Netflix will be spending a massive amount on content to further threaten the position of TV networks in the industry.
Netflix Inc. is the market leader of the streaming industry. Ever since its inception, it had only one aim that is to become the biggest and global TV network. The company sidelined businesses of other TV networks and traditional pay cable TV providers. They seem determined and fight to compete against Netflix. Sources suggest that the media companies are implementing a new strategy to prevent the declining viewership at their networks. TV networks will spend heavily to regain customers.
Companies like Discovery Communications, Starz, and Viacom announced separately that they are exploring opportunities to spend more on original programming. They realize that content is the king in such businesses and without offering top quality content to the customers, they cannot have a successful business.
The executives of the media companies mentioned during their earnings calls that hefty investment is required in order to buy new content and supply it to the customers. Netflix is also TV networks’ chief rival in the industry. The internet TV firm announced a plan to spend $5 billion on new and old online movies and TV shows this year. The amount is bigger than any TV networks, Hulu and Amazon. Its other two rivals in the same category are spending heavily on content as well.
The CEO of Time Warner’s Turner Broadcasting, John Martin, stated that his firm is planning to go all out on the original programming domain. Reportedly, Time Warner has been planning to long to increase original programming and original programming budget by miles.
The business model and success rate for the streaming service providers and TV networks are quite different. The TV networks and Hollywood movie studios rely on ratings whereas the streaming services rely on subscribers. Before Netflix entered the market, such networks used to fill their schedules with cheaper shows and repeat telecasts. With such schedule, it was enough to count on viewers to increase the ratings.
After Netflix and its excellent quality content, such schedule had no worth in viewers’ eyes. The cheaper shows and reruns will not be good enough to offer any good; hence, they will have to invest on content whether a big hit show or original series. At this time, it is very much needed.
The only benefit for Netflix is that it can easily spend big amount on content and expanding services. The TV networks cannot just keep on spending. CBS recently spent millions to buy a show, which so far has flopped in the industry. It can invest at once but cannot afford such a loss as it is all about ratings.