when netflix (NFL) – Get Free Report Initially shifting from offering reruns and old movies to producing its own content, the company is a prestigious one. In many ways, the company has followed the example of Warner Bros.found (world bank day) – Get Free Report HBO, a cable giant with a focus on quality.
HBO has never been a blockbuster. It keeps subscribers by putting out hit shows that people feel they need to be subscribers to watch. Whether it’s “The Sopranos,” “Sex and the City,” “The Wire,” “Six Feet Under,” and most recently, “Game of Thrones,” HBO has a prestige show that offers you nowhere else Neither show is to be found on cable or on the broadcast.
In some ways, it’s an expensive business model (dragons aren’t cheap), but in other ways, it’s actually cheaper. It’s less expensive to have a few well-known shows that satisfy and grow your subscriber base than trying to mass-produce a show.
That’s a lesson Netflix seemed to understand early on. The company is in the business of making shows — think “House of Cards,” “Orange Is the New Black,” “Black Socca,” “Stranger Things” and a few others — that attract viewers while building word-of-mouth, or mouth.
Netflix has apparently ditched the prestige model in favor of making shows not to be water cooler talk, but to please the company’s algorithms. That’s why the streaming giant produces a seemingly endless string of shows that no one talks about, cares about, or tells their friends about.
Now, while Netflix’s answer should be obvious — make fewer shows, but make the shows you make fit the prestige TV model — the company continues to go down the wrong path.
Netflix
Netflix keeps cutting programming costs
People will pay for premium programming.walt disney (it is) – Get Free Report It has already proven this with its Disney+ streaming service. The channel offers the top must-see shows people talk about, which is enough to make Disney+ the No. 2 streaming service, and despite not being three years old, it has about two-thirds of Netflix’s global paying subscribers.
For decades (before the current ownership mess) HBO showed that consumers were willing to pay premium prices for pay-TV. Disney has built on the success of that model with Disney+, while retaining ad-supported pricing for its second-tier Hulu service.
Pricing matters when your product is of dubious value. Hulu offers reruns, mostly low-budget limited shows without the mainstay shows people have to watch.Same goes for Comcast (China-America Chamber of Commerce) – Get Free Report peacock and paramount universal (Pala) – Get Free Report Paramount+.
These streaming channels don’t have Disney’s Star Wars and Marvel programming to attract subscribers. Sadly, the same is now true for HBO, which is why once-premium offerings have ad-supported versions, and Netflix has done the same.
You can’t have cheap and good quality. That’s why Disney theme parks never offer discounts on tickets (except for Florida residents). The ad-supported tier makes Netflix and all these other services less special because they only cost $15 or even $20 a month if they have shows that people want to watch.
Now, Netflix has signaled that cheap might not be enough.
Netflix opens up free service
Paramount makes a lot of money with its free Pluto TV service. Pluto offers up episodes of old reruns that people will obviously watch. It’s a money-making ploy, but offering reruns of “Manimal,” “Who’s the Boss,” and “Airwolf,” and a steady stream of shows no one has heard of, is a financial game, not brand building.
Pluto is a free, ad-supported streaming (FAST) channel, along with Roku Channel and Amazon’s AMZN Freevee. They repurpose old content as a way to sell ads. That might be a smart strategy (although it’s hard to see how sustainable it is), but it’s a very different model from Netflix.
There’s nothing wrong with packaging essentially free programs for people looking for free (and free), but you don’t want to do that with your core program. Netflix co-CEO Ted Sarandos answered questions about the company’s launch of the FAST channel during its fourth-quarter earnings call.
“Yeah. Look, we’re open to all these different models right now, but we’ve got a lot going on this year with paid sharing and the ads we’ve rolled out and continue the list of things we’re trying to deliver to our members. So we’ll definitely be watching that part closely,” he said.
The question is not that Netflix will enter the FAST space, but that the questioner mentioned Netflix using its decade of producing its own intellectual property as a way of doing so. Basically, it would be the company dropping its paywall — albeit for older shows — which would destroy its core product.
Stranger Things, or even an Adam Sandler movie, is new to anyone who hasn’t seen it. This is a core part of Netflix’s business model. Giving some of these shows away for free undercuts their value in driving future Netflix subscribers.
Netflix has a business model that works, and as long as you make great shows that people care about, it can last. Now that the company has lost its creative ways, management has made it clear that it doesn’t even want to go back to the appointment TV people are talking about.