Netflix is already well-known video streaming service in the United States. The use of Big Data applications and promotional practices in "House of Cards" let them fame in this year. In the first quarter of this year, Netflix has made one billion revenue, stock price exceeded $ 200 and 33 million subscribers households (the number is over HBO) in the United States. Then, Netflix published an article. This article was written by Netflix's CEO Reed Hastings and explained their future view of TV.
Reed Hastings (Resource: Flickr)
Hastings made a prediction: We are moving in a "app instead of channel" world. In many ways to support this argument, the transmission speed of the network faster and demand for high-definition video. In addition, he mentioned nearly 40 times "app" in this article, which also shows himself more or less seen Netflix as an app provider.
"Eventually, as linear TV is viewed less, the spectrum it now uses on cable and fiber will be reallocated to expanding data transmission. Satellite TV subscribers will be fewer, and mostly be in places where high-speed Internet (cable or fiber) is not available. The importance of high-speed Internet will increase.”
Netflix is spending about $350 million annually to maintain and improve its streaming service which contains promoting cross-platform device services, improving the user interface, and monitoring quality. Although this is a heavy burden, compared to the budget of the the Netflix film and television content, it is far less than the content cost.
Netflix video content cost about 20 billion dollars per year, such a large sum of money mostly on the authorization. For example, in December 2012, Netflix signed a license agreement with Disney. In addition, only a small part is used in the original content, such as <House of Cards>, <Hemlock Grove>, and <Arrested Development>.
Netflix's Contents
Netflix also have a selection of video content. They want to put contents with a lot of demand or long-term value to attract the audience to repeat viewing. The Netflix never have the most complete package, but it is not necessarily a bad thing.
Thoughts on Comparison (HBO, Hulu, and Amazon)“As we have gained experience, we have realized that the 20th documentary about the financial crisis will mostly just take away viewing from the other 19 such docs, and instead of trying to have everything, we should strive to have the best in each category. As such, we are actively curating our service rather than carrying as many titles as we can.”
Netflix subscribers in the United States has surpassed HBO. Hastings estimates that the number of households Netflix subscription will eventually grow 2-3 times than HBO's. In addition to HBO, Netflix regards Amazon Prime and Hulu as major competitors.
“Behind HBO would come Amazon/Lovefilm/Prime, Hulu, Now TV, and many cable and broadcast networks in various territories. Amazon in particular is spending heavily and commissioning its own original programming, presumably because they see the same exciting big picture for Internet TV that we do. Many consumers will subscribe to multiple services if they each have unique compelling content. Success relative to these competitors-for-content would be us having substantially larger revenue and therefore sustainable increasing content, tech and marketing spending, leading to further growth, and a virtuous cycle.”
As I mentioned earlier, in the first quarter of this year, Netflix had dazzling results. However, as we know, although HBO's number of subscribers in the United States was surpassed by Netflix, the number of original programming, the number of the Emmy Award-winning and global Subscribe households are ahead of Netflix. Thus, in order to compete with HBO, Netflix still has some way to go.
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