The Great Depression Created Netflix. And Why You Should Care.

"I'm worried about the upcoming recession. What should we do?"

This morning I spoke to a small group of Microsoft Partners. I was invited to their closed forum for an AMA (Ask Me Anything), and their first question set the cat among the pigeons.

As it turns out, it was?the?topic on everyone's mind.

Inflation, rising fuel prices, apparent food shortages, and ongoing supply-chain issues are all contributing to the sense of foreboding.

Below is part of the story I shared with them:

Newsletter - Lessons From The Trenches

The Great Depression created Netflix. And Why You Should Care.

The Roaring 20s.

Less than 100 years ago, we were barreling towards the Great Depression. Much like today, most citizens and corporations of the 20s were blissfully unaware of the pending economic devastation that the end of the decade would herald.?

You see, the "Roaring 20s" got its nickname due to unprecedented economic growth, innovation and prosperity.?

As the world came to grips with the devastation of a horrific war (World War I, 1914-1918) and a global pandemic (Spanish flu, 1918-1920), there was renewed optimism.?

The stock market in the US soared. And the rest of the world followed.?

As electricity became accessible, refrigerators, washing machines, vacuum cleaners, and radios became everyday household items.?

Movie theatres began supplanting live theatre as the outing of choice, and five major movie studios dominated the production and distribution of new content. While the "Big Five" studios also owned movie theatres, many independently owned theatres bought content from the Big Five but also supported smaller studios that didn't own theatres.

But it was the big studios that called the shots. They owned big budgets, which meant they controlled the directors and decided which actor would be the next big star. They decided which movies would get made and which ones wouldn't.?

In late 1929, all that was about to change.?

CRASH! Double Bills and Silver Spoons.

The stock market crashed, and independent banks closed their doors (and vaults) to angry customer mobs who rushed to withdraw their funds.?

As panic slowly turned to desperation, movie theatres struggled to survive (obvs).

But as the saying goes:

"Necessity is the mother of invention."?

Theatres began to invent new ways to attract patrons, which saw the introduction of offers like:

_ Double Bill?- two movies for 35 cents.?

_ Silver Spoon?- Buy tickets after 6 p.m. and receive a silver spoon.

_ Dish Nights?- Giveaway of china dishes. Which later evolved into a whole china set, one plate at a time per show.?

Each innovation had the desired impact. Attracting more patrons later in the evening and increasing profits.?

But the most significant innovation happened behind the scenes—a massive upswing in the creation of B movies.?

B Movies

Created for the bottom half of the Double Bill, B movies were low-budget and shot in a fraction of the time typically required of their A movie counterparts.?

The average cost to produce an A movie in the 1930s was around $400,000. While B movies typically cost anywhere from $3000 to $50,000.

They kept audiences entertained and the theatre's costs low.?

Demand for B movies soared. And that's when the magic happened:?

Failure was an option?- The low cost of production made failure more tolerable. New ideas were adopted and tested.?

Feedback was fast?- Audience reaction was easy to gauge.?

Adaption was just as fast?- Feedback instantly informed new scripts, which were rapidly turned into new B movies and distributed within just a few weeks.?

The movie industry's feedback loop had never been this effective.?

It bolstered an industry that would otherwise have seen significant contraction.?

Follow the lineage, and you'll see how B movie teams ultimately became the writers, directors and producers of TV content by the 1950s.?

In modern times, it's the DNA of the B movie and the systems it spawned that now support Netflix and other streaming services in creating their own content.

Why should you care??

Much like our forebears in the 1920s, most of us are blissfully barreling towards the next recession.

When the dust settles, there will be new winners and losers.?

If we're to stand up to the adversity that the pending recession will throw at us, we need to consider the past to help inform our future.?

How will you adapt to the changing market conditions??

Do you?know?your customers??

How will you gather feedback??

Can you rapidly iterate in a low-risk way??

Perhaps you'll be inspired by this short story from our history and the people who faced adversity and won.?

DM me on LinkedIn if you want to talk through your strategy. Unfortunately, there isn't much time left.?