Netflix: Friend Or Foe To The Broadcasting Business?

netflix-televisionIn this year’s second quarter reports, Netflix announced earnings that exceeded Wall Street analysts’ estimates; yet company shares fell in value over the same time period. Some professionals in the field assert that the discrepancy can be explained by an increased number of online subscribers in response to the fourth season release of “Arrested Development” and premiere of “House of Cards” -both of which are only available to view online. We asked Zintro experts to discuss how the growth of companies that offer online streaming, both in terms of global prevalence as well as available content, will affect various facets of the television business.

Mike Milo specializes in the production of animation and thinks “in the not-too-distant future, the television business as we know it will die. It’s only a matter of time before the television and the internet combine; and when they do Netflix, Hulu, Youtube and Amazon will all be bonafide broadcasting channel choices,” which Milo thinks “will shake up the Big Four beyond the ability to recover. Apple TV, Roku, Boxee and Google TV are all knocking on the door to come in and it’s a thin door which, in my opinion, they’ll eventually break down.” “Furthermore,” Milo adds, “since you’re paying for online content, there is no worry about Standards and Practices because you obviously approve of whatever risque content that might air or you wouldn’t subscribe. Network TV by comparison is hampered by the FCC’s Broadcast Standards and Practices and their ratings are suffering.”

Herb Rossin has extensive experience in all phases of broadcasting including syndication and is in touch with television stations and networks daily. Unlike Milo, Rossin believes “none of the ‘online’ content providers have cut into the broadcast business so far.” “If anything,” Rossin explains, “[their expansion] has helped by creating new viewers. From an advertisers point of view it’s far better to run a spot on TV to people who tuned in to watch a specific show, than to a random blogger, tweeter or whoever happens to be surfing the web: It’s the difference between someone going to a store to buy something and someone who is just window shopping.” Ultimately, Rossin concludes, “Netflix [and companies like it]  will help, not hurt, the TV industry.”

Bryan Rader is a cable television consultant who feels “The important trend to note in the Netflix growth story is not the number of net new streaming customers, but the level of engagement that the overall subscriber base is showing with this service…The most intriguing part of the story is the change in consumer consumption of content. This will fundamentally change how subscribers view (and eventually subscribe) to pay TV content. Viewership has historically been ‘network’ based. In the future, it will be ‘show’ based. The consumer will not care if it is from Netflix, Hulu or on a cable channel.” According to Rader, “The next part of this trend is the number of productions in Hollywood going direct to broadband rather than through traditional cable channels. This is only accelerated with the deployment of smart TVs and consumer devices.”

By Gabriela Meller

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