Netflix’s complicated role as an innovative disruptor in the film industry

Abstract

This article analyzes specific aspects of industry practice to consider ways in which Netflix has proven itself an innovative disruptor in the film industry. By applying Clayton Christensen’s theory and model of innovative disruption to Netflix, it addresses ways both Netflix and “incumbents” (in this case, legacy film industry businesses, namely the Hollywood studios) epitomize the concept, and what this has meant and might mean in the near future for the industry as a whole.While the streaming platform’s categorization as an innovative disruptor is not new and has drawn plenty of criticism, the author pulls from a combination of academic research and up-to-date coverage in trade journals to analyze four key areas of industry practice where the label could be justified. These four areas are: the skipping and/or collapsing of the usual distribution windows; the traditional lack of clear viewership data to compare with theatrical box office figures; the inclusion in prestige events like Cannes and the Oscars; and the use of metrics and algorithms to track and target users in minute detail.The article also analyzes ways in which Netflix itself has exploited and promoted the ‘innovative disruptor’ label as advantageous for its own business. The steps which have gotten Netflix to where it is today offer insight into film business strategies and industry trends that are actively shaping the future of the industry. This is reflected in how quickly and constantly the film business changes, underscoring how some of the data and information detailed in this article may already be out of date by the time of publication.The article draws conclusions about why Netflix has faced concentrated pushback from legacy businesses in each of the four industry areas analyzed. The article also considers ways the industry and the incumbent business model are themselves adapting as a result. These dual realities demonstrate the full arc of disruption.