Excerpts from an article by Amanda Lotz in The Conversation
In just a decade, Netflix has grown from a video service with seven million U.S. subscribers to one that reaches 93 million people worldwide. Its growth and ability to break into well-established industries – first video rental, now television and film – is a rare accomplishment. In my book “Portals: A Treatise on Internet-Distributed Television,” I explore how Netflix and other internet-distributed video services forced the existing television industry to radically change its practices.
Different model, different strategy
Broadcast networks and cable channels make money by selling audiences to advertisers. Netflix (and many other portals, including Amazon Video and SeeSo) are subscriber-funded: Viewers pay a monthly fee for access to the library of content. Of course, HBO has also long relied on subscribers, which explains the distinctiveness of many HBO programs, despite its distribution by cable. (HBO launched the portal HBO Now in 2015 to better match its subscriber-funded revenue model with a technology that makes its library of programs available on demand.)
To succeed, subscriber-funded services must offer enough programming that viewers find the service worthy of their monthly fee. Each show doesn’t need a mass audience – which is the measure of success for advertiser-funded television – but the service does need to provide enough value that subscribers continue to pay.
A quest for global domination
Some in the U.S. have doubted whether Netflix can maintain its market dominance based on a seeming lack of innovation and erosion of its U.S. library in recent years.
But Netflix hasn’t grown complacent. With 49 million American subscribers – which makes it available in 43 percent of U.S. households – the U.S. market has less opportunity for growth. For this reason, Netflix has aggressively pivoted to stake claim as the first global television network.
No television distributor has ever been able to reach a truly global audience. Netflix’s experiment as a global, subscriber-funded television portal may be the next chapter of television history.
Read the full article in The Conversation
And check out our webinar on how Crunchyroll, another subscriber-funded OTT video service is changing the future of streaming media!