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CEO Insight: Is Netflix Pointing the Way for the Industry?

Posted by François Moreau de Saint-Martin

Tue, Mar 11, 2014

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Barely a day goes by without a new story about Netflix, just see any of our recent Hot Industry News of the Week posts. The Subscription Video on Demand (SVoD) operator is arguably the biggest thing in the business right now, so it was a pleasure to be asked to give my opinion on Netflix’s strategic vision to Videonet, the leading source of strategic insight, analysis and news about post-convergence television.

If you didn’t catch that original post, you’ll find in what follows the outline of my key findings.

Today’s users expect to receive a personalized experience and they expect it from all content service providers. What’s more, they want a broad experience that doesn’t limit itself to just TV or just movies. Experts agree the ideal user experience is driven by a simple, pleasurable combination of content and multiscreen availability.

How does that match Netflix’s vision for the future?

  • Netflix claims remote controls will vanish. I agree. Tablets and smartphones are taking their place.
  • However, the claim that viewers don’t love the linear TV experience is less convincing. Appointment-to-view television is still alive and well in all territories. Content discovery is the crucial issue, not linear vs. non-linear TV.
  • Netflix needs to be more aware of the competitors it faces. Other uses of time and other providers of content battle for attention, true, but piracy is a third threat. The growth of pay TV piracy must be taken seriously.

The key question is whether Netflix is setting the direction for the whole industry, or whether it and similar services/operations merely serve to complement to existing content service providers.

I’d say the latter. For a start, Netflix is forming partnerships with traditional cable content services providers, such as the UK’s Virgin Media. So if consumers don’t love linear, why are they sticking with the cable operators? Because what Netflix does is increase their options.

Subscribers want comprehensive content not limited to movies, TV series or SVoD. Customers want and expect choice. There will always be a market for movies and TV series specialists, a market for news, for sport content, and so on but we must remember that pay TV’s success has been built on a broad church of content.

While Netflix’s strategy has worked so far, I’m not convinced it has the correct vision of where the industry is going and I doubt internet TV is going to kill its competitors stone dead, at least not in the foreseeable future. Don’t get me wrong; Netflix is an impressive outfit but when it comes to the future, we’re all guessing!

You can read my original post in full on Videonet.

Topics: TV Everywhere, Cable TV, Content Piracy, Content service providers, François Moreau de Saint Martin, Industry, Netflix, Pay TV, pay TV operators, PayTV, piracy, Social TV, User Experience, Videonet

 

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