Netflix – The Beloved Serial Killer

The worst thing about Game of Thrones isn’t the likelihood of every character you love dying a brutal death (poor Prince Oberyn), nor is it the fact that after five seasons Daenerys is still no closer to invading King’s Landing (in fact she’s even further away). The worst thing about Game of Thrones is that it takes 10 weeks to get through an entire season. Even with HBO’s own streaming service, HBOGo, Game of Thrones is still aired only on a weekly basis. To make Game of Thrones addicts wait seven days between each episode is almost as cruel as the late King Joffery. People want to be entertained now and they are willing to pay for it.

Netflix has recognized the impatience of the modern media consumer and has worked out a business model that benefits the consumers which in turn benefits the company. The streaming service offers its customers a plethora of TV shows and films, including a growing number of critical acclaimed original series, which are all released in their entirety to allow viewers to watch as much as they want when they want.  This model has been tremendously successful and has popularized the practice of binge-watching. In fact, Netflix has over 75 million subscribers worldwide that consume around 125 million hours of TV and movies per day and, as an indicator of Netflix’s power, the company made $6.7 billion in revenue last year as a result of its booming popularity (Netflix 2016). While this is all well and good for Netflix and media consumers, it does leave other industry players in a rather precarious position.

Television networks and DVD rental franchises are struggling as their business models have become outdated by the digitalization of media. The once ubiquitous Blockbuster Video stores have all but disappeared with only 51 stores still operating under the brand name in the US. Unable to compete with the rising popularity of Netflix and other online streaming and rental services, Blockbuster Video filed for bankruptcy in 2010 and officially become defunct in November 2013. Blockbuster Australia is still in operation thanks to having a different parent company, as well as the infancy of streaming services in the country. However as Netflix, Stan, and Presto enter their second year of operation in Australia, Blockbuster and other rental franchises such as Video Ezy will start to lose even more of their market share, inevitably resulting in even more closures. As indication of the losing battle video rental businesses are fighting, the ABS found that in 1999-2000 financial year there were 1166 video hire businesses operating in Australia, however in 2013, IBISWorld reported that the number had dropped by 80% to just 255 (Redrup 2013). This was two years before Netflix even arrived at our shores.

Television networks such as Channel Nine and Seven have been forced to enter the online streaming market with their respective services, Stan and Presto, in order to remain relevant. Both services were released just prior to the arrival of Netflix and have continued to maintain a healthy customer base ever since, with Stan in particular offering a considerable amount of content that Netflix Australia is yet to get the rights to. However their free-to-air TV channels have suffered as a result as OzTAM Data “suggests free-to-air audiences are down by around 7 per cent year on year in 2015, and down by around 13 per cent for those aged between 18 and 49” (White 2015). As networks begin to move more of their content over to their streaming service, television ratings will surely continue to fall. It’s not too outlandish to consider that traditional television may soon go the way of Blockbuster.


 

References:

Netflix, 2016, ‘Letter to Shareholders’, Netflix, viewed 23 March 2016, http://files.shareholder.com/downloads/NFLX/1747433996x0x870685/C6213FF9-5498-4084-A0FF-74363CEE35A1/Q4_15_Letter_to_Shareholders_-_COMBINED.pdf

Redrup, Y 2013, ‘The end of the video store: Blockbuster to close 300 US stores’, Smart Company, 8 November, viewed 26 March 2016, http://www.smartcompany.com.au//marketing/sales/34486-the-end-of-the-video-store-blockbuster-to-close-300-us-stores/

Turner, A 2013, ‘Blockbuster US to close last video rental stores in 2014’, Sydney Morning Herald, 7 November, viewed 26 March 2016, http://www.smh.com.au/digital-life/computers/blog/gadgets-on-the-go/blockbuster-us-to-close-last-video-rental-stores-in-2014-20131107-2x30g.html

White, D 2015, ‘UBS cuts valuations for Seven, Nine as Netflix steals eyeballs’, AFR Weekend, 22 July, viewed 26 March 2016, http://www.afr.com/business/media-and-marketing/ubs-cuts-valuations-for-seven-nine-as-netflix-steals-eyeballs-20150722-gihrtk

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