Thursday, December 6, 2012

Netflix in the News - Still out to change the (TV) world

Earlier this week, Netflix and Disney announced a deal that will bring Disney and affiliated studio content to Disney.  But the big news was that Netflix will become the primary pay-TV outlet for future features.
  Older Disney fare had been available on Netflix through its deal with Starz, but that deal expired earlier this year.  Now, older content from Disney, Walt Disney Animation Studios, Pixar Animation, Marvel Studios and Disneynature will be available shortly, while new feature films will become available on Netflix when they move into the pay TV window (typically six months after the initial theatrical run ends. A spokesman for Disney indicated that content from Lucasfilm will be included once its acquisition is finalized, while noting that DreamWorks, while it uses Disney for theatrical distribution, will honor its current deal with Showtime as a pay-TV partner.  High profile direct to video releases (Tinker Bell, cartoon series, and shorts built on feature film characters) will come online in 2013.

  The deal prompted a piece in GigaOm by Janko Roettgers, who sees the strategy of going directly to content producers and distributors for streaming rights (rather than acquiring them as secondary rights from pay TV networks), along with other recent moves, as building a platform that could transform traditional TV.
Netflix doesn’t just want to compete with traditional pay TV networks like HBO, Showtime and Starz – it wants to change television forever. The company envisions a future for TV in which old-fashioned things like ratings, schedule and recaps simply don’t matter anymore.
 Roettgers interviewed Netflix's Chief Content Officer, Ted Sarandos, about the Disney deal and other recently announced deals - and what was behind the moves.  One of the moves is the decision to produce original content - last year Lillyhammer led the way, and two highly-anticipated TV series are set to launch February with original content.  One, a return of Arrested Development has been generating a lot of media buzz and fan chatter since the series' relaunch on Netflix was first announced.  The other series slated for February debut is House of Cards. But these days, a lot of channels (beyond the traditional broadcast networks) are airing traditional programming in the hunt for bigger and better ratings.
   Where Netflix is changing the game is in terms of its scheduling strategy - releasing all of a season's episodes at the same time.  Sarandos argues that ratings, and thus worries about scheduling, are irrelevant from Netflix's perspective (and business model).  Unlike commercial networks, a program's value is not determined by its ability to attract large simultaneous audiences.
   “The most difficult thing in linear television is the pressure on the time slot,” Sarandos said.  Some content works well on what he termed linear television (content is offered as a linear sequence of programs) - like sports, news, and talk.  “The immediacy of Jon Stewart…. lends itself to linear business models.”  However, he suggested that scripted content is different - it has a longer shelf life, and it comes closer to giving viewers the flexibility in viewing options they want (as seen in DVR behaviors), while avoiding scheduling conflicts and losing audiences if the network shifts the air times.  In addition, program creators like the ability to build storylines over episodes without having to recap the previous episode.
  Netflix's on-demand and subscription business model, he noted, is based on building the value of available content, and the choice and flexibility an on-demand model provides to its subscribers.  Thus, success for Netflix is not built on the popularity of any single film, content, or episode, but in providing access to programming that at least some of their subscribers want to watch. 
  In addition, Netflix learned from Amazon the value of developing a recommendation system that personalizes the service.  (They even had an open challenge/contest to develop a better systems).  A more formal differentiation is coming in its new "Just for Kids" interface - that allows parents to provide their kids with family-friendly programming.
  As that Netflix business model (programming strategy) continues to prove itself, it may transform TV viewing, if not TV markets.  Sarandos wasn't shy when asked about the future of TV -
“It’s gonna look nothing like we’re seeing today.”

Source -   How Netflix wants to change television forever,  GigaOm

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