Thursday, January 31, 2013

Netflix Is A TV Network

With tomorrow's launch of its premier series House of Cards, Netflix could be considered a TV network.  While it does not yet have a daily news show, I wouldn't be surprised if that was in their future.  What they do have is a mix of old and now new TV series.  First comes House of Cards, second is Arrested Development, and more is certainly in the pipeline.  Couldn't this describe a TV network.

In the infancy of cable TV, reruns were the staple of a network's programming wheel.  Each charged a monthly license fee that the cable operator passed on to the consumer, and each tried to find an advertising model to build a second screen.  With revenue growth came investment in original series, first just one to test the waters and then more as each series brought more and more revenue back to the network.  So now it is Netflix following the same cable strategy.

Unlike a cable network, Netflix is using the web to talk build a business model directly with the consumer.  With a monthly fee of $8, Netflix costs more than many single cable networks, but acts more like a cable operator in providing a library of content that exceeds what any one network could offer.  And consumers have been willing to pay the fee as it can be less expensive than a cable subscription.  Netflix hopes that offering exclusive original series, like what a cable network creates, can successfully bring more subscribers to their world.  Bring a successful ad model to augment subscription fees and Netflix will be a true competitor to cable.

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