Month: January 2017

I don’t very often disagree with Netflix strategy, but the way they drop content is probably sub-optimal and Netflix can learn much from the mobile game industry. One of the key drivers for success for a free-to-play game is the release of new content. To succeed in the space, game companies have to launch enough content to keep players engaged and returning regularly, while also making sure the high valued players never run out of content. It is a tricky balancing act because content is not free, and it is particularly difficult to create compelling content, so you need to release the content that will optimize value to your players.

Netflix also grasps the value of content. It has gone from a distribution platform (initially DVDs, then streaming) to a content company. Their focus now is on creating Netflix Original series (House of Cards, Narcos, Stranger Things, Daredevil, etc.), as content is what is driving people to subscribe and then stay with Netflix.

While I am very cautious whenever I criticize Netflix (it has a great understanding of its customers through very sophisticated analytics), their approach to releasing content is not as strategic as mobile game companies. Netflix largely pioneered binge watching, releasing a season of content at one time and encouraging customers to spend a day or so watching all of the episodes. The benefit of this approach is that it creates anticipation leading up to the new season and customer focus during the binge. Game companies, however, have learned it is best to release a stream of content regularly rather than in large bursts.

Why regular content releases are optimal

A steady stream of content creates habits for consumers where they come back regularly to see what is new. If a mobile game company launches a new slot every couple of weeks or a mid-core company releases a new military unit, the player will return regularly to see what the new content is. Even if the content is not what the customer is looking for, they will then return in the future to see if there is something closer to their desires.

What companies also find is that consumers and players, particularly the high valued ones, churn through content much faster than you expect. Thus, you might feel that the 50 new levels you have launched is enough content to keep players happy for months, but your biggest spenders are likely to consumer it in weeks or even days and then have no reason to return to your game or site. A steady stream of content, however, allows you to manage how quickly they consume the content and always ensure they have something new every few days or weeks.

Regular content releases also increases word of mouth marketing. People often will discuss with their friends and colleagues what happened in the previous episode and what they expect to happen next. Binge watching if anything is the opposite, since you see the entire story arc (at least for the season) in a short period, unless you share that short period with your friends you are encouraged not to discuss the show because you do not want to provide spoilers. While not as strong a force in games, new content is one of the more powerful drivers of social media engagement, and by providing it regularly you ensure strong engagement over time.

Content is also one of the strongest, if not the strongest, triggers for monetization. By releasing content regularly, you are also triggering monetization regularly. While a big drop of content may trigger a large spurt in monetization (or subscriptions if you are Netflix), a constant stream gets people purchasing weekly or every few weeks.

The biggest reason a stream of content is best

The strongest driver of value from regular content releases is that you become part of your customer’s consciousness, you get inside their head. Dan Ariely, the noted behavioral economist, was a Board of Advisor’s member of my first company, Merscom, and taught me perhaps my most valuable lesson in business, the key for an entertainment product to be successful is for the customer or player to be thinking about it when they are not playing. I remember the early days of Facebook games, when people would wake up in the middle of the night to tend their crops in Farmville or tend to their pets in Pet Society, both of those games made hundreds of millions of dollars for their creators. When 24 first hit television (before it turned into 48, 72, 96, etc.), it captured a huge audience share because viewers would spend the week thinking about and discussing what was going to happen to Jack next. These entertainment experiences truly got into the minds of fans even, and maybe more so, when they were not enjoying the product.

An anecdotal example

A recent experience drove home why a steady stream of content is better than bulk content drops. There are two series that I like about equally, Amazon’s Prime Man in the High Castle and Designated Survivor (on Netflix in Europe). The former follows the binge watch model, the first season was released a year ago and the new season was released in December. After watching the first season of Man in the High Castle, I probably did not watch anything else on Amazon Prime for about ten months. I also pretty much lost interest in the series and while I did watch the second season, it did not elicit the emotions the first season did (it could have been due to the actual content, though trying to look at it objectively the seasons seemed comparable). When I returned to watch season two, I noticed other Amazon Prime originals I was interested in and put on my watch list. With the binge watching strategy, Amazon lost a chance to have me more engaged (and thus potentially sell me other Amazon products) and made me less likely to watch season three.

Conversely, Netflix released new episodes of Designated Survivor on a weekly basis (I believe it is an ABC series and not a Netflix original so they did not control the content cadence). I found myself not only coming back every week, but coming back every few days as I was not sure when the new episode would appear. Moreover, I kept thinking about the plot twists and nuances in the series, which has made my enjoyment of the series increase significantly over time and prompted me to discuss it with friends. With the regular content cadence, Netflix has kept me more engaged while increasing the bond with the customer.

The consequences of getting it wrong

Many of you are probably thinking the same thing I was, well if Netflix is doing it wrong, sign me up. So if Netflix has the content cadence issue wrong, why are they so successful?

As I wrote in a previous post, industry leaders and not omniscient. They are often leaders because they are great companies and are providing great value to their customers or players, but they are not perfect. This underlying value can often cover many mistakes, or at least sub-optimal behavior.

That seems to be what is happening with Netflix. They have evolved into such a strong content creation machine, with the ability to create hit series regularly; they have replaced regular release of new episodes of popular shows with simply releasing new popular shows regularly. Thus, when you finish your season of Narcos, you keep coming back for Luke Cage and then Stranger Things. It is not optimal as it is expensive to create continually new series and at some point the creative juices may be as successful.

My money is on Ariely

When planning your content strategy, I would always put stock in the thoughts of Dan Ariely. Create a strategy that always keeps your content, and thus your company, in the mind of consumers. That way you will keep them engaged and ensure your best customers keep spending with you.

Key takeaways

• The mobile games industry has discovered that release content regularly (weekly, fortnightly, etc) is optimal in creating player engagement and monetization.
• The practice of releasing large quantities of content once or twice a year, the binge watching promoted by Netflix and Amazon Prime, is not as effective as regular content releases.
• The greatest disadvantage of large content drops is that the content fails to integrate with the customer’s consciousness when they are not watching or playing, thus making customers less valuable.