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The Netflix Effect How Netflix Is Changing The Rules For TV

Report by Tim Mulligan
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The 20,000 Foot View

Since reinventing itself as an online video subscription platform Netflix has transformed the paid video market. By delivering its online offering into consumers’ living rooms through connected TVs it removed the barrier between the TV and the internet.  A competitive pricing strategy and commissioning attention-grabbing content bought the platform consumer mindshare both in its core US market and internationally. On-demand programming combined with commissioning shows targeted at specific consumer segments presents audiences with a compelling alternative to expensive Pay-TV bundles. The steady increase in cord cutters and cord nevers means that the traditional Pay TV sector is quickly having to learn best practice from Netflix in a bid to survive and thrive in this new market.

Key Findings

  • Netflix’s fastest            is coming from its non-US            Its International subscriber base has            between 2012 and 2015
  • Netflix is            subsidizing its international subscriber growth                       less revenue earned from its            subscribers
  • Despite slowing            in US subscriptions between 2012            2014, ARPU was up 
  • Netflix’s fastest            revenue source is international subscriptions            a CAGR of            between 2012            2014
  • In 2015,            will spend the same as            and Hulu, its two main            competitors combined, on content
  • HBO’s annual            budget is            less than a            of Netflix's total content budget-which            licensing as well as original           
  •            of consumers aged            to            have an online video subscription

Companies mentioned: Netflix, HBO, Sky, HBO Now, Sky Go, Apple, Apple TV, The Echo Nest, Next Big Sound, Comcast, Time Warner Cable, Brighthouse, Charter