Shows like “Orange Is the New Black,” with star Amanda Stephen, changed the television landscape … [+]
It seemed, at the time, like a risky bid.
In 2011, Netflix outbid HBO for rights to the drama House of Cards, directed by David Fincher and starring a pre-#MeToo scandal Kevin Spacey.
The move was a bold one for the fledgling streamer. Though Netflix had been around since 1997, first as a DVD mailing service and, by 2011, increasingly as a destination for everyone’s favorite streaming reruns, the company’s foray into original content had been minimal. Rivals Hulu and Amazon Prime, the other streamers, were still struggling to find their footing and not yet producing originals.
That landscape changed with Cards. Bought for a reported $100 million, the 26 episodes represented a huge commitment to a new direction for Netflix. There were so many questions: Could the company oversee a show that was as creatively success as those HBO had churned out for years? Would the investment be a fiscal success—or a disaster? And did a streamer even need original content to draw subscribers?
Cards, of course, became not just a huge success but also a game-changing one. The initial foray into original content bore dividends that continued to resonate throughout the remainder of the decade, completely changing the old model for television across multiple sectors.
As 2019 closes and a new decade begins, it’s worth looking at how streaming transformed television with its move to original content—and how that may play out in the coming years. Here are five areas impacted by this revolution.
1. The Rise of Binging
The entire first season of House of Cards dropped in one day. Netflix’s next big original, Orange Is the New Black, followed the same model.
While binging, or the practice of watching multiple episodes of a single shows in a sitting, had been done before, it became synonymous with the introduction of streaming originals, with most debuting an entire season at once, instead of following the traditional network model of airing weekly. (Exceptions exist, of course—Hulu has stuck with a weekly model for most series.)
The advantage to moving to this approach was that Netflix kept people excited and engaged. With attention spans at an all-time low, why risk letting people wander away after an hour? Binging suited Millennials and Gen Z, who like consuming content on their own schedules.
“Being able to just chill and watch your shows when before you had to schedule them on the network’s clock has been a huge change,” says PwC Technology, Media and Telecommunications Partner Greg Boyer. “The living room offers a far different experience for a viewer today.”
Cable and broadcast networks reacted to viewers’ appetite for binging. They experimented with form, such as dropping entire seasons of series in a weekend, like Angie Tribeca on TBS in 2015.
Looking ahead: You can expect to see more of this in the next decade, as networks look for new ways to engage viewers. They’re tied less and less to traditional TV schedules, except for live programming. We may see more networks experiment with offering an entire night of a single TV show vs. rolling it out once a week.
2. More Niche Content for More Niche Viewers
The broadcast model has always been to create broad-based content that appeals to a wide audience. It’s how shows like Friends and The Big Bang Theory and NCIS and, going way back, I Love Lucy have thrived for so long.
But the increasing fragmentation in viewing habits, with people bopping from console to TV set to mobile device, have also led to fractured audience levels. And so an engaged viewer, one who will follow your show no matter what and tweet about it and watch its new episodes, has become a valuable commodity, one difficult to secure with so much competition.
So how do you appeal to niches? Give them something they can’t resist. That’s what the streamers have exceled at. Like true crime? Netflix gives you Making a Murderer. Like your superhero shows with more teen angst? Hulu has Marvel’s Runaways. Want The X-Files but based on something real? Amazon’s Lore fits the bill.
“With streaming, we have the ability to discover and search, to be exposed to so many different things and genres that we didn’t before,” says Boyer. “We’ve heard of this term that it’s kind of the golden age of video—so much is now available, how do consumers even manage those choices?”
It’s difficult for broadcast and cable to compete with the deep pocketbooks of Netflix. The streamer has committed billions to developing new content, and other streamers, while not putting up quite as much, have expanded their budgets.
Looking ahead: It will become harder for broadcast to compete on a sheer numbers scale. Only about a third of broadcast shows make it to a second season, and with ratings dropping so sharply over the past decade, the threshold for survival has gotten lower. But networks can’t afford to embrace the same strategy as streamers, because they have limited openings for new content on their schedule. The “see what sticks to the wall” approach won’t work.
3. The Birth of New Streamers
These launches signify several things—traditional media companies wanting to compete with Netflix, Amazon and Hulu, of course, but also their desire to wrest back control of their lucrative library content. HBO Max, for instance, will launch with Friends, which had been a cornerstone of Netflix’s offerings.
These new streamers can leverage their existing properties—the success of Disney+’s The Mandalorian, set in the Star Wars universe, being a prime example—to attract subscribers. It’s an entirely new model for television, and the next few years will show whether their gambles work.
Looking ahead: Other media companies will follow Disney, Apple and WarnerMedia into the streaming wars, but their long-term outlook is questionable. Many people have raised their entertainment budgets, but the market can’t support an unlimited number of streamers.
4. TV Advertising Is Falling
A decade ago, TV advertising had been media’s 800-pound gorilla seemingly forever. As we enter 2020, the medium is poised to see unprecedented spending declines that we can tie directly to the rise of streamed content.
Events like the Olympics and elections will continue to drive TV investment. It’s not like it’s headed off a cliff. But streaming has clearly induced adjustments by advertisers in where they spend their money, since they follow the viewer eyeballs.
“While the decline in audience has been happening for a while, TV networks have been keeping prices high, raising them on available inventory. But now we are reaching a tipping point,” says Monica Peart, vice president, forecasting, at eMarketer. “Pay TV households are in decline at a rate that can no longer make up for the price increases.”
Looking ahead: TV ad spending will drop. How low is anyone’s guess. An interesting thing to watch for will be whether we see changes in advertising policies for Amazon and Netflix to pick up some of that slack—they currently don’t have ads, though Hulu’s basic platform does.
5. Ratings Evolve and Change
Traditional Nielsen ratings have never been perfect—the company has taken its share of criticism over the years, but no one could come up with anything better, so Nielsen continued to be the only name in ratings. Streaming has started to change that.
Nielsen has added streaming ratings, which Netflix has disputed. But it’s become clear a better apples-to-apples system of measurement is needed for the future, if we’re to get a better idea of what’s popular and what’s not—which can impact everything from subscriber numbers to Emmy wins.
Looking ahead: Greater competition from comScore and pushback from CBS have challenged Nielsen. There’s an opening for the service to evolve its ratings—or another player to come in and do it.