Understanding Netflix's Content Production Strategy

Netflix has revolutionized the entertainment industry, particularly in the realm of content production. Unlike traditional studios and networks, Netflix has leveraged a unique model and strategic partnerships to produce a vast array of original content. This article delves into how Netflix manages to produce a substantial amount of content, surpassing many in the Hollywood ecosystem, through outsourcing and innovative partnerships.

Traditional Outsourcing Practices

Most traditional networks and movie studios often outsource production to external companies due to regulatory limitations. These anti-trust laws prohibit vertical integration, where a company is both the producer and distributor of content. Consequently, networks and studios often work with independent production companies to create their content. This practice is not uncommon; for example, a network like NBC, CBS, ABC, HBO, or AMC might turn down a project before pitching it to Netflix.

Production Company Role

Production companies play a crucial role in the content creation process. They develop ideas, including adaptations of existing works or original scripts, by securing “options.” An option is a right given to a producer to develop a specific story or concept into a series or film. Once a production company secures the option, they seek funding from networks or streaming services such as Netflix. The production company then pitches the concept to Netflix in what is known as a pitch meeting.

Negotiation and Collaboration

During a pitch meeting, the production company lays out their vision for the content. Netflix may decide to fund the project outright or offer a pre-production budget. If Netflix is interested, they will often engage in further negotiations to ensure the project aligns with their goals. Netflix’s strategy is to maximize the number of projects they can fund, knowing that only a few will achieve significant popularity. This approach allows them to reduce risk and increase their chances of success.

Nurturing New Talent and Diverse Voices

Nicole Kidman, CEO of own production company, believes in the power of nurturing new talent and diverse voices. Netflix actively seeks out new writers, producers, and creators from outside Hollywood. This strategy is a reflection of their commitment to breaking away from the traditional industry politics and budgets.

Advantages of Outsourcing

Outsourcing content production offers several advantages for Netflix:

Flexibility: Netflix can quickly adapt to changing market trends without the constraints of studio politics. Multitude of Voices: By partnering with diverse production companies, Netflix brings a wider range of stories and perspectives to the audience. Cost-Effectiveness: External production companies often operate on tighter budgets, allowing for flexible and cost-effective production models. Quality Control: Netflix maintains control over content quality by collaborating closely with production companies during the development and production phases.

Challenges and Opportunities

While Netflix’s outsourcing strategy has brought unprecedented success, it also comes with challenges. Ensuring the quality of content from various sources is one such challenge. To overcome this, Netflix has developed robust systems for evaluating and managing content projects. Despite these challenges, the flexibility and ability to innovate have propelled Netflix to the forefront of the entertainment industry.

Conclusion

Netflix's ability to produce an overwhelming amount of content surpasses that of many in Hollywood due to its innovative outsourcing model. By collaborating with production companies outside the traditional studio system, Netflix can consistently introduce new and diverse content to its audience. This strategy not only sets Netflix apart but also challenges the traditional industry norms, paving the way for a future where content creation is more open and inclusive.