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Netflix Digital Bulimia

Netflix released all 12 episodes of the House of Cards season 2 on February 14, 2014. By the evening of February 14th, there were several reviews online of the entire season. These reviews included spoilers and a bit of reflection by each writer on the experience of watching nearly 12 hours of content in one sitting.

Netflix has come up with many innovative ways of delivering content and has in some ways supported the concept of binge consumption. For the blog writers, the need to binge on the content is in order to be the first to post a review of the content.

However, for regular viewers, it can be argued that binge consumption is not healthy socially, physically nor mentally. Binge eating is largely considered a disorder. For people who suffer from the eating disorder, they tend to hide it, they do it alone, and there is little incentive to share their binging experiences with others. It stresses the body and can ultimately lead to death if not treated properly.

Media content binging is not all that different. People who binge watch all 12 episodes, will largely have trouble finding a large enough group to discuss the storyline with. This is a really hard show to discuss by the water cooler since you have no idea what episode the other person has seen.  Being able to watch all 12 episodes at once also signals that the viewer may not have a real social life or other responsibilities. This again is somewhat embarrassing in social settings. Lastly, sitting around for 12 hours watching a computer or TV is not physically healthy.

Netflix spends months making all 12 episodes only for a viewer to race through the content. Feeding the disorder, they want more and more, and feel less and less satisfied with each piece of new content. Netflix has written an excellent story line with House of Cards, each episode beckons you to watch the next episode. Ultimately, you are left at the end of the season on a cliff hanger, with no way of getting a new fix. You have to wait until the next season is produced, which could be months.

This inherently, is Netflix’s biggest problem. The time it takes to make high quality content versus the rate at which we can consume it.  To offset this, Netflix really needs to have multiple shows in production at all times. They will need to stagger the release of each show to help keep everyone hooked on their content. Essentially, they don’t need you to be loyal to one show, they need you to be loyal to their system or network.  Think of this as demand fillers. Perhaps this comes in the form of new shows, back stories on the main show, or other new forms of content. Either way it has to be highly engaging, garner social media attention and be easy to create.

This is a monumental shift in media content creation and delivery. Netflix will have to ride a very fine line between content production costs and overall subscriber revenue. To keep everyone satisfied they will have to have a much larger library of original content. Combine this with the overall bandwidth costs of delivering high quality video, Netflix is facing a major uphill battle in the coming months.

As an investor, one must ask themselves, can Netflix sustain these costs? If they can, will the viewers be loyal in between seasons of shows? Can Netflix create secondary content around each show to fill the demand from the viewers to keep their loyalty? Can Netflix come up with enough new shows to keep viewers loyal all year round? Is Netflix’s value built upon a constant life time value throughout the year or a fragmented life time value of people paying only when new shows are available?

All of these questions will be answered in due time, but until then, take note of how your friends and family discuss or more likely don’t discuss their binge habits.

About Krish Sailam

Krish is a writer based in the Austin, TX area that is focused on making information easier to digest. Krish's enjoys topics around education, technology, economics and online marketing.

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