Wednesday, February 13, 2013

Streaming Wars Part II, Netflix Responds

How do you build a subscription base?  It's all about the content and Netflix is following the strategy of cable TV in building out original exclusive content.  And while the cost of acquisition must certainly be great, it is the content that acts as bait to attract new consumers.  So how best to attract an audience, recognize the different demographics that need to be reached.  And what is more powerful than families, and more specifically, those with young children.  That leads to their latest content deal with Dreamworks Animation.

"The series, "Turbo: F.A.S.T.," is based on DWA's movie "Turbo," which is scheduled to open in theaters this summer. "Turbo: F.A.S.T." will debut exclusively on Netflix in the U.S. and 40 other countries." Prior to this deal, Dreamworks Animation has done content deals with Nickelodean and Cartoon Network.

For Netflix families, access to quality children programming makes them that much more essential to the home.  And as an alternative to cable, Netflix brings a cheaper alternative for content into the home.  In addition, Netflix brings another benefit to families. "Parents like Netflix's easy way to find family friendly movies and shows on-demand and ad-free."  For parents concerned about their kids exposure to tempting commercials, an ad-free model should have enormous appeal.

Can Netflix afford all these programming costs for original and exclusive programming?  Kids bring parents and parents will have their own shows with ads.  Add to that a constant and growing subscription model and Netflix may be the streaming brand to beat.  If Netflix can add an e-commerce revenue stream to the ad and subscriber models, then they will indeed become a triple threat.

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