Netflix is the next phase of globalization

For Netflix, 2016 could not have started better. First, the video streaming company announced its availability in 130 additional countries, reaching a point of near-global presence. Then it revealed new user numbers, showing a record international growth (not including the 130 new markets), sending the stock price through the roof.

What’s even more interesting than the powerful kick-off is the company’s long-term vision which over the past 2 weeks was outlined in multiple interviews by Netflix CEO Reed Hastings, who currently is on a PR tour. Hastings stated in an interview that his goal is to be able to offer the same video catalog worldwide in 10 years from now. One way to get there, according to Hastings: Securing global rights to all newly licensed content. Another one: Massively investing in content specifically produced for Netflix. Last year, the service had launched 450 hours of original content. In 2016, the goal is to launch more than 600 hours of original content.

Hastings clearly wants to turn Netflix into the first global TV network, and he is well on his way. If he succeeds, this will have huge consequences not only for traditional TV stations, but for global media – and for globalization. Netflix’s plan could change much more than individual TV consumption. It could shrink the world yet a significant bit more.

Let’s look at the role television has in most of the world’s societies: Despite the expansion of the Internet, linear TV is still largely considered THE mainstream media channel to use if you want to reach a lot of people. No matter if you peak into the living room of an average apartment in a developed country or spend time in homes or meeting places in developing countries – you always find a TV set, often being the center of attention. The role of TV does differ depending on the overall state of economical and social progress of a market. But its status, ubiquity and impact on people is unparalleled, even in 2016.

But despite watching television being such a global activity, the typical content that is consumed is highly local or regional. Even though sports events, Hollywood movies and major U.S. TV-shows are being broadcasted throughout the world and even though you can find some transnational content clusters, such as programs produced for the whole Spanish-speaking market, national TV channels generally come across as “domestic”. This status quo is even more being manifested through national regulation, copyright laws as well as logistic and technical challenges which prevent linear broadcasting TV from turning into a globalized medium.

Netflix is about to change all that.

Even though the company’s CEO publicly stated that he is not specifically aiming at destroying the traditional TV landscape, Netflix will inevitably do exactly that – even if it that may take a few decades. It is unlikely that the TV set in the little restaurant in Turkey or in the beach bar in Thailand will suddenly be used to stream Netflix. But millions of people are right now being “converted” into on-demand users and thus turned away from traditional TV consumption. Subsequently, these people will get the chance to be exposed to totally new types of content. With heavy investments into its content catalog, Netflix is going to move towards a principle in which it can offer its users local content from everywhere in the world, wherever they are.

To quote a recent Bloomberg piece: “Because Netflix is a library and not a linear television station, it can look very different to different users even if its collection is the equivalent of one-size-fits-all. Hunt sees the global service as a collection of small audiences rather than one big mainstream group.”

If it plays its cards right, Netflix will be able to combine multiple goals: It can cater to already slightly or fully globalized mass-market taste, it can cater to regional or culture-specific tastes, and it can cater to subcultures whose fans are scattered around the planet. This will make Netflix unique and it WILL make linear TV look very unattractive over time. At least when it comes to the young audience. Older generations naturally are less likely to change the behavior and viewing patterns developed over many decades.

The scenario I am painting is based on the assumption that Netflix will actually accomplish its ambitious goals. That of course is far from guaranteed. A lot can go wrong. One of the major challenges will be to deal with national regulations, as recent reports from Indonesia and Kenya illustrate. But let’s say the plan works out. Let’s assume that in 2026, Netflix will have 1 billion subscribers all around the world and a gigantic catalog which pretty much can be accessed from each country – how will that impact how people using Netflix see the world?!

Since today’s TV landscape is mostly regional/national by default, all broadcasts involuntarily come flavored with local norms, dogmas and customs. In countries in which international content is being dubbed, that even applies to productions created in other countries. Jokes are being adapted, inappropriate scenes are being removed, context is (badly) being “translated”.

Netflix won’t just end all this from one day to another. But it is likely that it slowly will path the way to a harmonization of viewer needs. While culture and origin probably always will keep playing a certain role, it might diminish. Other criteria will become more important for Netflix users when choosing what to watch.

I am speculating here, and maybe I overstate the impact. But once Netflix offers the same catalog worldwide and makes everything accessibility through its recommendation engine, it is only natural that behavioral patterns and tastes will be influenced and changed over time. In the scenario which I am describing here, Netflix can help to remove cultural and mental barriers, by offering access to content from every corner of this planet, without as much “national” flavor as one is used to get when watching traditional TV.

There is an obvious caveat to all this: If Netflix succeeds with its plan, it will dominate TV in an unprecedented way. Too much power in one hand is never a good thing. That will be a debate to have. But for the moment, I am excited about whether Netflix can bring people of the world closer together through a globalization of TV.

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