Disruption – the process of creating a new market that eventually conquers an existing market by capturing committed consumers and displacing the former market leaders. We have seen many technologies such as Uber, Airbnb etc. that have successfully disrupted industries but in my opinion one company stands out from the rest. This company has successfully disrupted the entertainment industry not once but 3 times in a span of 17 years.

First disruption

Video rental market (Blockbuster) >> Netflix started in 1997 and by 2005 it had gained 4.5 million subscribers and replaced blockbuster as the #1 video rental choice.

What can we learn from this? Netflix started by focusing on a small group of frustrated consumers who were not happy with Blockbuster’s video rental services.  It provided an easy solution to this group’s pain points such as travelling to and from the store, late fees on rented DVDs and unavailability of desired movies. Furthermore, Netflix’s clever monthly subscription of $8.99 for unlimited access to all the movies within its database was extremely attractive to consumers currently paying $4.99 for a three-day rental movie. A combination of value and attractive pricing enabled Netflix to grow its customer base and dethrone Blockbuster.

Second disruption

Streaming and consuming content the way you like >> Previously, mainstream content could only be consumed on television but Netflix changed this by enabling users to watch its content on smartphones, tablets, computers, TV, and gaming devices. It added popular TV shows and created a new behaviour of binge-watching by allowing people to upload the complete series.

What can we learn from this? Through innovation and influence, Netflix created demand for consumption of content across different platforms putting pressure on the TV industry to provide a similar experience to its users. It led to service providers launching app platform compatibility and HBO launching its own subscription service.

Third disruption

Creating original content >> In 2013, Netflix launched its first original TV series called “House of Cards”. This show’s success can be quantified in its cult following, nine Emmy nominations and three wins. Following the show’s success, Netflix started producing additional content, displacing the TV industry as the only creator of TV shows. Netflix success is a huge threat to the TV industry as many users have already cut the cord.

What can we learn from this? Since its launch in 1997, Netflix had collected huge data on its user base. By mining the consumption data, Netflix not only improved its user’s experience through recommendations but also discovered the type of content that appealed to them. This insight was imperative in creating original content. Letting show creators make decision based on merits of the show rather than production houses running after TRP and powering these creators with knowledge of preferred content (genre, talent etc.) are the key factors that drove Netflix’s success as a content creator and the industry disruptor.

With the emergence of virtual reality, changing consumer trends and direct competition with the entertainment industry, I can only imagine what Netflix is brewing and cannot wait for its next disruptive technology.


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