Internet-only film businesses, have really declared war on Television. Netflix have invested 100 million usd in the remake of the British series, 'House of cards' with Kevin Spacey, as you'll probably know.
A 26 episode series that's not on Television.
Rather too, than asking people to wait week-by-week for each episode, it was all released at the same time to subscribers. Viewers could then schedule it as required, as it suited them - something which kills the rigidness of TV schedules.
Indeed they produced 6 trailers. Each one targeting the particular demographic of the Netflix subscriber. So female subscribers got the weepy trailer, young males the fight scenes - another thing you can't do on traditional TV.
Online content is also not beholden to advertisers...rather, is driven by subscriptions and subscribers on fixed monthly rates.
Consequently programme viewership fluctuations, is not the issue anymore for online broadcasters - another gaping hole in the way TV works and is funded. Netflix, with nearly 30 million subscribers, just needs to keep attracting those subscribers to stay or join the service, nothing more. Whereas, TV stations have to keep reaching out to audiences, to get them to watch, to generate Ads, when we know, through second screen viewing, their audiences are shrinking. No, Collapsing.
Netflix has already commissioned another feature, a horror called 'Hemlock Grove' and because they're not advertising dependent, they need to simply feature on quality broadcasting.
But online broadcasters will force change too. Voice control is the future too, for Netflix rather than "gesture control" being considered by other online broadcasters (like the Xbox function). So you simply "call out" your movie and up it comes and online will eventually create too many features that will just force TV stations to close because they simply haven't the technology to match.
Online broadcasting is affecting traditional movie-making too and not just TV.
Profits in the traditional movie business are down. Between 2004-2011, the big 5 studios profits were down -40%. Time Warner for example, in generating 12 billion usd in 2012 from film, generated 14 billion usd from TV/Online. And that balance is quickly shifting away from traditional movie-making towards content making that has subscribers attached such as cable/online.
Fees to cable/subscriber channels are estimated to be in the US, about 32 billion usd a year and growing +7% annually. And it's this steady income that content makers want to chase, rather than traditional TV dependent on advertising swings and thereby, focused on shows being popular (or not). Cinema revenue for film is equally volatile with "hits" and "misses". Content makers want broadcasters with steady income.
Film Theatre/Cinema attendance is not a growth business with too many distractions, such as Netflix, at home on multiple devices.
DVD/Blue Ray sales are obviously down too, about -46% in the past 6 years. DVD Pirating in Russia and China has become an issue too nevermind general illegal downloads. Actor and Director salaries are being cut, as are the number of projects.
It is the likes of Netflix that has been the lifeline for Hollywood, with big talent like Spacey/Hoffman/Jeff Daniels moving away from movies into online content.
Equally too, Netflix and Amazon's Love film are competing for broadcast rights against traditional broadcasters and have the cash war chests, to win. It's estimated that Netflix spent 5 billion usd in 2012 acquiring content.
In terms of 'connected devices' such as smartphones, games consoles, laptops, ipads and so on, Americans own 2.6 of them in each household. So the "theatrical window" of holding back online movie release is now becoming defunct to allow movies access this online market. 'Arbitrage' with Richard Gere, was released everywhere at once and understood to have made 3 times the money because it had a massive global audience at once.
But movie makers don't like it (because they'll lose the cinema premium) and theatre owners don't like it either.
So digital programme/content provision is winning time and time again meaning traditional movie makers will switch (as will talent) into creating online content. It also means traditional TV stations are getting more and more stuffed.
They're being outbid for content; they're losing audiences; they're losing money (180m+ euro a year in Ireland for RTE) every year; their content is poor; and their model has a doubtful future.
Even their anchor product - news - is being covered better and quicker (much quicker) by national newspapers online.
This game is over.
There's been a surge in Netflix traffic and they've just announced over a billion hours of video were streamed in the month of June. Netflix is one of the online video streaming businesses, where at a flat 7 euro a month, you can have "all you can eat" video. It's a family online video store - in case you've been asleep for the last year.
Nice to see that Netflix CEO Reed Hastings revealed the billion hours on Facebook appropriately and it compares to about 2 billion hours streamed in its entire last Quarter of 2011. So massive growth going on here.
In return, there's been a surge in their share price from Thursday of +13% following a +6% gain on Tuesday. So investors are loving the news.
Netflix have a goal is to reach 30m subscribers by end 2012 and currently they've about 26.5m streaming customers (and 10m DVD customers). I think few will bet against them, and in doing so, they're collecting more cash to re-invest into their own programming. Whilst they start with movie streaming, having achieved an audience, they'll start pushing their own TV. Already they've developed one series and are looking for comedy/children's programming.
The great thing about Netflix is that they know their product weaknesses and they accept it - with a view to improving it. Refreshing. Because most traditional TV broadcasters live in denial.
Amazon's Love Film are experiencing similar good growth these days too. So it's all about online entertainment at the expense of TV.
Netflix/Love film and others successes, is a direct reason that people "in the market" are now talking about the "collapse" of audience ratings on cable TV. It's a fact that people are watching less cable TV and cable TV subscribers are in long term decline. Terminal decline.
Bad news for Time Warner, Comcast, Cabelvision and them all, as households are increasingly less likely to pay for TV. All people want now, is the Web and fast internet download speeds. Terrestrial TV broadcasters are now in the same boat and are going to constantly see their business in decline.
Not just because Netflix subscribers will obviously be watching less TV, but also because broadcasters are hamstrung by schedules - pushing out content at a time that suits them and not at a time that suits the viewer - and that's no longer acceptable.
Equally with the high level of TV competition, and a recessionary market, broadcasters have less money to invest in quality programming. It's almost a cliche now for people to say "there's nothing on the telly tonight" because there isn't of any quality which in turn has driven consumers into the arms of Netflix.
But this collapse in TV has been going on for a while and the Netflix numbers will now just accelerate it.
In April I blogged about the growth in YouTube and the inroads it's making in TV..... http://streamabout.blogspot.ie/2012/03/youtube-is-new-tv-keep-calm-people.html
In May, I talked about how Nielsen are helping prove TV is becoming wallpaper as households leave the TV switched on in the background, but spend the time doing their Facebook pages, etc so about 40% are not "actively viewing".....
http://streamabout.blogspot.ie/2012/05/new-nielsen-data-finds-trust-in-tv.html
And I talked about the growth of programming supported by brands from online broadcasters that's leaving traditional TV in the shade.... http://streamabout.blogspot.ie/2012/05/youtube-third-wave-and-especially.html
And about the demise of traditional TV in general.....http://streamabout.blogspot.ie/2012/05/new-tv-research-and-its-not-good.html
In June, I came across the growth of 'Peepol.tv' and how citizen journalism news is changing the face of everything but notably news and taking it away from TV stations....http://streamabout.blogspot.ie/2012/06/peepoltv-gets-funding-to-start-citizen.html
This month we saw Murdoch's News Corp, splitting in two to try to deal with the trend.
You don't have to read them, but you get the drift. This is a continuing story and traditional TV owners are in serious trouble from online broadcasters - And they're doing nothing about it. Absolutely zero except continue to depend on State handouts through licence fee support.
The explosion of Netflix and Love Film and others is going to drive viewing further and further online. And when that happens, Ad money is going to follow them and not from new budgets, but from budgets traditionally spent on TV.
Few major traditional TV broadcasters have any strategy to deal with this nor do they even try to understand it. One locally dominant station has 15,000 friends on Facebook - a chewing gum I work with has 30 times that. Imagine being less popular than a gum. I looked for their Pinterest page. Nah, not a sign.
Self-congratulatory messages about the success of their iplayers illustrates how little they know. If they think that re-broadcasting of the content through an iplayer is breakthrough, it's worrying, because it's actually "entry level" stuff.
It's like a Bank spouting out about their banking online service as cutting edge. Or Tesco telling you how great it is because now you can shop online. That was the innovation of 10 years ago.
So online broadcasting and the explosion in Internet ready TV is coming fast.
New programming, which will be broadcasting at times that suit the viewer (on demand) in a totally customer service environment, will be the winner. It is the winner.
And as for the big old, traditional former TV monopolies?
Step aside.
