July 11, 2018

A Bounty for Binge Watchers

Netflix Announces Smart Download Feature

Netflix launched a new app feature yesterday that will assist users to download and view their favorite series offline. When connected to WIFI, the “Smart Download” feature will delete a downloaded program once it has been viewed and automatically download the next episode in the series. Currently this feature is only available on Android devices, but it is expected to be available on iOS devices before the end of 2018.

Taken on the surface, the Smart Download app is simple to use, practical and necessary, but there is something even more important about this app that goes well beyond its features…

More Feature Benefits
There are many features built into Smart Download that greatly benefit the Netflix customer. By automatically deleting material that was already viewed, the app helps customers avoid the problem of hitting the maximum capacity of Netflix downloads and saves memory on your smartphone or tablet. Smart Download is also programmed to avoid cellular data usage because the app is set up to run only when connected to WIFI.

This feature will make it easier for users to enjoy Netflix content in a more seamless way. Binge watchers will especially benefit from the smart features because the viewer does not have to go through the tedious and time-consuming process of manually downloading program episodes and then deleting them when they are finished or out of memory.

Room for Improvement?
There are minor and fixable issues with the Smart Download feature. As mentioned previously, the app is only available on Android devices, but according to reports, the functionality will be available on iOS devices in the next few months. Also, Smart Download will not work for movies because there is no logic to program and predict what movie a viewer will want to watch after viewing the movie just watched.

Culture of Adjustments
Throughout its history, Netflix has had to adjust to the rapidly changing marketplace. In 1997 Netflix was founded as a DVD-by-mail service, but quickly realized that the future of video entertainment distribution was digital and launched its subscription streaming service, its core business today. Netflix’s major rival, Blockbuster, did not adjust to the times and filed bankruptcy in 2010.

In 2008, TDG noted that Netflix’s real competitor was HBO. In 2012 Netflix premiered its first original show, Lillyhammer, demonstrating that they also believed that success in the original programming sector was critical to future survival. In fact, Netflix Chief Content Officer, Ted Sarandos had stated in a GQ Magazine article “The goal is to become HBO faster than HBO can become us.”

In 2016, Netflix spent $1.3B (22%) on original programming and announced that in 2018 it will spend $8B (50%) of its content budget on originals. With more and more companies offering their content exclusively, Netflix made the right call if it plans to successfully compete with its more vertically integrated rivals.

Significance of the Smart Downloads
The Netflix Smart Download feature is emblematic of why Netflix is so successful; that is, Netflix is in touch with their audience and constantly innovating to improve the user experience. Positive user experiences and smart innovation yield a positive brand experience and customer loyalty.

In this new ultra-competitive video space, customer loyalty is one of the keys to long term success which explains why the current market cap of Netflix exceeds that of rivals, Disney, Comcast, CBS, and Viacom.

The Future
As detailed in the recently released report ‘Thoughts on the Future of TV– The State of Quality Content’, TDG believes that Netflix will maintain its leadership position in the SVOD category over the next 3-5 years. However, their originals strategy has required significant upfront investment with debt far outstripping revenue and income (and the gap continues to widen). This model is unsustainable unless the company can find a way to increase revenue at a much greater rate. Because of brand loyalty, modest price increases have thus far been successful at generating revenue without fueling a mass exodus among subscribers, and the company is expected to make further increases during 2018.

To continue to thrive, Netflix must constantly innovate and create. To date, they have been amazingly agile, creative, and successful. However, with every passing day, the competition only gets stiffer, and the challenges to Netflix get more complex and expensive to overcome.

A 20-year veteran media executive, Rob Silvershein’s success in today’s competitive media environment is a direct result of his unique experiences spanning traditional, emerging, and startup media platforms. He is an accomplished strategist and spends most of his time advising media companies on how to structure themselves for long term success. He currently lives in Manhattan Beach, CA.

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