The Signal: Netflix's Flywheel Story

The basic story for the marketplace is “flywheel” not “AI”

The Medium identifies essential signals on how technology is shaping the business of culture, and how the marketplace is evolving in response.

---

The Medium’s new, reimagined editorial and analytical focus on Substack brings a fresh approach to our mailings.

To summarize what I wrote on Monday, The Medium is now focused on three “essential signals”:

1. Market signals that popular trades and mainstream publications miss

2. Connections between technological evolutions and actionable business decisions

3. "White spaces" of opportunity to improve product, investment, and strategic decision-making

Today’s essay is on how to interpret Netflix’s recent messaging campaign around its flywheel model.

Total words: 700

Reading Time:

---

Announcement & Special Offer

Solve Small: The ON_Discourse AI Transformation Summit

I am thrilled to share on the host committee for The ON_Discourse AI Summit. Over the past year, I have engaged with ON_Discourse events, both in-person and virtually, connecting with talented and visionary C-suite leaders, investors, and innovators at the forefront of their fields. These interactions provided invaluable insights into how industry leaders are navigating the relentless transformation of cultural creation, distribution, and monetization.

The ON_Discourse AI Summit is designed to distill epic stories about AI transformation into practical strategies for every role in the C-Suite. Unlike typical AI conferences, this event is cross-functional, hands-on, and focused on "small transformations" that drive real impact.

Subscribers to The Medium receive a 20% discount on tickets.

View the agenda: https://lnkd.in/ePWDCR5S

Date: March 26, 2025
Time: 10:00 AM - 5:30 PM ET
Location: Apella – 450 E 29th St, New York, NY 10016

---

The “Essential” Market Signal

There have been many headlines from Netflix over the past few weeks (in no particular order):

• A Variety interview with Co-CEO Ted Sarandos,

• Its new $320 million star vehicle “The Electric State” (and a disappointing reception) and an accompanying game

• A number of stories around its emerging gaming business (including the departure of former VP of Games Mike Verdu),

• Its evolving live experiences business.

They all seem like one, big, muddled jumble of unrelated headlines. But, there is a common market signal across these stories: Netflix is marketing its “flywheel”.

Why Does This Signal Matter?

The term “flywheel” has been increasingly used by Netflix management in its conversations with investors, and mostly by CFO Spencer Neumann. At the Morgan Stanley Technology, Media & Telecom Conference, he described the objective of “faster than the competition’ to drive a “growth flywheel of more and better entertainment, delivers more engagement, more revenue and more profit.”

For example, Fast Company reported that Netflix has begun to evolve its Open Connect content delivery network towards building its own cloud gaming infrastructure. New servers could eventually allow any Netflix member to play complex games on their smart TVs without an expensive game console. Netflix CTO Elizabeth Stone suggested that “the appliances that are going to stream games will need to look different”, too.

The release of “The Electric State” merged a movie release with gaming release for Netflix subscribers.

Netflix is expanding its flywheel to experiences by “opening up shops in malls, partnering with VR arcades, and touring the world with pop-up experiences related to its shows.” However, the objective is neither technology-focused nor a capital-expenditures-heavy investment into building out theme parks.

Instead, it aims to build “a business that’s really good at growing our brands and strengthening our brands”, as Sarandos told investors on its Q3 2023 earnings call.

Is The Signal Bullish or Bearish?