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TV Programmers Adjust Netflix Strategy

by User Not Found | 11月 27, 2015

Programmers used to view SVOD services strictly for the added licensing revenue they brought in, but as viewership to live TV continues to erode they are increasingly worried about the impact these services are having on their linear channels. As a result, the relationship between programmers and SVOD services is changing.

Earlier this month, several media executives indicated they are going to change how they sell their programming to digital services. Time Warner, in particular, has given strong indications that it is going to change how it licenses programming to Netflix. According to Time Warner CEO Jeff Bewkes, “Time Warner is evaluating whether to retain their rights for a longer period of time and forego or delay certain content licensing. This would effectively push the [subscription video] window for content on our networks to a multiyear period more consistent with traditional syndication.” In addition to restricting what content is licensed to Netflix and other SVOD services, programmers are also rolling out their own competing broadband initiatives such as HBO Now, CNN’S Great Big Story, and TBS’ new digital studio Super Deluxe.

It is becoming clear that big media companies are willing to give up some licensing money in the short term to maintain viewership on their own networks, while simultaneously building their own streaming business.

The popular news media narrative has been that Netflix is encouraging an entire generation of cord cutters to abandon pay TV. However, as can be seen in the following chart, the majority of SVOD users are also subscribers to pay TV. Only 5% or less percent of SVOD users cut the cord in the past year in all the countries that Strategy Analytics surveyed.

This change in strategy comes from concerns about the growing number of consumers who are watching programs on Netflix, Hulu and Amazon Instant Video. (Read more about Netflix’ market expansion and user behavior in our latest report: Profiling Netflix: U.S., U.K., France and Germany) TV programmers are well aware that SVOD users are some of the strongest consumers of movies and TV shows. As a result, they want to bring users back to viewing through mediums which programmers receive advertising revenue and carriage fees. Windowing systems, such as the ones Time Warner is evaluating, serve as one strategy by which TV Programmers can attempt to move viewership back to linear TV.

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