Summary: Netflix Nations: The Geography of Digital Distribution by Ramon Lobato

Recommendation

Netflix is so ubiquitous that it’s a verb, with users saying “Let’s Netflix it,” or “Netflix and chill.” Netflix is an interesting case study for those interested in the future of global television, says media and communication researcher Ramon Lobato, as it leverages both local and global strategies, catering to audiences multifaceted desires within one platform. Glean valuable insights into how Netflix’s rise to global dominance impacts media policy, user preferences and television distribution across the world. For Lobato, Netflix’s journey from DVD-rental service to a major disruptor of the entertainment industry illustrates the tensions between the desire for globalization and localizaiton.

Take-Aways

• In disrupting traditional media, Netflix creates a new paradigm for entertainment on a global level.
• Netflix embraces aspects of transnational, national and global business.
• Netflix isn’t a single, monolithic entity – it’s a complex metasystem.
• Netflix’s infrastructure reflects and reinforces existing socioeconomic disparities.
• Diverse local audiences demand a differentiated global strategy.
• Governments attempt to protect local television from TVOD’s cultural imperialism.
• Users fight back against geoblocked content and segmentation.
• You can learn five major lessons about the future of global television from Netflix.

Summary

In disrupting traditional media, Netflix creates a new paradigm for entertainment on a global level.

Part of Netflix’s success, as the world’s biggest subscription video-on-demand (SVOD) service, lies in the fact that it managed to bridge two American obsessions, home entertainment and e-commerce. Founded in California in 1997 as a DVD mail-order rental service by entrepreneurs Reed Hastings and Marc Randolph – who worked as an executive in direct sales – Netflix launched its streaming platform in 2007, outcompeting its rival Blockbuster. Today, Netflix is popular around the globe, with over half of its subscribers living outside the United States. As Netflix’s international audience grows, it flexibly evolves with it, strategically localizing content and reflecting user preferences in its licensing, marketing and original programming.

“Internet television does not replace legacy television in a straightforward way; instead, it adds new complexity to the existing geography of distribution.”

Think of Netflix as a “shapeshifter,” rather than trying to prescribe a simplistic role to it, as it’s a complex, multifaceted company, occupying multiple roles. While Netflix used to define itself as “the world’s online movie rental service” in 2009, today it refers to itself as a “global internet TV network.” In reality, Netflix is many things: technology company, software system, cultural gatekeeper, lifestyle brand, video platform, distributor, television network, global media company, big-data company and ritual. Netflix is a “hybrid TV-cinema-digital media distribution system” that takes aesthetic and experiential inspiration from older media forms, such as film and cable television. It isn’t just a digital media service, nor does it mimic traditional broadcast media: It contains elements of both.

Netflix embraces aspects of transnational, national and global business.

Netflix is both transnational, in that it crosses national borders, and global, as it simultaneously operates in several international markets. Since the advent of cable and satellite distribution, as well as digitization and the privatization of many state broadcasters, television infrastructure has been deregulated – it’s no longer easy to contain content neatly within national borders. Netflix’s entrance into international markets has triggered controversy on a number of occasions, with many viewing Netflix as effectively engaging in “cultural trespassing,” rejecting the globalization of entertainment. For example, the Kenya Film Classification Board described Netflix’s entrance into Kenya following its global switch on in 2016 as “a gross contravention of the laws governing film and broadcast content distribution in Kenya.”

“Given that the political discourse around Silicon Valley tech companies is changing rapidly at the moment, over the next few years it will be instructive to follow how Netflix and other internet television services are construed as allies or enemies in various national contexts.”

There’s a need to rethink what it means to be “transnational”: Netflix may be more transnational than other companies, but it still headquarters its operations in the United States and relies on territorial copyright licensing, embracing some elements of nationalism. Netflix also doesn’t penetrate every single market, as it’s not available in Iran, Crimea, North Korea and China. The best visual metaphor for Netflix is that of a “loose mesh” in that there are gaps in its service, but it covers most of the globe. Alternately, you can visualize it like you would shipping route maps, as its network appears in regions with preexisting concentrations of capital and connectivity. It’s impossible to detangle debates about the globalization of television content from those relating to monopoly fears, tax evasion, local-content protectionism and the current backlash against Big Tech. Whether governments will view Netflix’s services as threatening, “mere entertainment” or even “beneficial” overall remains to be seen.

Netflix isn’t a single, monolithic entity – it’s a complex metasystem.

Infrastructure refers to the underlying, often invisible systems that help deliver video to digital viewers. In the United States, an “infrastructure movement” is emerging, with scholars reflecting on new dimensions of infrastructure that extend beyond factors such as engineering. Today’s new “infrastructural turn” considers: “codetermination,” or the ways in which infrastructure influences media and communication and vice versa (for example, online video streaming services adjust resolution to match viewers’ broadband speeds); the complex layering of interdependent systems across physical space; and the dynamics of global competition that contribute to standardization of the processes formats, materials and equipment used.

“Netflix is not a unitary thing but a complex and dynamic metasystem made up of hundreds of different software processes that relies on hard and soft technical infrastructures, open and closed knowledge systems, and public and private investment.”

On an infrastructure level, Netflix is “the end product of interlocking and co-reliant technical systems, including a mix of public and private, open and closed, and soft and hard systems.” Netflix relies on “hard” infrastructures, such as energy infrastructures; “soft” (software-based) infrastructures; and human infrastructures, composed of a complex web of workers including programmers. Netflix’s infrastructure reveals that the company is far from a monolithic, static entity, but rather, is supported by 700 micro-services, which operate independently and communicate via application programming interfaces (APIs). Each micro-service achieves something entirely different – some load artwork, for example, while others deduct a customer’s monthly fee, contributing to an ecology of small-scale systems.

Netflix’s infrastructure reflects and reinforces existing socioeconomic disparities.

There is nothing neutral about internet infrastructure, as it can exacerbate existing dynamics of minoritization and privilege. For example, from a soft infrastructure standpoint, Netflix asks customers to pay using credit cards in most countries, which could exclude customers without access to credit. Similarly, the geography of physical internet infrastructure – such as satellite data links – is unevenly distributed, which means Netflix’s global customer base has uneven access to an uninterrupted entertainment streaming experience. Those in rural areas have less access to subscription video-on-demand (SVOD) services than those in urban areas. Providing even access to services isn’t always an easy task, especially in developing countries, where only those in higher socioeconomic brackets can afford to pay for high-speed connectivity: In Cuba, for example, many viewers struggle to watch Netflix due to slow and restricted public internet access, despite it being theoretically available.

“High-speed internet is a scarce, inequitably distributed resource, subject to struggle and vested interests, rather than a ubiquitous feature of modern life.”

Conversations about digital inclusion and exclusion arise when variables such as location, class and age affect people’s ability to access internet services and platforms such as Netflix. For example, Netflix’s content delivery network (CDN) Open Connect operates as a private network, accessible within the public internet, but it’s not available to all users, effectively creating a “fast lane” for more privileged users. The future of Netflix hinges, in many ways, on the spread of high-speed internet amongst the global middle classes. Today, Netflix lobbies governments to invest in public telecommunications infrastructure for its own commercial reasons, making it difficult to differentiate good public policy from corporate self-interest.

Diverse local audiences demand a differentiated global strategy.

TVOD services have the competitive advantage of being able to enter different national markets with minimal in-country infrastructure. While Netflix has offices in several countries, ranging from Brazil to Mexico and India, it centralizes its operational activities in a few locations, billing most customers only via Amsterdam, Los Gatos and Singapore. In the global media landscape, there’s no such thing as an undifferentiated global market – companies such as Netflix must develop a sophisticated understanding of national markets, considering factors such as genre preferences, income languages, willingness to pay and more. Netflix’s approach to localization hinges upon using user data to better understand local preferences and trends, rather than investing heavily in foreign staff and offices.

“[Netflix’s] long-distance localization model represents a Silicon Valley engineering response to a much older, and thoroughly cultural, business challenge – the stubborn locality of taste.”

Netflix’s localization strategy hasn’t worked seamlessly in every nation. For example, when Netflix entered Japan, it failed to fill a market gap, as Japanese viewers prefer to watch Japanese content. Even though Netflix included more local content – 40% – than usual in its Japanese catalog, it wasn’t enough to satisfy Japanese audiences. Some commenters began using the term “kurofune,” or “black boats,” to describe Netflix’s presence in Japan, referring to Commodore Matthew Perry’s forcible “gunboat” opening of Japan’s markets in the 1850s to foreign trade, reflecting fears that Netflix’s arrival would herald an unwanted influx of low-quality US content. Netflix responded to the feedback with increased localization efforts, committing to co-producing Japanese television, such as the shows Terrace House and Atelier.

Governments attempt to protect local television from TVOD’s cultural imperialism.

Netflix balances global and local tastes with a “both/and,” rather than an “either/or” strategy. Netflix wouldn’t succeed if it always behaved as a local television service – in reality, viewers don’t want local content all the time, and high-quality shows can have transcultural appeal. There are certain shows that global viewers overwhelmingly prefer to local shows (e.g., House of Cards). Netflix’s “cultural imperialism” has prompted intense national debates, triggering renewed cultural protectionism from legislators in nations that worry about SVOD’s power to erode local culture. For example, the European Union views cultural works as “creations of the spirit,” as opposed to simply commodities, with EU law requiring each member state to ensure that at least half of its broadcast television content remains European.

“Netflix stands as a singular but fascinating case study – a specific vision of what global television might mean in an internet age – as well as a reminder that digital distribution cannot easily overcome the stubbornly local dynamics of culture, consumption and taste.”

The Canadian Centre for Policy Alternatives warned in 2016 that Canada would lose control of its national broadcasting system, disrupting national programming, unless the country regulated content (Netflix avoids demonstrating its commitment to Canadian content quotas via sharing user streaming data). In 2017, Netflix agreed to establish a Canadian production base, investing $500 million CAD. The government simultaneously decided not to impose a digital streaming service sales tax on Netflix, while controversially insisting it hadn’t given Netflix a tax break in exchange for production spending.

Users fight back against geoblocked content and segmentation.

Users have adapted and sometimes “tricked” Netflix’s service to better suit their needs. Users circumventing geoblocking is controversial, as subscribers leverage tools such as VPNs, browser add-ons and Smart domain name systems to change their IP address and access content. Initially, Netflix had a fairly permissive stance toward geoblocking circumvention, but it introduced VPN-detection technology in 2016 after facing external pressure from rights holders, such as Sony, to better protect geoblocked content.

“The digital media business is inherently leaky because it is built on the sale and leasing of access to infinitely reproducible goods, such as digital videos and e-books.”

Rights holders were particularly concerned that viewers using tools such as VPNs might watch a show from outside their region on Netflix, rather than through local pay-TV services. This posed a threat to Hollywood studios who couldn’t charge their desired amount for content without enforcing territorial market segmentation and exclusivity. Today, Netflix’s anti-VPN technology isn’t foolproof, but it’s created significant hurdles for users hoping to access geoblocked content, helping Netflix contain the “threat” posed by these users. These “proxy wars” gave rise to heated debate about the pros and cons of “borderless TV,” while Netflix has slowly reduced catalog differences, investing more in its own original programming.

You can learn five major lessons about the future of global television from Netflix.

Netflix demonstrates five important principles about the future of television:

1. Taste is still localized – Despite globalization, taste still differs from one region to the next.
2. Local and global television content can coexist – Netflix’s more global offerings won’t reduce viewer demand for local productions; instead, it will give viewers more options to satisfy their desires.
3. Netflix doesn’t have a uniform impact on the world – Netflix doesn’t disrupt each region it enters evenly, but rather, its subscriber base varies substantially from region to region.
4. Uniform pricing excludes low-income viewers – As Netflix endeavors to maintain price consistency as much as possible across the globe, this pricing strategy excludes those from lower socioeconomic brackets in low-income countries, where it has become a niche service.
5. Internationalization has structurally transformed Netflix – Netflix faces different regulatory pressures in different nations and must operate differently in different contexts. It’s best to view it as a “collection of national media services” connected together, as different global frictions give rise to more complexity and diversity. The more Netflix expands its reach globally, the more it is itself transformed.

About the Author

Ramon Lobato is the author of The Informal Media Economy; Shadow Economies of Cinema; and Geoblocking and Global Video Culture. He’s also a media and communication senior research fellow at RMIT University, Melbourne.

Review

I have read the book [Netflix Nations: The Geography of Digital Distribution] by [Ramon Lobato] and I am ready to give you a brief review of it. Here is my review:

Netflix Nations: The Geography of Digital Distribution is a book that examines how Netflix, the world’s largest subscription video-on-demand (SVOD) service, has transformed the global television industry and culture. The book is written by Ramon Lobato, a media scholar and researcher who specializes in the study of digital media distribution and globalization. The book is based on extensive research, including interviews, documents, reports, and case studies, as well as Lobato’s own observations and experiences as a Netflix user and subscriber.

The book challenges the common perception of Netflix as a uniform and revolutionary global service that offers the same content and experience to all its users around the world. Instead, the book argues that Netflix is a complex and diverse entity that varies according to different national and regional contexts, such as markets, regulations, infrastructures, cultures, and tastes. The book also argues that Netflix is not a new phenomenon, but rather a continuation and adaptation of previous forms of media globalization and distribution, such as satellite television, cable networks, and video rental.

The book is divided into three parts. The first part, “The Journey”, traces the history and evolution of Netflix from its origins as a DVD-by-mail company in the US to its expansion into an online streaming service that operates in more than 190 countries. The book shows how Netflix adapted its business model, technology, content, and marketing strategies to different markets and challenges, such as licensing agreements, bandwidth limitations, censorship laws, local competitors, and user preferences. The book also shows how Netflix interacted with various stakeholders and actors in the global television industry, such as producers, distributors, regulators, advertisers, journalists, scholars, activists, and users.

The second part, “The Empire”, explores the impact and influence of Netflix on the global television landscape and culture. The book analyzes how Netflix’s products and services have changed the way people watch, access, produce, and share television content across different platforms, devices, genres, languages, and formats. The book also examines how Netflix’s platforms have enabled new forms of expression, creativity, participation, and activism in different social and political contexts. The book also discusses the challenges and risks that Netflix faces in its global expansion, such as cultural clashes, legal disputes, political pressures, cyberattacks, and ethical dilemmas.

The third part, “The Future”, looks at the prospects and challenges that Netflix faces in the changing and competitive digital media environment. The book highlights how Netflix has been investing in new technologies and fields that could shape the future of television and media consumption, such as artificial intelligence (AI), virtual reality (VR), biotechnology (BT), quantum computing (QC), and space exploration (SE). The book also addresses how Netflix has been coping with the increasing pressure from the Chinese government and regulators who have been cracking down on the tech sector for various reasons such as antitrust violations data security concerns social stability issues national security threats. The book also considers how Netflix has been responding to the growing competition from other tech players both inside and outside China who are vying for market share and user attention.

The book is a well-written and well-researched account of one of the most important and influential tech companies in the world today. It is based on extensive interviews with Netflix executives insiders investors competitors regulators experts journalists activists users as well as public records company documents media reports academic studies industry reports etc. The book provides a comprehensive and balanced perspective on Netflix’s history strategy culture vision values achievements challenges controversies opportunities etc. The book also offers a rich portrait of China’s tech ecosystem and its dynamic interaction with the state society economy culture etc. The book is not only informative but also engaging as it tells captivating stories anecdotes examples cases etc that illustrate Netflix’s remarkable journey and impact.

Strengths:

• Comprehensive Analysis: Lobato provides a comprehensive analysis of Netflix’s content distribution strategies, highlighting the company’s innovative approach to geographic expansion and content curation.
• Insightful Insights: The book offers valuable insights into the future of media consumption, including the growth of streaming services and the impact of location-specific content on user preferences.
• Well-Researched: Lobato’s research is comprehensive and well-researched, drawing on a wide range of sources, including interviews with Netflix executives and industry experts.

Weaknesses:

• Lack of Detailed Analysis: While Lobato provides a detailed analysis of Netflix’s content distribution strategies, he could have delved deeper into the company’s operations and business model.
• Limited Focus: The book primarily focuses on Netflix and its impact on the entertainment industry, with limited discussion of other streaming services or the broader media landscape.
• Tone: At times, the book can feel somewhat academic and dense, which may make it challenging for some readers to engage with the material.

Conclusion:

In conclusion, “Netflix Nations: The Geography of Digital Distribution” is a thought-provoking and insightful examination of the geography of digital distribution and its impact on the entertainment industry. Ramon Lobato’s comprehensive analysis provides valuable insights into the future of media consumption and the role that streaming services will play in shaping cultural trends and global media consumption habits. While the book has some limitations, it is an essential read for anyone interested in the evolving landscape of the entertainment industry and the impact of technology on media consumption.

Rating: 4.5/5

Recommendation:

Netflix Nations: The Geography of Digital Distribution is a must-read for anyone who wants to understand one of the most powerful forces shaping the world today. It is a fascinating and insightful exploration of how technology business politics society culture etc are intertwined in the era of globalization digitalization innovation etc. It is a book that raises important questions about the role and responsibility of tech companies in addressing the opportunities and challenges that humanity faces in the 21st century.