Commentary
Diller: Netflix Won The TV Game
- by Wayne Friedman , Staff Writer, February 20, 2019
If you were one of six major studios you once controlled everything, according to Diller. That's over.
As he and others have said, Netflix is way ahead of rival entertainment concerns -- especially now with 60 million U.S. subscribers -- when it comes direct-to-consumer (DTC) home video.
“Netflix has won this game,” he says. Which begs the question: What’s the new game?
Walt Disney, WarnerMedia, NBCUniversal are chasing after Netflix with similar DTC aspirations in the video streaming field -- to get consumers to buy premium TV content directly.
But at the same time, Disney, WarnerMedia, and NBCU are looking to wean themselves away from those carriage/retrans revenues.
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That’s hard to do. While those revenue percentage gains are dipping a bit, they still register around 5% hikes over the last several years. All while seeing real-dollar stagnation or declines in traditional linear TV advertising.
As for Hollywood being irrelevant? Well, not for the old Hollywood business. Walt Disney still made $7 billion in theatrical revenues globally in 2018 and $3 billion in U.S. box office.
Netflix isn’t on this list -- right now, anyway. Its attention is on the video platform.
That said, it doesn’t mind using theatrical-based awards events, like the Academy Awards, to garner big hardware and consumer attention. Netflix is spending some $25 million just for Oscar advertising and marketing for its film “Roma.”
The new game? We’ve heard this many times before: Amazon.
The ecommerce company knows consumers buy lots of stuff -- nonentertainment products like electric toothbrushes, furniture, clothes, groceries. All have a strong advertising connection. Now toss in the lure of big entertainment content to its 100 million Amazon Prime subscribers.
Chess moves from this new consumerism is just beginning.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
As you said, Wayne, "What's the new game?" I'm afraid that Barry and others who make these pronouncements about Netflix are jumping to unwarranted conclusions. A long time ago broadcast network TV was owned by CBS and NBC with ABC running a chronic and pitiful last. At that time everybody was saying that ABC had "missed the boat" and that CBS and NBC couldn't be beat. Then ABC worked a deal with Disney which brought it the hit TV show, "Disneyland" which was followed by "Wyatt Earp", "77 Sunset Strip", "The Untouchables", etc. and suddenly ABC was also dining at the captain's table just like CBS and NBC, the former invincibles who we had been told had it made and couldn't be toppled---ever.
Similar trunarounds and reversals of power abound in the history of television--as I note in my book, "TV Now and Then". Netflix faces a host of savvy competitors with tons of viewable content and it's saddled with a huge and growing debt that has to be accounted for in some manner. Will Netflix continue to rule whatever fiefdom it holds sway over? Perhaps. Is it invincible--with a permant lock on the undying loyalty of subscribers---no matter what it charges and no matter what else is available? Perhaps. But don't be surprised if competitive pressures force Netflix to offer an ad-supported platform soon---or, maybe, Bezos will just buy it. Stay tuned.
Love this analysis. Netflix is in the middle of its own transition. While those cotent providers - TV networks among them - attempt to transition to catering to the consumer directly. They will have to continue to prove their investment in content is warranted. Given the dearth of actual hits they've produced of their own they are not invincible. Transition is a two-way street.