Know about how Netflix could eventually stop losing money
While you spent the holidays streaming “Bird Box,” “Black Mirror: Bandersnatch” and/or re-watching “The Office” for the hundredth time, Netflix Inc. was playing out a corporate drama of its own—poaching Activision Blizzard Inc. Chief Financial Officer Spencer Neumann to be its new CFO.
Just before the news emerged, Activision abruptly announced that it would fire Neumann, who had agreed to a provision that barred him from negotiating for a new job until the last six months of his contract. It was a clear sign that Neumann wasn’t willing to pass up a chance to work at Netflix, this era’s preeminent high-flying, a money-burning media company.
Another, more untested path would be to cater more to active users over less engaged ones. This is where the company has a lot to learn from Disney and Activision, Neumann’s former employers. Both of those companies—in very different ways—do a great job of charging different customers vastly disparate amounts of money for consuming their content.
Disney doesn’t just charge you for a ticket to see Star Wars. If you’re a superfan, you can buy action figures, go to a Disney theme park or watch “The Clone Wars” on Netflix. There are endless ways to upsell customers based on their affection for a particular piece of intellectual property.
The video game industry has a term for this—whales. Many companies make the bulk of their revenue from a relatively small group of people, and modern games are built to extract the maximum amount from those willing to pay. That means selling in-game loot boxes, virtual items, and special game editions. Activision is also exploring esports to further monetize its popular titles.