Keywords: Netflix, film industry, distribution, exhibition, brand, algorithm
INTRODUCTION
What defines film? Format is not the answer, considering the industry transition to digital cameras did not disqualify the film label. Perhaps the defining factor is more abstract? I think the answer lies in the experience of film. I think a debate about the experience of film will soon consume the institution of film (by which I refer to the filmmakers, critics, theorists, studios, festivals, distributors, exhibitors, et cetera). Exhibition is a core component of this experience, but most important to my thesis is how changes in distribution have created changes in exhibition and consequently ignited this debate. Distribution and exhibition have been linked throughout film history, especially as the introduction of new technologies such as television, physical formats, and the internet opened new viable pathways for distribution that drifted further from theatrical exhibition. Netflix dramatically altered the exhibition experience of audiences by prioritizing distribution to the home instead of theaters. The company Netflix was founded in the United States in 1997 and, by the end of 2019, Netflix’s US subscriber base had grown to 61.04 million subscribers of a global total 167 million subscribers (Watson, “Number of Netflix Paying Streaming”). During the same period, the number of theaters in the United States declined 22 percent from 7,480 to 5,869 (Watson, “Number of Cinema Sites”). These numbers only hint at a larger narrative about how Netflix evolved as a distribution service and brand, how it created a competitive marketplace of major and minor streaming services, and how it introduced challenges to the established film industry. Said challenges include Netflix’s popularization of home streaming, acquisition of “Original” content, and declination of subscriber agency through a recommendation algorithm. Netflix created an existential dilemma about the experience of film and the importance of exhibition in relation to that experience.
EVOLUTION
Netflix was founded in 1997 to “offer online movie rentals,” with the initial website launching in 1998 and first subscription service in 1999 (“About”). Netflix was an early model of an online video-on-demand (VOD) service and more specifically a subscription video-on-demand (SVOD)[1] service. Video-on-demand means that entertainment content is always accessible. Netflix was a VOD service since inception because disc selection was always available online; the service was and still is independent of the preset schedules of theaters or television. Netflix was also an SVOD because it required a subscription, a model that has become predominant in the current VOD marketplace.[2] A Netflix subscriber could peruse an online catalogue of films and order physical copies, either DVD or Blu-ray, that would arrive by mail. When they were finished with the film, the subscriber would then return the disc to Netflix back through the mail. Netflix revealed an early penchant for data analytics by constructing strategically placed distribution centers that enabled near universal disc delivery within twenty-four hours, a tactic that would increase subscriptions (Jenkins). Using data analytics to gather and retain subscribers would contribute to the development of the Netflix recommendation algorithm, which will be elaborated on later; but it did exist in 2000. Netflix maintained its subscription model when it introduced its streaming service in 2007 and expanded the platforms it was accessible on over the next three years.[3] The focus of VOD services is to deliver content directly to the television set, but still have online versions of their services for widespread availability. Netflix achieved this by becoming accessible through physical platforms, such as video game consoles, Blu-ray disc players, and TV set-top boxes (“About”; Ulin 195, 332, 375). Netflix’s promise of always available content, and the ease with which it made that content accessible, was the first step in dissuading audiences from going to theaters.
After releasing its streaming service and growing its US subscriber base, Netflix began expanding its service around the world. In 2010, Netflix expanded to Canada, in 2011, to Latin America and the Caribbean, and, from 2012 to 2015, Netflix gradually launched throughout Europe and into Australia, New Zealand, and Japan. Finally, in 2016, Netflix expanded to 130 more countries, bringing the total number of countries and languages the service was accessible in to 190 and 21, respectively. Between 2000 and 2010, Netflix’s subscriber base expanded to 10 million and, between 2010 and 2020, the subscriber base expanded to over 167 million (“About”; Watson, “Number of Netflix Paying Streaming”).[4] Netflix’s subscriber base is still slowly growing in the United States amidst market competition but is swiftly growing internationally (Molla).
Netflix’s international expansion was complicated by both domestic competitors and local viewership tendencies. Netflix was penetrating foreign markets as a US company, forcing a cultural realignment of content to appeal to potential local subscribers. Each country had its own tastes that Netflix had to consider. Netflix initially built appeal by both exporting US entertainment and licensing local properties; this expansive catalogue made it a formidable global competitor, but contexts in specific markets such as Brazil and India prevented easy global distribution (Evans et al. 409, 413, 421).[5] Almost 6,000 titles are available in the United States through Netflix, however, its catalogue in foreign countries is often smaller; furthermore, the catalogue is in constant fluctuation because of expiring licensing arrangements and the acquisition of new “Originals” (Lobato 244-245, 248, 252).
“ORIGINALS” AS BRAND
During this decade of global expansion, Netflix began acquiring “Originals” for its streaming service. Reporter Ashley Rodriguez found that Netflix labels content an “Original” if it was (1) licensed to stream first on Netflix, (2) exclusively licensed, or (3) self-produced (“Netflix Didn’t”). Simply put, “Originals” are films or series either licensed or produced by Netflix, but it is often difficult to determine what level of involvement the service had in the film or series. For example, Lilyhammer, Netflix’s first “Original” series, was a 2012 co-production between Netflix and the Norwegian TV channel NRK1; NRK1 had distribution rights in Norway, but Netflix had them for the United States, so it was labeled an “Original” (Rodriguez, “Netflix Will”). To not get bogged down in specifying whether Netflix produced or licensed a film, I will use the vocabulary “acquired.” If Netflix’s level of involvement in the film is relevant to discussion, I will include it. The “Original” label will simply refer to whatever films Netflix labeled that way.
Netflix’s acquisition of “Originals” is important for two reasons. The first reason is because doing so gave Netflix more control over its content. Netflix’s success inspired former licensing partners to create their own services on which to put their own content, meaning Netflix would lose access to certain high-profile films or series. Therefore, Netflix had to heavily invest in the acquisition of “Originals” to ensure more control over its properties because “the only reliable way to maintain control of your position in the streaming space is to actually own the content you’re streaming” (Inside Gaming). In 2017, producer Scott Stuber was hired to head Netflix’s “Original” film division; in 2018, Netflix budgeted $8 billion for content and $2 billion for marketing, and Chief Content Officer (CCO) Ted Sarandos[6] detailed in a video call with analysts that a portion of the content budget would go toward producing eighty “Original” films among other entertainment, all slated for release in 2018 (Molla; Rodriguez, “Netflix Will”; Statt).[7] The benefits of this high-cost investment are more than the maintenance of its subscriber base; reporter Kayla Cobb asserted Netflix “found a correlation between money invested in original programming and audience growth.” Growing the subscriber base is essential because that is Netflix’s only source of revenue and that revenue often goes directly back into acquiring “Originals” (Bernstein; Lotz 492).
The second reason Netflix’s acquisition of “Originals” is important is because the practice began to formulate a new brand identity for the service. Netflix was previously a provider of other studios’ films, but now it distributes its own “Originals.” Furthermore, the “Original” films acquired by Netflix represent a variety of genres and production sizes, including “awards consideration films, big blockbusters, and a solid padding of indie gems” (Cobb). Examples of these films include Beasts of No Nation (Fukunaga, 2015), The Siege of Jadotville (Smyth, 2016), Mudbound (Rees, 2017), Roma (Cuarón, 2018), The Irishman (Scorsese, 2019), and The Last Thing He Wanted (Rees, 2020).[8] Critic Mareike Jenner further elucidated on the Netflix brand in her writing “Netflix and the Re-Invention of Television.” Jenner wrote that CCO Sarandos emphasized fostering diversity in Netflix’s content and went on to define said diversity using Orange Is the New Black as an example. According to Jenner, diversity in that series included a “[strong] emphasis on non-white identities, a questioning of heteronormativity, and … multilingualism” (162, 174). The emphasis on non-white identities is crucial here. I think Netflix incorporated the diversity in identity in its films because that allowed for the incorporation of cultures associated with those identities and, consequently, the issues within those cultures to be explored on-screen. For example, Beasts of No Nation follows violence in Africa, Mudbound explores race relations in the United States, and Roma tells a familial epic in Mexico. Netflix must consider the cultural representations of the over 190 countries in which it operates in relation to “Originals” acquisitions. Not all Netflix “Originals” include diverse cultural representation on-screen, but those that do assist Netflix in “[positioning] itself within an American and a transnational television landscape” (Jenner 162). Netflix’s brand for its “Original” films was established as both a variety in type and diversity in content, the combination of which made the service an apparently viable home for all films.
COMPETITION
As previously alluded to, competitors emerged to challenge Netflix’s dominance of the streaming marketplace;[9] Hollywood studios especially sought to directly profit from their own films and series rather than continue licensing them to Netflix. This fragmented the market and divided content across numerous major and minor services. Experts referenced by researcher Roderik Smits disputed whether the entertainment industry homogenized or heterogenized; this means said experts disagreed whether the services were seeking broad appeal like Netflix or catering to certain audiences (Gatekeeping 163-166). I separate the competing services in the streaming market by whether they are seeking broad appeal or niche audiences. Major competitors have the financial backing to garner a variety of content that facilitates broad appeal. Major competitors include Hulu, Amazon Prime Video, and Disney+. Minor competitors may lack those financial assets and thus pursue niche audiences. Minor competitors include the Criterion Channel, MUBI, and Shudder. With the presence of both major and minor competitors in the market catering to broad and niche audiences, I think the market has heterogenized.
The major competitors are the significant challengers to Netflix’s revenue, which, in 2019, was $20.2 billion with a net income of $1.9 billion (Bernstein; Masters).[10][11][12] For comparison, the largest to smallest studio revenue from film and television sources in 2017 was $13.9 billion for Time Warner, $9 billion for Sony, $8.3 billion for 21st Century Fox and Disney, and $7.7 billion for NBC Universal (Bond and Szalai). These studios are entertainment conglomerates with diversified revenue streams not indicated by these numbers, but Netflix’s large revenue from a single distribution service speaks volumes about streaming success in comparison to studio models. VOD services like Netflix established an oligopoly on the online distribution market as major Hollywood studios failed to quickly adapt and were initially relegated to being content suppliers. Exclusive content, such as Netflix’s “Originals,” became an increasingly important factor for streaming services as Hollywood studios developed their own (Smits, Gatekeeping 6-7, 171).
Incidentally, by introducing their own services to the market and restricting content available for Netflix to license, Hollywood studios incentivized Netflix to become a vertically integrated studio of its own. Labelling Netflix “vertically integrated” means it has control over the production, distribution, and exhibition of film. Netflix was a distributor since inception, but when it launched its streaming service, in 2007, it gained some marginal control over how its content was exhibited by expanding availability to TVs, laptops, and smartphones. In 2012 and 2013, Netflix became a producer when it began producing certain “Originals.” Finally, in 2018, with the release of the “Original” Roma, Netflix four-walled (rented) theaters, which garnered the company more control over exhibition (Keegan). Researcher Roderik Smits agreed that Netflix has become a vertically integrated studio to counter studios closing their doors to the service (Gatekeeping 172).
As it was globally expanding its service, Netflix’s 30 million subscribers were responsible for “one-third of all internet traffic entering North American homes” in 2014 (Holt and Sanson 8). This introduced a new industry consideration into the film distribution space, internet service providers (ISPs). Streaming content requires cooperation between the service and content providers as well as ISPs, who unfortunately may lack the infrastructure to deliver on such quantities of data (Dixon 144; Ulin 457-458). Because of the nature of conglomeration, many competing services are connected with ISPs that could hinder one another via “their ability to control content by controlling bandwidth” (Strover and Moner 238). For example, Verizon co-owns Redbox Instant, a competitor with Netflix, and has been accused of slowing Netflix traffic to Verizon customers (Holt 24). The capability of companies to enforce domination over a market by hindering their competitors through other means is the reason net-neutrality is an essential component of the online streaming distribution practice. Associated with the introduction of ISPs into the distribution sector is the work of content delivery networks (CDN), which are purposed to effectively deliver content and enable associated actions such as streaming and downloading; Netflix’s CDN Open Connect coordinates with global ISPs to spread their content. However, CDNs are unregulated by the Federal Communication Commission and purposefully utilize their position outside the system to exploit consumers (Holt 25). The legal framework for the SVOD market is not perfect, but Netflix’s effect on film distribution here is clear: Netflix’s success incorporated internet companies into film distribution. Film distribution interests have expanded beyond the confines of the traditional industry by incorporating ISPs. Some consequences of this emerged during the COVID-19 pandemic when streaming services agreed to reduce the quality of their streams to reduce the strain on ISP infrastructure (Ankers, “Update”). This would impact the subscribers’ experience by forcing them to watch a film at a lower quality.
AWARDS, THEATERS, AND NETFLIX
As mentioned in the introduction, the number of theaters in the United States declined 22 percent from 7,480 to 5,869, between 1997 and 2019 (Watson, “Number of Cinema Sites”). But from these fewer theaters, box office revenue increased to its highest in history with $11.07 billion in 2017, $11.8 billion in 2018, and $11.4 billion in 2019 (Hughes; Loria and Pahle). Films often conformed to theater chains’ demand for a 90- to 120-day exclusivity window, but Netflix released its early films under a day-and-date release where the films were available simultaneously in theaters and on the streaming service.[13][14] Netflix’s day-and-date release of Beasts of No Nation in only thirty US and fifteen UK cinemas may have undermined its award season viability for alienating theater chains despite critical acclaim at festivals (Smits, Gatekeeping 185). Netflix only began conforming to theater demands for a longer release window as it more actively pursued acquiring awards for its “Original” films, not because the experience of watching a film in theaters may have been more rewarding.
The research of Gabriel Rossman and Oliver Schilke from the American Sociological Review is essential to understanding why Netflix would pursue awards because the pair analyzed the impact of prizes on films using the Academy Awards as an example (92).[15] Prizes “confer symbolic capital (and by extension, whatever economic success this symbolic capital avails) to a few winners while denying these benefits to many also rans” (Rossman and Schilke 89).[16] By acquiring awards, Netflix furthers the prestige of its own catalogue and attracts subscribers influenced by the promise of access to award-winning films. Even if their “Originals” do not win awards, being critically acclaimed, nominated, or discussed serves as its own marketing for the service. Such films boost the quality of Netflix’s catalogue compared to its competitors. Another measurement of this quality over quantity comes via the number of Certified Fresh ratings provided by Rotten Tomatoes, a popular film review website that aggregates reviews into a single score. Although Amazon has four times more films in its catalogue, Netflix has more Certified Fresh than “Amazon, Hulu, and HBO Now combined” (Marie). So, there is not only “a correlation between money invested in original programming and audience growth,” there is an additional added value if that programming is award winning (Cobb).
Beasts of No Nation was Netflix’s first prestigious “Original” film, albeit Netflix only acquired the 2015 film after it had experienced a successful festival run. According to Netflix, Beasts of No Nation “was the most watched movie on Netflix, in every country [they] operate in” in its first week of release; it also won several awards from international festivals but failed to be nominated for any Academy Awards, which spawned some criticism (qtd. in Sändig 199-200). As previously mentioned, the day-and-date release of the film alienated major theater chains and limited Beasts of No Nation’s theatrical run to a couple dozen individual theaters. Beasts of No Nation’s zero nominations from the Academy Awards was described as “a pointed vote in favour of traditional distribution models, notwithstanding the film’s recognition from BAFTA and assorted industry guilds” (Lodge). Part of the acclaim directed toward Beasts of No Nation arose from how it combatted afropessimism.[17] Two years later, in 2017, Netflix acquired Mudbound after it appeared at Sundance and was passed on by other studios (Fleming; Wortham). Mudbound was also released in theaters and on Netflix simultaneously; this time Netflix was rewarded with four Academy Awards nominations, but no wins. In a similar vein as Beasts of No Nation, Mudbound undermines a conventional, or as Rees put it “simplistic,” Hollywood narrative through representation of diverse issues.[18] Director Dee Rees said that Netflix’s ability to distribute films directly to subscribers ultimately yielded more views for her works.
Alfonso Cuarón, the director of Roma, would agree with Rees about how the widespread availability provided by Netflix yielded a larger audience. Roma is an epic story that contends with “Mexican identity, sexual politics, societal violence, working-class agency, and economic divide” (Sandler). Netflix acquired Roma when other theatrical distributors passed on it because they considered the “black-and-white Spanish-language film, a risky commercial proposition” (D’Alessandro, “Alfonso”; D’Alessandro, “Does”; Sandler). That investment paid off for Netflix. Roma was nominated for ten Academy Awards and won three, making the service “the first home entertainment platform to snag a nomination for Best Picture at the Academy Awards” and “the first streaming company to join the MPAA” (Flores 59). Furthermore, in February 2020, Roma became the first Netflix film to be added to The Criterion Collection, another achievement for Netflix that “further [legitimized] it as a company committed to producing quality material” (Michael).[19] The critical acclaim directed toward Roma as evidenced by the Academy Awards and The Criterion Collection granted Netflix the cultural value associated with them. The Netflix brand became synonymous with diverse award-winning films.
The success of Roma also demonstrated the viability of the new limited theatrical model over the day-and-date release. Roma was exclusively available in theaters for three weeks before becoming available on Netflix (Sandler).[20] Again, Netflix four-walled (rented) theaters to screen Roma, a tactic that “removes the burden of revealing any unfavorable box office numbers” (Keegan). Reporter Brook Barnes paraphrased the president of the National Association of Theater Owners John Fithian, who said that Roma’s theatrical release was a “disingenuous effort to court Oscar voters and make Mr. Cuarón happy.”[21] However, Roma’s director Alfonso Cuarón described the relationship between theatrical and streaming release as “completely compatible” and that “in many ways one informs the other” (qtd. in Barnes). Associate Professor Kevin Sandler wrote that Roma’s success demonstrated that “consumers may no longer discriminate between the big screen and small screen in their moviegoing decision-making.” Sandler hypothesized that Netflix’s service “may not devalue a motion picture,” and the success of Roma demonstrated the viability of Netflix as a “[route] for films like Cuarón’s masterpiece to earn both the audiences and prestige they deserve.” In their quotes, Cuarón and Sandler imply that there is no difference between the theatrical and home experience; rather, they explicitly state that the increased viewership provided by Netflix is more beneficial to a film than a traditional restricted theatrical window.
In 2019, Netflix similarly planned for month-long theatrical windows for its film releases such as Marriage Story and The Irishman, but theater chains were still resistant to exhibiting Netflix films (McClintock, “Netflix”). Both were exhibited in individual theaters in New York City and Los Angeles. To counteract theater chains from not exhibiting their films, Netflix considered purchasing individual theaters in both cities, and actually did come to an arrangement with Paris Theatre in NYC to “screen its films there on an ongoing basis” (Zeitchik).[22] This would enable their films to still qualify for Academy Awards and satisfy filmmakers who want their films screened in theaters. Year after year, since Beasts of No Nation, Netflix further established its presence at the Academy Awards and simultaneously increased the number of “Original” films nominated or awarded. This trend was disrupted at the 2020 Academy Awards, when Netflix “Original” films had twenty-four nominations but were only awarded two; Netflix had fewer nominations, in 2019, but won more awards thanks to Roma. The Irishman was a predicted favorite at the awards, but writer Jesse Schedeen wrote that the film “was completely shut out of the awards,” and this may be a result of the friction between Netflix and theater chains as well as the slow recognition of Netflix by the Academy as a legitimate competitor.
RESPONSE
Journalist Dana Harris-Bridson presented a different type of “friction,” not within the industry but within the viewing experience. Harris-Bridson’s discussion of friction comes from being forced to bear the uncomfortable endurance test that would be watching the three-and-a-half-hour film in one viewing in theaters; this test becomes optional at home where viewers are in control of the film and can pause or skip as they choose. Harris-Bridson asks an important question in place of Netflix: “Can audiences fully appreciate the brilliance of the filmmaker’s work without the focus and isolation provided by a big-screened black box?”[23]
Harris-Bridson’s question is one of the core issues the modern institution of film has with Netflix. The Motion Picture Academy, film festivals, studios, and theaters have reacted negatively to what they perceive as a Silicon Valley intruder. Netflix flouts Hollywood traditions by limiting theatrical release, not reporting box office earnings, extensively spending on Academy Awards advertising, and not releasing audience data except for the purpose of publicity (Hunt and McKelvey 317; Thompson, “The Spielberg”). But the most fascinating consequence Netflix has had on the entertainment industry is challenging the understanding of what defines film. The theatrical release is often the qualifying factor in determining whether a media product is a film; a film not released in theaters is disqualified as television.[24]
The Academy has so far been unable to exclude Netflix films from qualifying, but other festivals have. French theater owners complained, in 2017, when Netflix successfully submitted Okja to the Cannes Film Festival without having a theatrical release scheduled in France; French process holds that a film cannot be released on a streaming platform until thirty-six months after a theatrical release. On the one hand, theaters were defending their livelihood, which exclusivity supports; but on the other hand, a thirty-six-month window potentially restricts audience access to a film if said theaters are not exhibiting it. Regardless, Cannes caved to the pressure from the exhibitors and now forbids films that are not scheduled for a release in French theaters. Negotiations to screen films in 2018 and 2019 were unsuccessful so the only Netflix presence at Cannes was an acquisition team (Keslassy and Donnelly).[25] Meanwhile, the 76th Venice Film Festival in 2019 featured three Netflix productions, including Marriage Story (Hinckley).
Forbes contributor Mark Hughes wrote that pressuring to exclude Netflix from festivals and awards “is shortsighted and unfair.” Hughes called the discrimination against the artistic integrity of Netflix purely for business reasons “severely problematic.” Art should not be judged in some “silly and myopic display of resentment … due to a self-righteous sense of defending the ivory towers of artistic integrity against supposed interlopers whose imagined sin is creating additional distribution and viewing platforms for cinema” (Hughes). Hughes defended Netflix as a distributor of artistic films such as Okja and implied that the institution of film was restricted by adherence to theatrical distribution. While the theatrical exhibition experience may have its virtues, discriminating against Netflix for not prioritizing theatrical distribution is unfair to the artistry of the films.
Some of Netflix’s filmmakers would agree that the service provided an outlet for their films that may not otherwise have been available. The head of films at Netflix Scott Stuber spoke about how Netflix lacked the historical intellectual properties of traditional studios and that “it’s very important strategically to get in business with filmmakers like Rees, Alfonso Cuarón, Martin Scorsese, and that is our differentiator” (qtd. in Wortham). Director Dee Rees, whose films Mudbound and The Last Thing He Wanted were distributed on Netflix, highlighted the independent community as the developer of the best films and that “Netflix forced the rest of the industry to take more risks” (qtd. in Wortham). Cuarón praised Netflix’s limited theatrical distribution model for the continued viewership of Roma even a month after release and as a means to cultivate “a diversity of storytelling, diversity in characters, diversity in countries, diversity in languages, [and] diversity in the way in which you see films” (qtd. in Sandler; D’Alessandro, “Alfonso”). Furthermore, Cuarón referenced Scorsese when he spoke to why noteworthy filmmakers were taking their films to Netflix; he said that Netflix “[isn’t] afraid of doing these films” (qtd. in D’Alessandro, “Alfonso”). Scorsese’s opinion of Netflix was nuanced because he supported the theatrical viewing experience but appreciated “having the backing of a company that says that you will have no interference, you can make the picture as you want” (qtd. in Lattanzio). Scorsese defended his decision to work with Netflix at the BFI London Film Festival, saying that they provided the opportunity when studios STX and Paramount Pictures passed.[26] According to these filmmakers, who have worked with Netflix, they were allowed to take artistic risks in their films that were then exposed to a wider audience because of Netflix, even if they were not privy to a long theatrical release.
Filmmakers Steven Spielberg and Christopher Nolan, neither of whom has distributed a film through Netflix, spoke ill of the service because of their loyalty to the theatrical experience. As a Governor in the Academy, Spielberg attempted to block Netflix’s presence from future Academy Awards, believing that the difference between theatrical and digital distribution made Netflix exclusively qualified for Emmys (Ramos; Thompson, “The Spielberg”). Nolan, who strictly films in 70mm, “didn’t hesitate” to refute the idea of working with Netflix at a CinemaCon presentation. In quite the contrast to Cuarón, Nolan disliked Netflix’s limited theatrical release model saying that the “mindless policy of everything having to be simultaneously streamed and released … is obviously an untenable model for theatrical presentation” (qtd. in Kohn, “Christopher”).
ALGORITHM AND AGENCY
The final component in the discussion about Netflix’s impact on film distribution and film experience is its recommendation algorithm. The algorithm originated in 2000 as “a personalized movie recommendation system, which [used] Netflix members’ ratings to accurately predict choices for all Netflix members” (“About”). With the release of the digital streaming service, the algorithm transitioned from predicting star reviews to recommending content that would keep its subscribers watching. The recommendations system was a necessity born out of the natural consequence that a comprehensive catalogue would stall subscribers.[27] However, the algorithm introduced the final issue into the existential dilemma about film experience by potentially usurping subscriber agency in choosing what to watch.
The algorithm creates a personalized Netflix homepage that consists of a series of rows containing dozens of films and series recommended for the subscriber. When opening a new account on Netflix, it asks, but does not requires three personal preferences of films or series to begin the personalized homepage. This is an example of how the algorithm utilizes content and knowledge-based recommenders that incorporate tags and user input on preferences. Netflix’s tags are organized into 19 umbrella genres, 400 subgenres, and 76,897 micro-genres (Jenkins; Smith-Rowsey 73-78; “All”).[28] Netflix’s algorithm also utilizes collaborative filtering where data is compared “within a mass of individual profiles to find shared interests between users” (Hunt and McKelvey 311). All of it is purposed for subscriber retention and prevention of their departure for other streaming services. With its intention to be a global service, Netflix chose not to localize the algorithm, but rather to globalize it so that entertainment from one country could have viewership in others (Gomez-Uribe and Hunt 2-6, 14). In other words, the algorithm incorporated global viewership data so subscribers could be exposed to all the content Netflix had available.
The algorithm as described above, in conjunction with the variety of diverse content available as “Originals,” hypothetically provides Netflix subscribers a plethora of choice. However, the reality of the situation is that subscribers choose the recommendations 75 percent of the time (Arnold 58-59; Strangelove 25). The consequence of subscribers relying on the algorithm is that the algorithm’s choice of content will affect the individual. Researchers Robert Hunt and Fenwick McKelvey explored this in their journal article about regulating algorithms. Sources mentioned by the pair, including UNESCO, Natascha Just, and Michael Latzer, discuss how data companies like Google, Facebook, and Amazon “shape individuals’ realities and consequently social order” (qtd. in Hunt and McKelvey 308). To understand the importance of this, it is crucial to remember a fundamental principle of art: that it is meaningful, impactful, and influences the audience. For example, Birth of a Nation (Griffith, 1915) is credited with contributing to the resurgence of the KKK in the United States. Therefore, an algorithm controlling what films subscribers are recommended is a powerful tool for influencing their perception of reality. But Netflix is not only in control of the algorithm, it is also creating an “Original” film catalogue that the algorithm recommends from. Netflix has immense power as the content creator and controller of the algorithm that recommends said content.[29]
Netflix has already demonstrated its influence on subscribers by encouraging the practice of binge-watching[30] through the release of whole series and auto-playing next episodes. Binge-watching as a model of viewership supports Netflix’s global expansion because it allows for simultaneous global communication between subscribers all trying to stay relevant with the cultural discourse (Horeck et al. 500). Subscribers are encouraged to watch the film or series so they can participate in an online discussion about it. However, the binge-watching habit fostered by Netflix encourages the production of series and, consequently, series has overtaken film as the primary content that is streamed (Dixon 102). This is also an example of how Netflix has altered the experience of film; Netflix has minimized its importance on the service in favor of series.
Researcher Neta Alexander questioned whether Netflix’s algorithm could replace a cultural expert and whether the microgenre categorization threatened “both the culture of cinephilia and filmmakers’ creative freedoms” (82). The prior comments by directors Rees, Cuarón, and Scorsese implied Netflix’s willingness to let filmmakers retain their creative freedom. However, the prioritization of “contemporary mainstream content at the centre of their [catalogue]” fosters a film community that does the same (Smits and Nikdel 23). Subscribers trying to stay relevant with the global conversation about Netflix’s content could lose the opportunity to discover “great films,” and that very cinephile concern is something Netflix has tried to address with its prestigious “Originals.” The experience of film here is that of discovery; the algorithm eliminates the pleasant surprise by recommending content that it anticipates the subscriber will enjoy and may not expand their content horizons.
COVID-19
The recent COVID-19 outbreak immensely altered the state of the institution of film and will only exacerbate the debate about the experience of film. For example, because of the CDC recommendation to limit gatherings to 10 people, AMC Theatres[31] was forced to close its 634 theaters, Regal Cinemas its 542 theaters, and Cinemark its 345 theaters until further notice (D’Alessandro, “Regal”; Maddaus; McClintock, “AMC”).[32] With the loss of the theatrical market, studios can redistribute their films on proprietary (Disney+) and third-party (Amazon) online VOD services. Studios have a financial incentive to reduce the theatrical release window because it would ease marketing costs and because around 80 percent of VOD revenue would go back to the studio as opposed to another distributor (McNab). Universal Pictures was the first Hollywood studio to break the traditional theatrical distribution window when it announced its animated film Trolls World Tour (Dohrn, 2020) would release day-and-date on multiple VOD services on 10 April (Vejvoda). Films released in theaters early in the year would be released on VOD as early as 20 March (D’Alessandro, “Regal”; Vejvoda). Films scheduled to be released in theaters in March, April, May, and even June were indefinitely delayed (Fujitani). Sony Pictures followed Universal’s lead while reaffirming their commitment to theatrical exhibition but cited the “unique and exceedingly rare circumstance where theaters have been required to close nationwide” as the reason for immediately making Bloodshot (Wilson, 2020) available in homes (qtd. in Sneider).[33] All this demonstrates that distributors are not all going to wait for theaters to recover to release their films, especially not when internet traffic has been consumed by streaming SVOD services such as Netflix. For now, the only film exhibition experience is at home.
Even the Academy Awards have removed the requirement for a one-week qualifying theatrical run in LA or NYC by allowing VOD and streaming releases. Furthermore, when quarantine restrictions are eased, cities that can provide qualifying theatricals runs will be expanded to include Chicago, Atlanta, Miami, and the Bay Area (Thompson, “Oscars”). This current temporary amending of the rules may be difficult to reset after the pandemic has ended. Indeed, some reporters expressed their concern that it would be difficult for the industry to recover from this transition if consumers became accustomed to paying extra for home exhibition of new films; others countered that the temporal nature of COVID-19 and stated support for theatrical distribution meant the market would return after the pandemic subsided (Sneider). The concern is that theaters will collapse as a means of distribution and films will be relegated purely to the home. Director Christopher Nolan wrote for The Washington Post about the essential social aspect of theaters and how their failure would affect those workers. Nolan recognized the inability of his films to screen without said workers and asked for government funding and post-quarantine cooperation with studios to ensure theaters remain. Nolan presented an idealized outcome where people gather post quarantine and “contribute billions to our national economy” in their desire to release pent-up isolated emotions together. Nolan hopes that a collective desire for a social theatrical film experience will revive the industry after the end of COVID-19, but I am not so sure.
CONCLUSION
The experience of film has changed immensely over the past two decades because of Netflix’s popularization of home streaming, acquisition of “Originals,” and recommendation algorithm that makes it all too easy for subscribers to find something enjoyable to watch. The transition of film distribution and exhibition away from theaters to homes has altered the way audiences experience film. When using Netflix, the subscriber is simultaneously in control of how they watch a film, but often influenced by an algorithm that recommends what to watch. That algorithm could recommend from a variety of diverse and artistic films, but there is no apparent guarantee that it will. Filmmakers who have worked with Netflix appreciated the opportunity for their films to be exposed to a larger audience than perhaps would have been reached through a theatrical release. However, other filmmakers and segments of the institution of film still adhere to the importance of the theatrical film experience. There is certainly something to be said for the experience of giving up control to be taken on an unknown journey by a film in a theater. Unfortunately, COVID-19 forcibly eliminated that option, at least temporarily, but perhaps permanently. After the conclusion of the COVID-19 pandemic, the very nature of film could have changed, finishing a process that Netflix started back in 1997.
References
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Author Biography
Dylan O’Connell is a recent Summa Cum Laude graduate of Keene State College with a Bachelor’s degree in Film Studies – Critical Studies and a Minor in Creative Writing. This is his first published essay, although he hopes to have another on Japanese filmmaker Ōshima Nagisa published this Autumn in Film Matters‘ print publication. Until his work as an English teacher in Japan begins, he plans to hone his writing craft through independent study of foreign and war films.
Mentor Biography
Irina Leimbacher is Associate Professor and Chair of the Film Studies department at Keene State College. Her specializations are nonfiction, experimental, and essay films and she has published articles in Discourse, Film Comment, Bright Lights, and Wide Angle. She is often inspired by her hard-working students, from whom she gets to learn all kinds of interesting things.
Department Overview
The Film Studies Department at Keene State College is the only one of its kind in New Hampshire state universities. The Film Studies Department seeks not only to educate students on the technical production of film, but also how to critically analyze films through a variety of theoretical frameworks.
[1] As defined by Dr. Elissa Nelson, an SVOD service is a service that allows viewers to pay a fee for unlimited streaming of available titles (68). The terms “SVOD service” and “online streaming” have become almost synonymous, but the term “SVOD service” is more widely applicable. This research will delineate between the two.
[2] In 2006, the aggressive onset of streaming allowed companies to experiment with business models such as Advertising video-on-demand (AVOD) and transactional video-on-demand (TVOD) to capitalize on the developing consumer trends (Ulin 294).
[3] Although originally intended to be cancelled with the onset of the streaming service, the disc rental service is still available as a separate subscription exclusively in the United States. (Bernstein).
[4] A subset of these subscriber numbers are those subscribed to the disc rental service. In 2011, Netflix had 11.04 million subscribers to the disc rental service but, by the end of 2019, that count had fallen to 2.15 million (Watson, “Number of Netflix paying DVD”).
[5] Both Brazil and India have large national film industries that compete with Hollywood for their domestic markets.
[6] Sarandos was named the “Showman of the Year” in 2017 by Variety “for challenging Hollywood and US television distribution models” (Jenner 172).
[7] In the same year Warner Bros. and Disney were only slated to release twenty-three and ten films respectively (Griffin).
[8] Further examples include The Fundamentals of Caring (Burnett, 2016), I Don’t Feel at Home in This World Anymore (Blair, 2017), Okja (Joon-ho, 2017), War Machine (Michôd, 2017), Death Note (Wingard, 2017), Bright (Ayer, 2017), The Ballad of Buster Scruggs (The Coen Brothers, 2018), The Two Popes (Meirelles, 2019), and Marriage Story (Baumbach, 2019).
[9] In 2013 Netflix controlled 89 percent of the streaming market, but it is unclear if that statistic applied to the United States or globally (Strangelove 149).
[10] Since 2015, Netflix’s revenue nearly tripled and net income grew more than fourteen times (Bernstein; Masters).
[11] Revenue is divided into 46 percent from domestic streaming, 53 percent from international streaming, and 1 percent from disc rental; profit is divided into 65 percent from domestic streaming, 31 percent from international streaming, and 4 percent from disc rental (Bernstein).
[12] Despite the staggering $20.2 billion revenue, since 2011, Netflix has posted negative cash flow due to heavy spending on growth and “Originals” content (Bernstein). Critic Cameron Lindsey hypothesized about Netflix’s future and thought that expenses associated with acquiring “Originals” and increased market competition from diversifying cable channels could undermine Netflix as the market leader (180-181). An investment report on Netflix made the same assessment that increased streaming competition could be a potential hindrance to the service’s growth, but it optimistically estimated stellar growth for the next decade. The report also stated that Netflix was expected to invest $21.05 billion in 2028 (Oliveira and Ribeiro).
[13] Netflix released its “Original” Crouching Tiger, Hidden Dragon: Sword of Destiny (Yuen, 2016) in China and the United States under the day-and-date strategy (Smits, “Film” 122-123; Smits, Gatekeeping 185).
[14] If films are not available in theaters during the 90- to 120-day exclusive window, then their revenue freezes, however; theater chains think they would lose box-office revenue on a day-and-date release. Small, standalone producers and distributors may release a film under a day-and-date strategy where it is simultaneously available in theaters and online; this release model prioritizes “immediacy of availability and accessibility,” which assists in the generation and sustaining of popular buzz (Smits, “Film” 116, 123).
[15] Rossman and Schilke claimed to identify three characteristics of prizes: prizes influence what films consumers watch, prizes create differences between winners and losers, and prize juries are difficult to appeal to because of their disconnect from audiences. The Academy Awards conform to these because they are influential among film industry analysts, lead to additional revenue for awarded films, and are determined by critics (86-87, 92).
[16] Prizes are important because they have distinct economic effects: “(1) consumers treat prizes as judgement devices, (2) prizes create sharp discontinuities, and (3) appealing to prize juries sacrifices mass audience appeal” (Rossman and Schilke 88).
[17] Researcher Jan Sändig defined afropessimism as the perception of Africa as a continent synonymous with “poverty, misery, deadly diseases, and brutal wars” (195). Sändig described the “emphasis on both rational and irrational motivations in Beasts” as “accurately [reflecting] the dynamics of many wars” (209) and concluded that Beast of No Nation “frames the violence as the result of a complex web of political, economic, sociopsychological, and ideational factors” that “evades simplistic culturalist arguments that have formed the bedrock of afropessimism” (211). Beasts of No Nation has a complicated representation of Africa; it presents a “generic war scenario that can easily be seen as depicting Africa as entirely war-stricken,” but counters the generic scenario with an understanding of the “[combined] strategic and emotional drivers of warfare and connects political, economic, and social motivations in highly realistic ways” (Sändig 196).
[18] When Rees received the script for Mudbound she chose to insert her own ideas about exploring “the spectral horror of white violence” that did not devolve into the “simplistic Hollywood [narrative] about the resilience of black people and the restorative power of interracial friendships” (Wortham).
[19] Netflix called the physical release of Roma on The Criterion Collection an “honor” (@NetflixFilm).
[20] Large theater chains refused to show Roma for its shirking of the 90- to 120-day exclusive theatrical window, but Roma still exhibited in 250 theaters in the United States, 100 in Mexico, and more than 1,000 globally since its initial release on 21 Nov. 2018 (Barnes; Sandler). Over the 2018 Thanksgiving weekend, Roma debuted in three theaters and earned an estimated $90,000 to $120,000 total, which divides into $30,000 to $40,000 per location, “among the best ever for a foreign-language film, not adjusted for inflation” (McClintock, “Box”).
[21] Academy Award voters were divided on this practice: some were critical while others saw Netflix as a distributor for films that other studios had passed on (Keegan).
[22] Netflix reportedly considered purchasing Landmark Theatres in LA, but the price was too high (Faughnder).
[23] Tom Quinn, co-founder of film distributor Neon, stated that the industry needed to “settle down and figure out what’s best for each movie” saying that The Irishman was best viewed in a theater because of the commitment the audience made to view it in one sitting (qtd. in Kohn, “Parasite”).
[24] The Academy reportedly considered adding a rule that would disqualify Emmy-nominated content; awards submitters would be forced to define their submissions as films or television (Lee).
[25] Allegedly, Cannes regretted missing Roma in 2018 and wanted to show The Irishman in 2019, but its de-aging special effects were not completed. Possible solutions have abounded, but the likelihood of any being accepted by Netflix, Cannes, and the Federation of French Exhibitors remains unlikely (Keslassy and Donnelly).
[26] Netflix reportedly invested $160 million in The Irishman (Lattanzio).
[27] The Netflix algorithm is essential for combatting the choice fatigue that causes subscribers to lose interest between 60 and 90 seconds when trying to select a title; it is designed to present a flow of content that keeps subscribers engaged (Broeck et al. 39; Gomez-Uribe and Hunt 2; Samuel 87).
[28] An example of a micro genre is Emotional Fight-the-System Documentaries (Jenkins).
[29] Journalist Barry Hertz described Mudbound as at the mercy of Netflix’s algorithm; the presiding issue being whether the algorithm or conscious decisions would properly promote the film.
[30] A 2013 survey by Netflix found that 73 percent of its subscribers “considered binge watching the ‘accepted’ and ‘normal’ way of receiving their content” (Samuel 79).
[31] The United States’ largest theater chain AMC Theatres had its credit rating downgraded with a predictive statement of “default imminent, with little prospect for recovery” (qtd. in Ankers, “AMC”).
[32] Drive-in theaters have found success amidst the closure of traditional brick-and-mortar theaters (Ankers, “AMC”).
[33] The rest of the industry has also adapted to the focus on digital distribution. Popular review website Rotten Tomatoes removed its homepage sections about what films were in theaters and what films were soon to be in theaters. Instead, its homepage displayed “Top Streaming Movies,” which broke down by platform, with Rotten Tomatoes’ associated streaming service Fandango NOW being the first displayed and Netflix the second. Rotten Tomatoes also published an article advertising niche streaming services that focused on specific markets (Friedlander).
