How Netflix Stole Apple's Buzz

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by Jon Friedman
October 14, 2013 9:15 AM
1 Comment
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Think of his piece is a thinly disguised public service announcement, appealing to to the management, workforce and shareholder community of Netflix.

Remember when Apple Inc. had it all? Granted, it is not an easy question to answer because this development took place  way back in the early 21st century. But yes, there was a time when Apple roamed the earth and devoured everything in its path. The company enjoyed a total, suffocating victory. Main Street cheered. Wall Street bowed down. Apple CEO Steve Jobs was deified as the era's answer to Thomas Edison.

Jobs' products were objects of design beauty and technological wonderment. True, not one person actually needed a suped-up smart phone, the way they had to have, say, electricity, mind you. But this, too, was a feature of Jobs' genius. He subliminally persuaded millions of people to believe that they couldn't live without his products. 

And did they believe him? Oh yes. Otherwise sensible mommies and daddies and college-educated nerd-wannabes waited patiently on long lines outside the company's gleaming, teeming stores to be the first kids on their blocks to have a new iPhone or iPad or iDon'tKnowWhat.

Whatever gadget that Apple splashed its good name across was sufficient  And Wall Street noticed, too. Investors wanted desperately to join CEO Steve Jobs' party, and the shares of Apple stock skyrocketed. 

Boasting an extraordinary case of dual citizenship, Apple had the best buzz on both Wall Street and Main Street

But no more.

Today, that honor belongs to Netflix, which mirrors Apple's glory days in some subtle ways. Apple had an initial burst, based on its ability to market a different kind of personal computer. Netflix caught fire by showing Americans a better way to receive and enjoy home entertainment. Both companies slipped and had to make strong comebacks.

In the summer of 2011, Netflix was sailing along when it announced a precipitous price increase, whose biggest crime was the company's horrendous timing. While the hike was entirely moderate, the announcement occurred at a time when the United States was staggering through an economic rough spot. Netflix, perviously a corporate darling, looked opportunistic -- arrogant, even. This is an unwanted reputation for a business that depends entirely on customers' liking it.

Now all is forgiven. Netflix was the hottest stock around during this year. The Los Gatos, Calif.-based operation's shares jumped about 251% year to date and 417% in the past 12 months, compared with 19% and 17%, respectively, for the benchmark Standard & Poor's 500 Index. (Since Steve Jobs died on Oct. 5, 2011, after a lengthy bout with cancer, Apple's stock has experienced fits and starts, not the kind of straight-up ascent we had been used to seeing.)

While Apple's great image stemmed from the aura of its physical products -- phones, tablets, mobile music marvels -- Netflix has burnished its reputation by creating sparkling original content, such as House of Cards, starring the two-time Oscar winner Kevin Spacey, and Orange Is the New Black.

Netflix has succeeded Apple as the hippest company around, the one with the best word of mouth among geeks, entertainment lovers and investors. Whether or not Netflix chief Reed Hastings & Co. have studied the Jobs playbook at Apple to uncover the cherished secrets of being -- or, much more crucially, looking -- cool. And so Netflix did.

Having a certifiable buzz is both the most elusive quality to explain adequately and yet it is also the easiest to spot. The Beatles sure had it in 1964, for instance. It's hard to pin down this quality. How does a person or a government or a company acquire a BUZZ? And how does it eventually squander this zeitgeist advantage and forfeit the legend?

Let's examine three examples of getting and then losing a buzz. 

Sen. Barack Obama certainly had it on the campaign stump in 2008. Now? Come on. Hey, it's hard to make a case for someone, no matter how scholarly and well meaning, whose hair is turning more gray with each passing day (and crisis).

Facebook CEO Mark Zuckerberg oozed it -- Hollywood even immortalized him in a riveting motion picture called The Social Network. But then came Facebook's star-crossed initial public offering on May 18, 2012 and Zuck promptly lost his glow. Something about angry investors having to cancel their orders for yachts, because Facebook's stock price nosedived, will have that effect on the CEO at the top of the food chain.

As the resident star of the small-market Cleveland Cavs, LeBron James was the most popular player in the National Basketball Association and firmly ensconced on the short list of the sports world's most admired superstars. Then he foolishly and recklessly crafted The Decision, when he shamelessly exploited America's fascination with his choice of destination as a free agent in 2010. He quickly became an outcast. It's fair to say that more people were thrilled by the fact that the pariah's team had lost in the 2011 NBA Finals than Mark Cuban's Dallas Mavericks had won the title, by upsetting King James'Miami Heat squad.

So, where do these wide ranging morality sagas leave Netflix -- and, for that matter, Apple? 

Funny thing about The Buzz and America. We love winners. We could forgive almost anything if we were becoming enriched or entertained or convenienced. Because it is all about us.

Obama handily won a re-election in 2012, as the electorate felt less scared of the leaky economy. Netflix Nation rallied around Zuck -- as soon as the NFLX stock price began to zoom in the righteous direction. And what do you know about LBJ? As soon as LeBron led the Heat to one title, then, back to back championships, he once again became the toast of the sports world (well, forgave him, for what it was worth).

As soon as Netflix started to show House of Cards and Orange Is the New Black, its image changed accordingly, too, and it obtained a buzz the size of Alaska. 

As I said, this buzz issue is hard to pin down. It's also tough to quantify in terms of what it means to sales or investors' returns or acceptance on Madison Avenue. But it's crucial because having a buzz means that a company has a shot at wooing people across demographic, age, gender and geographic divides. When you're anointed as being cool, everyone wants to be your friend, follow your lead and join your club.

Meanwhile, Apple, for its part, continues to rack up impressive sales -- remember, its latest batch of iPhones flew off store shelves a few weeks ago -- but there is no actual pop-culture buzz surrounding Apple any more, the truth be told. It reminds me of a line narrator Malcolm McDowell, the actor, uttered in a documentary about The Beatles. He was talking about the period just after Beatlemania subsided. He intoned: The girls still screamed -- but the excitement was gone.

That's similar to where Apple is at nowadays -- it still registers very healthy sales but there is no real buzz around the company any more. That's because Apple is no longer wowing us with its new products. Just as the teenagers continued to scream for John, Paul, George and Ringo, people still faithfully buy the newest iPhones, though it sometimes seems as though they do so out of a sense of obligation, not adventure. It's hard to imagine anyone enjoying the thrill of discovery in the act of purchasing one of Apple's products.

Right now, Netflix has both the satisfaction of recognizing that its buzz is still strong and the motivation of making sure it can hold on to it. Hold dear singer/songwriter Paul Simon's admonition, Got to keep the customer satisfied -- satisfied.  

If Netflix's next original television series is greeted with yawns instead of yelps, it, too, will find itself taking its turn in the barrel, wondering what the heck happened to its buzz

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1 Comment

  • John Ryan | December 18, 2013 5:39 PMReply

    Did no one proofread the first sentence of this? I am baffled.

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