, and Alexa Scarlata.