Like the title says, gentle readers, my FMS 302 final. I don’t know what grade I got, so, read at your own risk.
Time Warner Chief Executive Jeffrey L. Bewkes is not afraid of Netflix. Despite the company’s growing success and popularity, Bewkes does not see Netflix as a real threat to big media companies saying in an interview with the New York Times that it would be like asking if the Albanian army is going to take over the world; it wouldn’t happen.
His interview comes a week after Netflix introduced its new streaming-only plan in the United States. For $7.99 a month, subscribers will have unlimited access to the “Watch Instantly” selection on the Netflix website. The new plan is a result of the demands of subscribers, whose viewing habits show they prefer to stream videos rather than wait for the DVD to arrive in their mailbox. Netflix is slowly making the transition from a mail order DVD rental company to a streaming video company, and it’s starting to cause a stir in the entertainment industry. While Netflix’s new plan may not have an immediate effect on the industry, it shows a growing trend in how people consume media through convergence, audience measurement, and its synergy and partnerships with other media companies.
Convergence is a phenomenon of the digital age that is slowly transforming the media industry. Creative content, from videos to music, can now be streamed through broadband or wireless networks on computers and computer-like devices. The computer screen is beginning to replace the “television” screen, enabling viewers with a Wi-Fi or Broadband connection to turn their media viewing experience into a more individualized one by giving them control of when and where they watch their content (Marshall 41). Because of the portability and convenience these devices provide, people have begun to expect more content to be “on demand” and instantly available online. Netflix has been a fairly consistent example of this market trend, not only allowing subscribers to stream video on their personal computers and laptops, but also by continually adding to their list of “Netflix ready” devices that enable subscribers to stream video from over 200 electronic electronics. The list includes popular gaming consoles, Blu-ray disk players, High-Definition TVs, and digital video recorders (DVRs); as well as a growing number of mobile devices including the iPad, Windows Phone 7, and the iPod Touch. Netflix’s decision to become a primarily streaming-only company is another reflection of this growing market trend. In a press release issued on the Netflix website November 22nd, the day the new plan was released, it was noted that in the current financial quarter, Netflix’s 16 million subscribers will watch more content streamed over the Internet than they will on DVD (Hastings).
In order for the convergence of the “old medium” television and “new medium” computer-like screens, content must be interchangeable between the two. TV shows and movies that viewers can watch on a traditional television set must also be watchable on a smaller, computer-like screen without drastic changes to the dimensions or quality of the video. Netflix has made a good example of combining the two in providing a streaming program for Internet enabled TVs, popular gaming consoles with Internet capabilities, and Blu-ray disk players. While they are all related to traditional TV sets, they are streamed through an Internet connection rather than satellite or broadcast signals, which allows Netflix subscribers to choose the content they want to watch when they want to watch it, as opposed to watching scheduled programing on their set.
Convergence has also lead to the problem of audience fragmentation. With the choices between broadcast, cable, satellite, and digital mediums, the audience that had once been collective is now scattered across multiple platforms. Viewers also have the opportunity to watch more television programs than they have in the past, because they are more widely available. This poses a problem for both networks and advertisers, as neither is sure how to advertise to an audience they cannot measure. The Neilson ratings, which were founded in 1923 to measure audiences for the radio industry, have long been the only way to measure audiences watching television programming and dictates how advertising is bought and sold. The Neilson ratings are considered “overrated” however, because, “even with the tiniest fraction of a rating point translating into vast caches of currency, marketers haven’t a clue how many viewers are actually watching from the household where the set is on—or even whether their message is beaming to an empty room” (Verklin 38). Neilson ratings also do not provide clear information for online audiences. In order to solve the advertising problem, advertisers and programmers need to first solve the audience measurement problem, especially when the audience is as fragmented as it is today.
While Netflix does not advertise (yet), their model is something to consider. Firstly, as it is a subscription service, it accounts for all its viewers. Secondly, when users watch TV shows, the number of programs the subscriber has watched, as well as how many minutes of each individual program, are recorded. Subscribers also keep a queue of TV shows and movies they plan to watch. If these three factors were combined, it would be more accurate to see how many people are watching a show via streaming than through the Neilson ratings. In terms of advertising, this would provide the network and cable executives with a clearer idea of who is watching what and advertisers would also be better able to target specific audiences through offering more granular data. In her master’s thesis, Article Research for Fun and Profit: Rediscovering the Value of Television Audiences, Sheila Murphy Seles argues that with this type of data, “advertisers and publishers could test advertising effectiveness by leveraging second-by-second playback statistics,” which would benefit both publishers and advertisers because rates would be negotiable based on measurable effectiveness (Selles 80-1).
Fragmented audiences are also leading networks to find new, digital means of distributing content to viewers. Today’s viewers are becoming more and more used to having choices when it comes to their media. It’s much like what Tartikoff envisions in TV 2000: a computer screen that has a video menu and lets the viewer select what they want to watch when they feel like watching it (Tartikoff 208-9). Instant streaming encompasses this idea, especially Netflix’s instant streaming subscription, which not only give viewers this control, but also use past viewing experiences and personal preferences to recommend titles that might interest them. One way for media corporations to begin to capitalize on this is through synergy and partnerships, the “Holy Grain” for many in the media industry as it a cross-promotion that drives the sales of the text in all its forms and benefits all involved (Lotz 32). Recently, Netflix and Disney-ABC Television Group reached an agreement that would allow the Netflix to stream hundreds of TV episodes from Disney Channel, ABC Family, and the ABC Television Network. The shows include Grey’s Anatomy, Desperate Housewives, and Lost as well as Disney’s Wizard’s of Waverly Place and Hannah Montana. Netflix is willing to pay $100,000 an episode to acquire the licensing for the more recent episodes. This not only gives Netflix subscribers a new selection of family friendly titles to choose from, but also promotes Disney-ABC movies and programming, encouraging subscribers to purchase their children’s favorite movies on DVD and children to watch their favorite shows on Disney’s channels.
While Bewkes may not have reason to fear Netflix in the immediate future, it is clear that the “Netflix Model” of streaming content that their subscribers want to watch is becoming a popular, influential one. In the digital age, it provides viewers with the immediacy and convenience they’ve come to want and expect from the entertainment industry; expectations that the big media companies must begin to meet if they want to keep their viewers, attract new ones, and make a profit.
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Arango, Tim. “Time Warner Views Netflix as a Fading Star.” The New YorkTimes 12 Dec. 2010, New York ed.: B1. Online.
Hastings, Reed. “Netflix Launches U.S. Subscrption Plan for Streaming Movies & TV Shows Over the Internet for $7.99 a Month.” Netflix. 22 Nov. 2010. Web. 10 Dec. 2010. <http://netflix.mediaroom.com/index.php?s=42&item=376>
Lotz, Amanda, and Timothy Havens. Understanding Media Industries. 1st ed. Oxford University Press, 2011. 32. PDF.
Marshall , P. David . “Screens: television’s dispersed ‘broadcast’.” Television Studies After TV . ‘Ed’. Graeme Turner & Jinna Tay . London : Routledge, 2009. Print.
Sarandos, Ted. “Netflix and Disney-ABC Television Group Announce Deal to Stream Array of ABC Network, Disney Channel and ABC Family Shows to Netflix Members.” Netflix. 8 Dec. 2010. Web. 10 Dec. 2010. <http://netflix.mediaroom.com/index.php?s=43&item=379>
Selles, Sheila M. “Audience Research for Fun and Profit: Rediscovering the Value of Television Audiences.” MA thesis. Massachusetts Institute of Technology, 2010.
Tartikoff, Brandon. The Last Great Ride. New York, NY: Turtle Bay Books, 1992. 208-9. Print.
Verklin, David, and Bernice Kanner, Watch This, Listen Up, Click Here. Hoboken, NJ: John Wiley and Sons, Inc., 2007. 38. Print.