Shixue the similar strategy to break into TV

Shixue Chen

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Film 184B Final Essay

Question 4

 

Netflix, Television and Digital Media

Nowadays, as the number of Netflix subscribers grows, many see Netflix as a disruption or competitor to the TV business. By saying that “Netflix bringing television programming to the Internet,” Mr. Woolf means that being “digital media” is not the key to Netflix’s success. Instead, Netflix is not even doing the “digital media” way, as it is not user generated, not social, not free. The fact that Netflix brings the values and behaviors of television programming to the internet, is what distinguishes itself. From my point of view, although Netflix and traditional television programming have differences, their growing similarities and core values carry more weight than their differences. However, instead of Netflix copying the television model, Netflix and television are learning from each other and creating a more advanced concept of TV.

The differences exist as Netflix made a lot of breakthrough in both the media perspective and internet perspective. Before Netflix’s entry into media business, it first delivered DVDs by mail, which offered a large selection to users with low cost. Now, it uses the similar strategy to break into TV business with streaming technology. It immediately destroyed the myth of television localism and later established the crossover market of licensing deals for TV shows. The crossover nature of Netflix brings the digital elements into television business and even has the ability to turn ad-supported shows into paid products.

But Netflix is not like digital media. Reed Hastings, the legendary CEO of Netflix, decided that Netflix will reject the conventions of digital media.  As the opposite of user generated, social and free digital media, Netflix is as old-fashioned and passive as traditional television programming.  A perfect example given by Mr. Woolf is House of Cards. Before it landed on Netflix, it had been unsuccessful. Instead of the “big-data” driven success of digital media, the success of House of Cards is in a television convention. As Mr. Woolf puts it in a beautiful way,” the caprice and luck of a needy buyer meeting an eager seller.”

One similarity between Netflix and television is that the declining proportion of revenue from advertising. While almost all the digital media is advertising supported, Netflix charge for television content. Netflix is the first successful seller that carries content into the digital world and proves the success of subscription model. Television, whose income from advertising, according to chapter “Counter Revolution,” dropped 50 percent, actually doubled its revenue from non-ad sources. For example, CBS’s falling ads market resulted in its share price going up by twenty times. Its revenue consisted more of overseas sales and licensing to cable or digital platforms including Netflix.

Another similarity is that television is converting to a paid business, just as Netflix does. The very nature of television programming is undergoing significant changes. According to the chapter “Television Wants to Be Paid for,” the shift from ads-supported content to user-supported content is changing the nature of programming. The traditional mass-market emphasis is shifted to younger, more demanding audiences and household members who can pay for the content. HBO is a good example.

Netflix is adopting television model (such as passive watching) and targeting Showtime and HBO as its main competitor, according to its CEO Hastings. HBO’s HBO Go and Showtime Anytime are competitive applications that enable users to watch its programs on any devices. According to Business Insider, HBO is way ahead of Netflix in terms of worldwide subscribers. However, HBO is fallen behind total subscription revenue. What is interesting to me is that Netflix and HBO are learning from each other. HBO is taking cues from Netflix and increasing production of original shows and accelerating its international expansion. Ted Sarandos, the content chef of Netflix, recently said that the company’s goal is to “become HBO faster than HBO can become us.”

While television business and Netflix are getting paid by audiences, digital media, on the other hand, is lowering its prices to broaden its mass base. From Yahoo to BuzzFeed, most digital media companies are seeking more and more traffic and appealing to be everything for everyone. During the classic network era, Newton Minnow makes a speech about “The Vast Wasteland.” Today, Woolf regards digital media as the new wasteland. Google and Facebook shows the very nature of mass production: the declining unit value and the increasing scale. It is why digital media is eating itself and becoming the wasteland.

We now live in an era that video can be shown everywhere. If we regard Netflix as a form of digital media, digital media is becoming video and becoming TV. At the end of Woolf’s book, he tells us that content is king. I agree with his point in that content, instead of the form, whether it is on web or mobile, should the first and most important thing when it comes to media. The new television, including Netflix, is becoming better with more original, higher quality video. 

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