By Chris Owen, Director, UK
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It’s time to explore the second of our seven basic plots: tragedy, where the protagonist is a hero with a major character flaw or a great mistake that is ultimately their undoing.
The age of Blockbuster
Ah. The good old days. Walking into the local video rental store and browsing the shelves full of VHS cassettes, all the while looking at whether it was a standard (50p/night) rental or a premium film knocking on for a huge £1.50/night. Heady heights indeed, but surely a fair price to be able to watch the latest Hollywood epic landing in a popcorn-smelling, pick ‘n’ mix punting Blockbuster near you.
You find what you want — mere months after it left the cinema screens — and take it to the counter where a disillusioned undergrad absently scans the barcode, while waiting for their shift to end so they can go down to the student union. Your rental record is updated — a profile being built on what you prefer to watch (albeit at a rate of perhaps 10 films a year and stuck on a system which needs a floppy disk to remove the data).
Then, VHS became increasingly obsolete, and the CD rocked up.
A change in the tide
In 2002 Lovefilm arrived promising the latest hits in the post. Amazing. And then, once you’d watched them, all you had to do was go to the hassle of posting them back. Or forgetting about them, and eventually cancelling your subscription and never renting again because you were worried about the fine.
Give its future-gazing due, its foray into streaming grabbed the attention of Amazon, and Lovefilm was acquired in 2011 as part of its ‘Instant Video’ service. The postal option was alive and kicking (well, thrashing in its death throes), until autumn 2017 when Amazon decided to sunset it due to ‘decreasing demand’ for discs.
This would be quite the understatement if it weren’t for the fact that, despite the near monopolistic dominance of streaming, Netflix still has a disc-on-demand service with around 2.5m subscribers. I mean, this is nominal against the near 170m worldwide, but still. Admirable.
Netflix takes over the market
What Netflix has done for the film industry can’t be over-stated. Its streaming service has fundamentally changed entertainment. Its sophisticated data-modelling allows micro-targeting that ensures it can promote niche titles to incredibly small audiences, with a very high expectation on take-up. Instead of the high-investment/high-risk strategy of major studios, Netflix can acquire content knowing that it can get the eyeballs on it that the investment dictates. As such, it returns huge sums into smaller production houses and studios.
Through such a high success rate on quality recommendations, it drives loyalty among subscribers. It’s been such a success that it is has now become a studio in its own right, creating original material it knows it can almost guarantee returns on, creating further brand allegiance through being recognised as the creator of the likes of ‘House of Cards’.
So what’s the tragedy?
Well, if you’re Blockbuster, the tragedy is that in 2000, when Netflix was losing money with less than half a million subscribers, you had the chance to buy it for just $50m. Netflix would continue with the online business, and Blockbuster the physical.
In terms of a tragedy, our hero is Blockbuster — the local video store where you got judged for renting ‘Cool Runnings’ for the third time in a row. The great mistake is not buying Netflix for roughly 0.25% of its current revenue.
You win some, you lose some. And some you get absolutely leathered on.