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Streaming disrupts linear TV

News, 10 December 2014

NEW YORK: Streaming services such as Netflix are taking audiences from traditional TV and also threatening its business model, according to industry figures.

"The growth of streaming is seen at this point to be the major disruptive force in the media landscape today," according to David Poltrack, chief research officer at CBS.

The New York Times reported his remarks to a recent media and communications conference, where Poltrack outlined new research that showed households with Netflix were watching significantly less traditional television than those homes without it.

Different interpretations, however, were put on the data. Poltrack's view was that while Netflix was competing with TV for viewers, it also offered a new revenue source for licensed content, while the syndication of past shows could also help build an audience for new programming.

"Wouldn't you prefer that your competition relied on old episodes of your programs as opposed to new content from someone else?" he asked. "You have to look at the big picture. Yes, Netflix is a formidable competitor. But they're a valued partner as well."

Not everyone was convinced by this argument. Television viewing has dropped 3% this season and television's share of the total ad market is set to be overtaken by digital in the next couple of years.

"The ratings have just disappeared," said Todd Juenger, a media analyst with Bernstein Research. "You have audiences leaving ad-supported television for non-ad-supported television, and I don't think that they are coming back."

For Netflix, chief content officer Ted Sarandos suggested that TV companies change their business models instead of wringing their hands about a clear trend of people wanting to be able to watch programs on demand or multiple episodes in one sitting.

"If you want to fix the economics of ad-supported television, you have to fix the product," he said. That could mean, for example, cable operators investing in technologies that enable advertisers to insert up-to-date commercials when people are watching TV episodes weeks after they are first broadcast.

Data sourced from New York Times; additional content by Warc staff