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Netflix has a truly brilliant strategy, but this 1 small change could totally destroy it. (It's no accident)

Inc. logo Inc. 3/10/2019 Bill Murphy Jr.
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Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN or Microsoft.

Forget Netflix and chill. This famous director would like to chill Netflix.

The story of Netflix is the story of a company that knows how to pivot. But now, there's a new chapter and a new challenge: a small proposed rule change that could present an giant challenge to the company's key strategy.

You probably know this, but just in case, Netflix got its start two decades ago as a mail-based alternative to Blockbuster and local video stores. They'd literally mail you physical DVDs in a little envelope.

(For my younger readers, they used to have these things called DVDs...)

Then, Netflix saw the future. They shifted to digital. They built the largest video distribution network on the planet. Then, they realized distribution doesn't mean much if you don't have access to the content people want to watch.

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So, Netflix pivoted again, to become a content producer.

In 2018, the company spent an estimated $12 billion on new programming. They introduced an average of two brand new shows almost every single day last year.

But, they needed something more. If you want the premium content that viewers really want, you have to make sure that creators view deals with streaming services positively -- from an artistic perspective.

In other words, Netflix never wants to lose out on a movie because a director thinks of streaming services as something less desirable than a deal with an old school Hollywood producer and distributor.

Netflix's plan involves pouring on the prestige. Hence, the reported $25 million Netflix spent last year to try to get a Best Picture award for its film, "Roma," at the Oscars.

Because Spielberg, who is really a competitor to Netflix in many ways, has been pushing hard to disqualify streaming services from the Oscars. Ostensibly, his gripe is that Neflix gives its Oscar-worthy films a short theatrical run to qualify for awards, before pulling them from theaters.

Related video: Will Steven Spielberg get Netflix ousted from the Oscars? (provided by CBS News)

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"I don't believe that films that are just given token qualifications, in a couple of theaters for less than a week, should qualify," Speilberg said, adding, "Once you commit to a television format, you're a TV movie."

That quote is from a year ago, but reports are that Speilberg plans to "speak out about Netflix at the next Academy meeting."

Netflix pushed back gently on Twitter Monday, tweeting, "We love cinema," and adding that they also love things like: 

  • "Access for people who can't always afford, or live in towns without theaters,"
  • "Letting everyone, everywhere enjoy releases at the same time," and
  • "Giving filmmakers more ways to share art."

No, it's not exactly the St. Crispin's Day speech, but so far public sentiment seems to favor Netflix over Spielberg, anyway (not that public sentiment necessarily means anything when it comes to the Oscars).

If Netflix weren't able to compete for awards like the Oscars, that could tarnish its image a bit in the eyes of creators. And that could mean missing out on a few truly top productions that can make or break a company's year.

That in turn would undermine the whole content strategy -- which could mean yet another pivot. Fortunately for Netflix, that's one thing the company has shown it's good at.

Bill Murphy Jr. is a contributing editor at Inc.com.


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