Netflix: Threat or Opportunity? – Telco2.0 Research

After DVD market which industry is going to be “Netflixed” ?

 

The way in which audiences consume movies and television content appears to be changing.  While ‘linear’ viewing of scheduled channels remains robust, the market for DVD has collapsed and new pricing and consumption models are opening up.

Telco 2 Figure 6 Netflix Evolving Content Proposition

 

So is Netflix a ‘win: win’ opportunity for all concerned?  It may not be that straightforward.  

  • For leading pay TV players, Netflix will be yet another component forcing them to invest in innovation to minimise customers churning from bundled packages, and reducing flexibility around price increases;

  • For TV channels Netflix could lead to programme rights inflation, as a new player with a distinct business model comes into bid for premium exclusive content rights

  • For both established TV platforms and premium channels there is the risk that in price sensitive markets or demographics Netflix offers may gain traction, particularly among younger consumers at the expense of traditional subscription models.

  • For telcos looking to compete with cable and satellite, while Netflix could offer a cost effective way to deliver attractive premium content, it also carries a risk of constraining the telcos into the position of a ‘dumb (or happy) pipe’, not sharing in upsides and not owning the consumer who deals directly with Netflix.

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