It is probably unfair to say that television is at a crossroads when the medium has been in the throws of a rather steady and predictable shift. The broadcast networks’ viewership declining in favor of the hundreds of cable channels that now inhabit the digital marketplace all accessed at the touch of a single button on your remote control.
Of course this shift is ultimately meaningless, just a reshuffling of the status quo but makes for good copy in the trades particularly when many of those same cable networks are owned by the same companies that own the broadcast nets and rely on syndicated repeats from those very same networks. And with each passing year, the distinction the audience makes between these two groups continues to evaporate. Increasingly the focus is on another battle: how shows are distributed and how that distribution is evolving.
Nearly 90% of Americans receive their television via cable/telco/satellite while the rest resort to good old fashioned rabbit ears. Much has been made of the growing number of households “cutting the cord” and using a combination of downloading and streaming video services such as Hulu and Netflix. However its a minuscule number. Netflix and Hulu are best watched on your computer screen, not the 50 inch big screen in the family room. Of course this will change and the quality of the online streamers will improve. If the iTunes experience has taught us anything, it’s that sometimes close enough is good enough. If multiple distributors provide exactly what you need, at this point it becomes a numbers game, who is the cheapest. And therein lies the problem. Your cable company, your satellite company, your video streaming websites are just dumb pipes that rely on others to provide content. If ABC thought it made fiscal sense to stop licencing their shows to Netflix or Hulu, you can believe in minute those shows would be gone. Of course it’s never that easy, with dumb pipe Comcast the proud owner of a dozen or so networks including the beleaguered NBC. Oh and don’t forget they own part of Hulu as well. The pipes are at the mercy of the content owners. But at least one of those pipes refuses to go quietly into the night.
Netflix has made waves on the entertainment landscape, recently sending former rival Blockbuster into bankruptcy. Known primarily for its movie rentals, Netflix increasingly is being viewed via streaming video rather than DVD rental (a business it owns 61% of compared to its next closest competitor, Comcast, at 8%), Netflix has increasingly prioritized television show streaming, primarily the streaming of back catalog seasons and shows. And it is in the area of television that yesterday Netflix made an opening salvo to the industry that the game is about to change, and that the future of television is perhaps at your door step.
Hulu CEO Jason Kilar in a rather well regarded and well known blog post earlier this year commented on what he thought the future of television held. Kilar stated:
Distributors will certainly play a role in the future of TV, but we believe that three potent forces will be far more powerful in shaping that future: consumers, advertisers and content owners.
As the CEO of one of those dumb pipes, Kilar’s statement is interesting and the message obvious for all of those television distributors out there: to control your own destiny you have to make your own content. Hulu in fact experimented with this the prior year, dipping its toe in the water with the little watched reality show “If I Can Dream.” Netflix CEO Reed Hastings has taken Kilar’s message to heart in a much more substantial way. Yesterday Deadline.com broke the news that shook the industry to its core, namely that Netflix is becoming an original series player. Deadline reports:
In what is probably the biggest gamble in its 14-year history, I hear Netflix has outbid several major cable networks, including HBO and AMC, for Media Rights Capital’s drama series House of Cards, executive produced and directed by David Fincher and exec produced by and starring Kevin Spacey
Most astoundingly is that Netflix has reportedly picked the show up for two seasons of twenty-six episodes, a deal worth potentially over $100 million. What remains to be seen is if the show will eventually be available on other networks after an exclusive viewing window, a scenario that I think is likely in order to fully monetize their investment. If successful Netflix has the ability to upend the old guard in television, potentially changing the future of the medium in the process. Gone is the idea that a show must live in the world of the linear television network. Gone is the idea that either you or your DVR has to be ready and able to watch or record at the day and time that the network says you must or else their advertisers don’t care that you exist and don’t count your viewership potentially ending up with your show in the television graveyard in the sky. Gone is the very notion of a network, instead shows are released just like films, en masse each week. Gone is the past, the future of television is here?