David Poltrack, chief research officer at CBS, unveiled research at the UBS Global Media and Communications Conference earlier in December that shows that streaming on Netflix is beginning to eat into TV time.
Netflix subscribers watch significantly less traditional television than non-Netflixers, despite an increase in original network programming.
“The growth of streaming is seen at this point to be the major disruptive force in the media landscape today,” he said, noting that there has been a 3% decline in linear viewing for the 2014 autumn TV season in the US.
The study showed that less than 10% of actual time spent viewing on Netflix is driven by original programming like House of Cards and Orange Is the New Black, even though those shows may be the reason people sign up for the service in the first place.
Rather, it is, ironically, broadcast content that people are streaming. NBC’s massive hit, The Blacklist, ABC’s Once Upon a Time and NBC’s Parks and Recreation are among the top shows.
Todd Juenger, a media analyst with Bernstein Research, told the New York Times that the media company decision to release more TV content to OTT services is coming back to bite them.
“That spirals down the road,” he said. He added, “The ratings have just disappeared,” said “You have audiences leaving ad-supported television for non-ad-supported television, and I don’t think that they are coming back.”
But, finding new platforms for old library content and teasing viewers to current-season TV with past season fare on Netflix is still a working model, according to Poltrack. “Wouldn’t you prefer that your competition relied on old episodes of your programs as opposed to new content from someone else?” Mr. Poltrack said. “You have to look at the big picture. Yes, Netflix is a formidable competitor. But they’re a valued partner as well.”
Advertising revenue is what’s at stake of course. Poltrack however said that despite the viewership declines, most over-the-top (OTT) subscription services serve no ads and therefore don’t compete with broadcasters here, so that budgets are staying steady.
But others beg to differ, noting that OTT’s popularity is taking an obvious toll. WPP’s GroupM advertising firm’s latest forecast predicts that linear television’s share of the total ad market for its clients will fall for the first time next year.
All of this setting the industry up for a sea change, if indeed viewers “don’t come back.” For its part, Netflix is saying that all of this is forcing linear TV into a needed course correction.
“If you want to fix the economics of ad-supported television, you have to fix the product,” Ted Sarandos, chief content officer at Netflix, told the UBS conference.