Netflix Video Games: Vigilance Through Self-Disruption

by | Nov 2, 2021 | Be Vigilant Book | 0 comments

TRANSCRIPT of VIDEO: NETFLIX VIDEO GAMES: VIGILANCE THROUGH SELF-DISRUPTION

Netflix rolled out five exclusive mobile games today, available for free to all Android subscribers to its service. The games are ad-free and, for now, there doesn’t seem to be a plan for Netflix to monetize them.

I talk about Netflix in my book (Be Vigilant! Strategies to Stop Complacency, Improve Performance, and Safeguard Success). I use it as part of the story of how complacency can threaten even the most successful businesses, as it did to Blockbuster.

But the story of Netflix and its relevance to complacency and vigilance goes so much deeper than how it overtook Blockbuster and completely re-wired the movie rental business. In fact, the Netflix story provides ample material to discuss both sides of the complacency coin.

Sure, there’s the lesson of how complacency can feed on overconfidence and self-satisfaction, like it did for Blockbuster, opening the door for Netflix to enter and, subsequently, dominate an industry.

But, the more interesting part of this story is what happened after that. I talk in the book about how one of the ways to fight complacency with vigilance is to continually “get off the X” or, in other words, stay strategically unpredictable.

One of the ways to accomplish that is to disrupt yourself. In fact, the best type of disruption is self-disruption. And this is what Netflix has continued to do.

From physical movie rentals via the mail, to streaming, to content production, Netflix hasn’t rested on its laurels. It hasn’t allowed itself to get comfortable and vulnerable. It’s constantly looking to innovate, to expand its industry and market, to enter new ones.

And that’s why this move into video games is so interesting. Nielsen’s Gauge report recently showed that streaming only represents 26% of all tv time, with Netflix only accounting for 6% of total tv time. As competition in the space continues to heat up (Disney+ and Amazon Prime have been fierce competitors during COVID), Netflix once again looked for a way to change direction as well as the value equation.

There are some who believe this is a bad move for Netflix, that video games are not their core competency, that diversification in this way can be distracting and confusing. And perhaps this might be true if Netflix was looking to get into the video game selling business. But a quick look at two of its first five games hints at something different.

Stranger Things has been a successful franchise and a demonstration of the power of original content for Netflix. Two of the games they introduced today are under the Stranger Things umbrella. Who will these games be attractive to? Stranger Things fans, of course. How long do you think it will be before a Squid Game game is launched?

The games are added value and they’ll keep customers on their Netflix app for longer periods of time. Netflix is pretty good at self-promotion on their app, so the longer you spend there the more likely you are to discover something new to watch. The more eyeballs they keep on the app, the more likely they are to have trending content that draws more subscribers.

But here’s the thing. Whether video games turn out to be a success for Netflix or not, just by launching them they are forcing their competitors to question whether they should be there too. Competitors who are in reaction-mode are less likely to be in action mode. Just by keeping them guessing, Netflix gains an advantage.

Getting off the X, practicing strategic unpredictability, forces competitors to re-observe, re-orient, re-decide, and re-act, which slows their overall decision making process (I talk about this in relation to a concept called the OODA loop in the book). When it comes to your competition, slower is better as it relates to decision-making.

Remember, complacency feeds on past success. On the over-confidence and self-satisfaction that can make us predictable and vulnerable to competition. The best way to fight complacency is with vigilance. And one way to be vigilant is to practice the self-disruption Netflix practices in order to keep it at the top. So, be a Netflix and figure out a way to disrupt yourself today, before your competition does it for you.

Until next time, I’m Len Herstein. Be Vigilant!

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