3 Higher Ed Lessons from Netflix's "Long Term View"

Netflix's 11 page Long Term View document, posted on its Investor Relations page, is worth investing the time it takes to read.

April 25, 2013

Netflix's 11 page Long Term View document, posted on its Investor Relations page, is worth investing the time it takes to read.   

I predict that this document will be making it on to the syllabi of business school and communications classes throughout the land.   

And if we are lucky, some forward looking university president will be inspired by Netflix's Long Term View document to write up and share one of their own.

In reading the Netflix Long Term View document, 3 points jumped out that may have relevance to higher ed:

1.  How much Netflix spends on content.

Each year Netflix spends $2 billion to license content. Content acquisition is by far Netflix's highest cost.  Netflix invests lots of money each year in technology, in its website and video streaming platform, but these investments are dwarfed by the cost of content.

The analogy here for higher ed is I think the quality of the courses, library services, and other educational services that we provide on our campuses. High quality physical classrooms and labs, state of the art student and athletic facilities, and nice dorms may all be important - but it is the quality of the educational experience that we provide that determines our ultimate value.   

A challenge that we will have going forward is to figure out how to invest more resources in instruction and learning services (from library services to instructional design), without driving up costs.  In a competitive higher ed market students will gravitate towards institutions that offer the highest quality learning experience.

2.  The growth of Netflix's investment in producing exclusive original content.

Of that $2 billion on content, Netflix is spending about $200 million on original content. Netflix expects this investment in original content to grow in the future.   

Netflix's original content strategy is a good one. This year I watched every episode of House of Cards, Netflix's original drama starring Kevin Spacey.  High quality entertainment that I can only find on Netflix will encourage me to keep my streaming subscription.

I expect that many of our colleges and universities will seek to invest in brand name faculty talent to attract and retain students. The superstar professor will only become more visible, and more valuable, in the age of the MOOC.  With massively open online courses setting the cost of consuming educational content close to zero there will be big incentives to offer value-added and exclusive educational services to attract tuition dollars.   

3.  How much Netflix spends on improving its technology and service delivery.

Netflix reports that it spending $350 million a year to improve its technology. Better streaming. Better apps. A better website.

Our colleges and universities will also need to invest heavily in our learning platforms in order to compete for the best students. Competition for tuition dollars will increase as public funding continues to erode, and new players come to the market.  

What do you think we can learn from Netflix's Long Term View?


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