Catherine Barton
Professor Woz
Finance 3770
November 28, 2015
Netflix – Friend or Foe? Netflix, created in 1997, revolutionized the way people watch movies. As Netflix began to deliver DVDs to your door, convenience overtook the trip to the video store. When their streaming infrastructure was deployed, consumers no longer needed to even visit their mailbox. This business model has transformed the home entertainment industry and has identified Netflix as the leader in this industry.
The massive Netflix subscriber base, currently at 69 million worldwide, is a magnet for content providers. Content can be licensed to Netflix for an additional near-passive revenue stream. The Netflix subscriber base has grown faster than most analysts expected, and the company has proven to be nearly impervious to subscriber rate hikes. This should be a recipe for a mutually beneficial business alliance, however, recent developments may be telling a different story. For years, Netflix has refused to brand content with network identification, resulting in viewers being oblivious as to where current episodes can be viewed. Additionally, Netflix is now producing original content in the form of television series’ and …show more content…
However, networks are increasingly negotiating for the branding of their licensed content. “A logo and a few seconds of promotional video may not seem like a big deal, but networks struggle to keep their brands relevant, making sure viewers know the origins of a show and where to go for fresh episodes is paramount” (Flint, “Branding” B3). Historically, Netflix has pushed back against the branding of content from other networks, and the owners of the media content have, apparently, agreed with the terms offered by Netflix. This situation appears to be changing, as these providers are beginning to withhold some of their programming for more favorable licensing
Professor Woz
Finance 3770
November 28, 2015
Netflix – Friend or Foe? Netflix, created in 1997, revolutionized the way people watch movies. As Netflix began to deliver DVDs to your door, convenience overtook the trip to the video store. When their streaming infrastructure was deployed, consumers no longer needed to even visit their mailbox. This business model has transformed the home entertainment industry and has identified Netflix as the leader in this industry.
The massive Netflix subscriber base, currently at 69 million worldwide, is a magnet for content providers. Content can be licensed to Netflix for an additional near-passive revenue stream. The Netflix subscriber base has grown faster than most analysts expected, and the company has proven to be nearly impervious to subscriber rate hikes. This should be a recipe for a mutually beneficial business alliance, however, recent developments may be telling a different story. For years, Netflix has refused to brand content with network identification, resulting in viewers being oblivious as to where current episodes can be viewed. Additionally, Netflix is now producing original content in the form of television series’ and …show more content…
However, networks are increasingly negotiating for the branding of their licensed content. “A logo and a few seconds of promotional video may not seem like a big deal, but networks struggle to keep their brands relevant, making sure viewers know the origins of a show and where to go for fresh episodes is paramount” (Flint, “Branding” B3). Historically, Netflix has pushed back against the branding of content from other networks, and the owners of the media content have, apparently, agreed with the terms offered by Netflix. This situation appears to be changing, as these providers are beginning to withhold some of their programming for more favorable licensing