NETFLIX 2028

Taking a look at the largest media company in the world ten years down the line

This month, Netflix announced another quarter of rapid subscriber growth, sending the stock 10% higher. As of this week, the company is worth $137 billion, second in valuation only to Disney ($148 Billion) among media companies. So, with Netflix likely to become the most valuable media company in the world in the coming months, let’s fast-forward a few years and take a look at the Netflix of the future.

In 2018, you probably wouldn’t have thought twice about sharing your Netflix password. Worst case: your cousin’s girlfriend bungles Netflix’s recommendation engine and you end up watching the first episode and a half of Riverdale.

But in 2028, a Netflix password is no longer just a digital key. It’s an entertainment passport. It’s a portal and it’s a wristband. You wield it in the physical world as frequently as in the digital world, and you’re unlikely to share it with others.

That’s because Netflix is no longer a subscription. It’s a membership. It affords you a wide range of entertainment experiences. And it knows even more about who you are and what you like.

The Move to the Physical World

Before we talk about Netflix’s move into the physical world, let’s trace the course of events leading up to it.

Around 2014, the movie theater business began to show signs of strain. However, formulaic superhero adaptations — and their sequels, prequels and spinoffs — would still draw for several years, briefly papering over industry declines.

The reliance on the blockbuster became so profound that, in 2015, 2016 and 2017, the top 10 grossing films accounted for more than 30% of domestic box office receipts. The box office would only become more concentrated through the rest of the decade.

Combined Top 10 Film’s Share of Domestic Total Box Office (Source: The Numbers)

Why the emphasis on big ticket features? One theory is that the studios became more risk averse after a decade of comic book mega-hits, preferring to invest in proven winners.

A simpler theory, however, is that the proliferation of streaming services left the studios no choice. That is, the broad array of entertainment options available in the living room raised the threshold for a trip to the theater, and the studios were forced to respond with ever more elaborate epics.

Just as TV viewing reduced radio listening, internet viewing was reducing movie attendance (and, of course, TV viewing as well).

Anyway, in 2020, reeling from attendance declines, a crippling debt load and a disinterested foreign majority owner, AMC Theatres became available for pennies on the dollar. While Netflix was a major factor in the company’s demise, it also became a major beneficiary.

So, in 2020, Netflix acquired AMC and pledged to change the game.

Suddenly endowed with a formidable global footprint — more than 1,000 theaters and over 10,000 screens in North America and Europe — Netflix went to work. After selling off or leasing away some of AMC’s older and less appealing locations, Netflix’s three-pronged strategy became evident.

N Cinemas : a re-imagination of the time-honored movie theater

: a re-imagination of the time-honored movie theater Netflix Arena : a dedicated space for gaming and competitive eSports

: a dedicated space for gaming and competitive eSports Netflix Arts & Culture: a multi-purpose space for art, music and theater

N Cinemas

The standard movie-going experience hadn’t changed much in the last half century. 3D never became the medium-changing technology some had hoped it would be. And, while the screens were larger and the audio was clearer (and a few theaters had amusement-park-like air and mist blasters), the vast majority of improvement had revolved around amenities like cushier seats and high-end concessions.

N Cinemas set out to change that. Netflix’s R&D division introduced light VR headsets with direct access to the human sensorium, allowing for fully immersive and adaptive story-telling. In 2028, feature films make you think again. Literally.

Potential Viewers at N Cinemas Wearing Netflix-VR Headsets (Image by Reuters)

Although Netflix has erected safeguards to protect viewer data, its machine learning algorithms discern patterns and preferences from your viewing behavior and use the data to improve personalized sensory and emotional experiences (building off its many years of streaming data). So, again, you might think twice about sharing your password, lest your narrative model be tailored to someone else.

The business model has changed too. In the decades earlier, studios and theaters would roughly split the pie. In 2028, Netflix reaps all the profit from its own productions. And, if other studios want to run their films through Netflix’s proprietary experience, they can too — for a sizable cut.

So, the mainstream theatrical experience has shifted substantially in the years after Netflix made a move into the physical world. But the movie theater isn’t the only forum for entertainment that Netflix has re-imagined.

Netflix Arena

By 2018, multiplayer online gaming was already broadly popular among young people. While most players might have just gamed online with their friends, the most skilled players could earn money streaming their gameplay to their fans online.

In the early 2020s, Netflix introduced Arena — a multipurpose arcade and competitive eSports venue. It was a prime example of Netflix iterating on the past and re-imagining the entertainment experience.

The teenagers who may have hung out at the mall or in the basement in the early part of the century now meet up at Netflix Arena. Bring your Netflix membership fob and you can play a library of games with the latest tech. Play with your friends or play alone. Or head over to the amphitheater to watch the pros compete live against players at Netflix Arena in Berlin or Mexico City.

And, just like any other arcade, game credits are the currency. So, you may think twice about sharing your password or loaning out your fob.

Netflix Arts & Culture

This project was more of a branding exercise than a profit-making endeavor for Netflix. After pulling out of the Cannes Film Festival in 2018 over disagreements about what constituted a prize-eligible movie (more here), Netflix set out to establish itself as the standard-bearer for art and culture.

It wasn’t easy. Cultured types initially treated Netflix A&C with a fair amount of skepticism and disdain. Massive tech companies with global footprints can’t often make a claim of highbrow cultural cachet, and this was no exception. But over time, locations around the world inched towards respectability, becoming hubs for cultural exchange and exhibition.

With a Netflix membership and a basic online portfolio, artists, filmmakers and musicians now have a cost-free forum to exhibit their art — with guaranteed foot traffic and an auditorium full of similarly-minded people. Slowly but surely, Netflix Arts & Culture venues have become staples of the local arts scene and essential domains for artistic expression. And Netflix A&C’s new online platform acts as a digital storefront of sorts for artists trying to build their brand.

But What About Online Streaming?

It’s still important! But Netflix’s competitors — like Disney — have mostly caught up and digital media streaming is only somewhat differentiated from platform to platform. Armed with that insight, Netflix moved into the physical world and differentiated itself for a new generation of customers. And it’s never looked back.