Strongly recommend Outside the Box: Netflix and the future of television by Ken Auletta in the latest New Yorker magazine (we have the paper version, no wi-fi connection required). The feature takes a dizzying tour of the TV-video landscape, and there is much to absorb and ponder. When Netflix started up in 97, its founder hired a guy to develop a personalization engine that would figure out what each subscriber liked to watch, generating suggestions to the viewer about what he would like to see. And Hastings, the CEO, soon saw the future of video on demand, i.e., streaming. It would eliminate the mail delivery step between Netflix and its clientele, or should we say each of its clients individually. Like advertising strategy (Im lovin it), and the extreme individualizing of mobile devices, the target for Netflix (and Amazons video on demand) was not consumption by a cohort of consumers with common needs, but millions of individual users each with real - or imagined - uniqueness. Netflix now keeps detailed track of a subscribers habits and preferences, and how quickly she watches each episode, and how many she watches in one night. What started as a dozen categories of content is now 79,000, to better predict what you want to see next. Move over, NSA. Every device is a television now, and Netflix has cornered 30% of all online streaming, ahead of Youtube. The format collides with cable, which sells in bundled quanta defined by the few content companies in the game like HBO, Disney and ESPN. The last of these accounts for about 6 bucks in each cable bill, even for viewers who do not watch it. And HBO, which has apps to allow viewing of its shows on any device, worldwide has over 2 1/2 times as many subscribers as Netflix: a whopping 114,000,000! Who will win this ongoing battle for viewers is impossible to predict; traditional TV advertising is to an extent up for grabs where half the viewing households have DVD-Rs. Since 2000 over 1/3 of TV advertising dollars have shifted to digital media. And in an on-demand world, immersive viewing like binging create viewing patterns difficult to model. TV show streams now average 2 1/2 episodes in one sitting. Finally, behind all the streaming is the reality that without broadband there is no streaming, no stream provider can exist without it, and the gravy for cable is the broadband connection. Auletta quotes Hastings: The future [for providers] is broadband. That business has nearly 100% margins. And guess who is fighting this oligopoly? Google, with its start-up, Fiber, claiming TV service that is 100 times faster than the average broadband speeds. But in eighteen months it has brought fibre-optic cable only to Kansas City and Provo.
Posted on: Fri, 31 Jan 2014 04:43:19 +0000
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