Netflix: Changing Television

Katie Murray '15, Staff Writer/Editor

This October, Netflix surpassed forty million subscribers, sending out a strong message that the internet is drastically changing the world of entertainment.

The company, which many cite as the main cause of Blockbuster’s bankruptcy, is currently dominating the movie rental business. Netflix’s business model was based on mail order rentals without due dates or late fees. Blockbuster was offered the purchase of Netflix in 2000 for $50,000, but turned down the offer. By 2004, Netflix had gained loyal subscribers and Blockbuster had just launched its own mail order rental service. Blockbuster’s service was not as popular as Netflix’s and its profits dropped sharply. Then, in 2010, Blockbuster filed for bankruptcy. The company was eventually bought by Dish Network. Dish announced this month that all three hundred of the remaining Blockbuster stores would be closed, though the internet rental service will still be available.

Having beaten out the competition in movie rentals, Netflix now seeks to dominate television with its instant streaming service. Netflix executives are optimistic in this goal, writing on their website, “As Internet TV grows from millions to billions, Netflix is leading the way.” Netflix streaming has benefits that are obvious to television consumers and terrifying for satellite TV companies. “Netflix is convenient,” explains sophomore Rachel Rockwell. “It’s just always there. You can always go back if you missed something or be like ‘this movie is really cool’ and re-watch it.” Junior Jen Carellas says she likes the lack of commercials and time-restraints that internet viewing provides.

What makes Netflix appealing for many subscribers is the prospect of “binge viewing.” Senior Meredith Peppes, a binge viewer, says she likes that “you don’t have to wait for the shows to come on TV. I can just sit there and consecutively watch the TV shows one after another on Netflix.” Netflix streams shows in their entirety, allowing its subscribers to watch whole seasons whenever and wherever they like, a service cable TV networks don’t provide to their users.

The cast of the popular Netflix original series House of Cards.
The cast of the popular Netflix original series House of Cards.

Netflix made headlines this February after releasing its first Netflix original series, House of Cards. Netflix made the show using massive amounts of statistics and data collected from its subscribers’ ratings on TV shows they watched on Netflix. House of Cards was made as a remake of the UK TV series of the same name which data showed was popular among subscribers. The director and star of the show were handpicked by Netflix’s chief content officer, Ted Sarandos, because of the data he had collected on them. House of Cards was nominated for nine Emmys and won three of them, making it the first show of its kind to be nominated for an Emmy.

Netflix has continued releasing original content since House of Cards, including a wildly popular show, Orange is the New Black and a continuation of the cancelled show Arrested Development. The majority of Netflix’s money goes into buying the streaming rights for online content. Though it has not released specific figures, it is estimated Netflix spends hundreds of millions of dollars each year on getting the rights to stream content. Producing its own content could save Netflix streaming rights and increase its profit by bringing in new subscribers.

As technology develops, the entertainment industry will be forced to change. As Vikas Bajaj of The New York Times says in his article “Ready to Cut the Cord,” “It appears that cable TV may be in the early stages of a transition that began in the telephone business more than a decade ago when Americans started giving up their land lines and began relying mostly on cellphones.” Cable TV consumers are tired of the commercials, high prices, and uninteresting programming handed to them by their cable companies. Netflix appeals to these people by offering programming with no commercials, low prices, and the freedom to choose what you watch when you want to watch it. However, when compared to television giants such as Comcast or Time Warner Cable, Netflix is a small, young company that many believe poses no threat to the extremely powerful and profitable entertainment industry.

Beau Willimon, writer for House of Cards, predicts that “this is the future, streaming is the future. TV will not be TV in five years from now…everyone will be streaming.” There is much debate on whether streaming is, in fact, the future. More so, people wonder whether streaming could end up killing cable. Entertainment and television have become such intricate pieces of American culture that no large transition in their methods will be taken lightly. If Netflix continues to grow and draw customers away from big cable companies, both the entertainment and advertising industries will be forced to make a choice. They can drastically alter their comfortable ways of running their businesses to conform with the new internet craze, or they will be forced eventually into bankruptcy, much like Blockbuster three years ago.