Netflix's Journey Through the Diffusion of Innovations Theory

What is the Theory of Diffusion of Innovations?

This sociological theory explores how new inventions are adopted over time and how soon different groups use them. First talked about in Everett Rogers' 1962 book, Diffusion of Innovations, the theory outlines five key elements that drive this adoption process: the innovations themselves, the adopters, communication channels, the time factor, and the social system in which they occur.

Rogers writes about five different social groups (or adopters) that move through his theory: innovators, early adopters, early majority, late majority, and laggards. This framework applies to a wide range of phenomena, from technology and ideas to religions and professions, making it very useful and interesting.

Communication and marketing departments frequently use this theory to estimate how quickly a product will gain traction and achieve sustainability. They refer to this pivotal stage as "critical mass," the point at which a product has reached enough adoption in its market to ensure ongoing viability and potential for growth.

Netflix's Journey to Critical Mass

My EOTO post and presentation focused on Netflix and its evolution over the years. Let’s examine Netflix’s journey through the lens of the diffusion of innovations theory.

Innovators

Netflix was launched in 1997 by Reed Hastings and Marc Randolph as a DVD rental company. This creative new service allowed customers to rent films online without late fees, setting the foundation for its future transformations into streaming and award-winning original content production. Initially, Netflix appealed to a niche audience of tech enthusiasts eager to embrace new technology and the Internet.

At that time, Marc Randolph was an entrepreneur and marketer fresh from selling his previous start-up, while Hastings led the software company Pure Atria. Before Netflix, Randolph had pitched several ideas that Hastings ultimately rejected. It’s intriguing to consider how different the landscape might be if they had chosen one of those alternative concepts. The success of Netflix as we know it today highlights the power of that pivotal decision.

Early Adopters

Early adopters of Netflix were people who were ready for more options in movie rentals and were also tech-savvy enough to use the internet and manage the new online system that was launched. This happened during my parent's generation when they were in their 20s and using tech at work. My grandparents were not on board at this point and were happy to keep renting their movies at Blockbuster and watching local television and cable.

Early Majority 

By 2007 Netflix saw a new way forward with their new streaming model by adding a subscription model and offering movies that could be watched and downloaded online. In 2013 they started adding original content like House of Cards which brought in more subscribers ready to leave cable. 

Late Majority

By 2015 streaming became the leading way of watching movies and television and Netflix was a popular choice. Once people subscribed to it, they tended to stay and started telling their friends about new shows they were watching. This group started viewing Netflix as a better value than cable due to the huge library of on-demand content.

Laggards

The laggards to Netflix were people set in their ways and didn't want to switch from cable to on-demand streaming. They also may have been people who weren't that interested in the latest movies and TV shows until it really became the "norm" to have subscriptions to multiple platforms.

Conclusion

Netflix had a lot of advantages over its competitors as its platform became more popular. A big one was the huge content library, as well as being able to watch content on so many different devices besides televisions like phones, tablets, and desktops. The platform turned out to be very easy to use by the laggards, once they adopted the technology. As they added original content that started winning awards, word of mouth and visibility added more users, and social media added to the buzz.

Netflix’s journey through the Diffusion of Innovations Theory is a great example of how a creative idea and new innovation can move through different segments of society, from innovators to laggards, until it achieves "critical mass." Its success was driven by the advantages it offered over existing products like cable and Blockbuster, and its ability to be tried and adopted easily by a wide audience. Netflix continues to be a top media viewing platform today that I watch a lot.