Netflix: Challenging Conventional Wisdom

It’s almost 20 years since Netflix was founded. Starting life as a DVD rental service, the California-headquartered company was officially founded by businessmen Reed Hastings and Marc Randolph in August 1997.

Where rival rental service Blockbuster failed, Netflix succeeded by making the leap into online content. In 2007 the company began expanding into streaming services across the United States. By 2010, it had gone international.

Today, the Netflix brand has become synonymous with online film and television services, and the company’s forecast revenue for 2017 is just over $US 8 billion.

With figures like that and a history dating back two decades it might surprise some that the company had not, until last year, set up a centralized intellectual property team.

Ali Buttars, Trademark Specialist, Content and Brand IP at Netflix, says that today the company supplies original content to more than 190 countries in 23 languages.

Netflix’s leap into producing its own content is a recent venture. The company started making its own shows in 2013 and this business move prompted the company to turn its attention to protecting its newly created IP.

“While our house brand enjoys a high degree of fame, a great deal of attention is devoted to our shows and films,” Ms. Buttars explains.

Ms. Buttars, who joined the company earlier this year, says: “My primary focus is to develop and manage the trademark clearance, prosecution, and consumer-friendly enforcement strategies around our house and title brands.

“Our goal is to create thoughtful efficiencies that will allow us to scale as our global footprint and content offerings grow. Efficiency avoids undue process—a core value of the Netflix culture.”

Customers First

Although the need to protect Netflix’s IP is clear, the company’s customers’ needs are the main focus of its business strategy.

Considering what consumers want is at the forefront of the company’s thoughts when assessing IP.

“Our whole business is built on this idea, and nearly every decision made in the company at every level is viewed through this lens,” she explains.

“In many ways, that makes us totally aligned with the most important role that trademarks play: helping consumers.”

This approach has cultivated an authentic and positive relationship with subscribers, she adds, noting that “it’s our team’s job to be respectful of our customers’ desire to engage with our IP, and in many instances, encourage them to do so if they are passionate about it, because that can amplify our brands.”

She acknowledges, however, that as is the case with all other film and entertainment companies, copyright is “just as important” as trademarks and is “one of our greatest assets.”

Despite its loyal fan following, Ms. Buttars stresses that Netflix will not hesitate to take action to root out bad actors who may use the company’s IP to commit fraud or scam people.

In April, the company was targeted by a hacker or hacking group known as “thedarkoverload,” who got hold of several episodes of the popular prison drama series Orange is the New Black that had yet to be aired.

The episodes, which were hacked from a post-production house, were leaked after Netflix refused to meet an undisclosed ransom demand.

But the hack did not have its desired effect. The hacker/s did not get their money and, according to media reports, the stunt was seen as a failure.

The episodes, the reports said, would likely have been viewed by only a small number of non-Netflix customers, while the company’s loyal following preferred to watch episodes directly as they aired—perhaps a vindication of the consumer-focused mentality Netflix adopts.

Future Focus

As the company grows (it has more than 100 million subscribers) and understandably becomes the focus of more media attention, what are the IP team’s efforts currently focused on?

One area Ms. Buttars highlights is the creation of more original local content, unique to certain jurisdictions.

Mexican political series Ingobernable, Las Chicas del Cable, a Spanish drama focusing on four women hired as operators of a phone company, and Okja, an upcoming South Korean-American feature length film, are some recent examples.

Netflix is reaching new audiences, Ms. Buttars says, and there are various topics to be considered.

“It’s my job to collaborate with many other stakeholders including creative, marketing, and localization teams, who all have different perspectives, goals, and risks, and bring my perspective to the conversation so that we can collectively make the best decisions,” she says.

“Laws vary on a country-by-country basis and those differences inform how we scale our original content. We try to balance our customers, where they are, and what they love against risk. The difficulty lies in finding the right balance.”

She adds that one of the biggest challenges is knowing when and how to localize content and the brands that arise from it.

“It’s our team’s job to know how to create strategies to scale fast and partner with our globalization teams and linguists to best serve our global customers. We look at whether it is a series or single title, and whether there are business plans to use the English title with a localized title supporting it, or vice versa. We also take into consideration local cultural sensitivities and tastes.

“We constantly try to find ways to challenge conventional wisdom.”

As productions become increasingly international, the need for understanding the nuances of international copyright law also grows, Ms. Buttars says.

“We carefully review our original content to ensure that it does not infringe third-party rights. But we always do so in a manner that allows our show runners and filmmakers to fulfill their creative visions,” she says.

From its humble beginnings to the powerhouse it is today, Netflix has been on quite a journey. It survived the shift from hard copy rentals to online streaming and has since managed to evolve into a production and content creation company in its own right. With revenues high and subscribers ever increasing it shows no sign of slowing down. Even cyber attacks struggle to bring it down.

The secret to its success? Knowing, understanding, and engaging with what its customers want.

Ali Buttars will be speaking at the Trademark Administrators Brunch at 11:30am today.

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