Netflix attempts a Global Optimisation … plus the latest release from DJ Dr Fish
If you are like me, you tried to steer clear of Operations Research at university for as long as you could. OR, for those of you who either don’t know or delightedly forgot, is the practical application of optimisation methods to real world problems. Dull but really important if that’s your bag…
Netflix has emerged as the global giant in online streaming of movies, tv shows and video. Apparently, 60% of internet traffic globally is Netflix related. From their standpoint, they would love to offer the same entertainment content to everyone globally since this would maximise revenue while minimising cost i.e. they make the most profit. Sadly for Netflix, they entered a globally fragmented market where every content provider(movie and tv studios) had contracted individually with every content distributor (movie theatres and tv stations) on different terms, in different countries with different exclusions, fees, etc etc. In short, the golden objective of one product for everyone, anywhere is impeded by the historical practice of negotiating mutiltidue of restrictive contracts on a case-by-case basis. e.g. the Fox Network can broadcast Star Trek in the US but not Europe.
One basic result from Operations Research is that the more constraints that get layered on an optimisation problem, the lower the value of the Objective Function. In other words, restrictive content contracts mean lower profits for Netflix. And so it is that Netflix has boldly gone where no content provider has ventured before – disassembling the complex labrynth of legal restrictions to launch a single Netflix for everyone, anywhere (or close to it). The fact that they have achieved this feat is truly momentous – consider the power Netflix must wield over the Fox Network to induce Disney to recontract!!!
But the benefits will be more far reaching. Exclusivity is a local marketing advantage for local broadcasters. If Netflix can break this constraint, then any owner of Global content should be able to, well, go Global with Netflix and cut out the local gatekeepers. Rugby, Soccer, Cricket, Shakespeare – you name it – its coming to everyone, anywhere very very soon…
PS: Check out the latest release from DJ Dr Fish at https://soundcloud.com/stephen-john-fisher/a-fish-mix-for-unfocused-meditation-and-document-review