27 February of 2014

Defeating the tradition: Netflix?

by Berkem Ceylan

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US giant Netflix set to defeat the tradition in Europe. The continent is ready to be “Netflixed” after Nordic and the Netherlands expansion.

Remote controls are complicated. Once a remote control was considered awesome. They were like lightsabers, but it seems that they are not anymore. Especially Netflix is contributing to the shattering of the remote control. People choose the experience of Internet TV over the so called traditional television watching. One good reason is the fact that the uprising streaming-platforms are giving the viewer the possibility to customize the moving pictures. The traditional TV model is still popular but losing ground. Why so? Could Netflix be leading the Internet TV into the next level in Europe?

Going Abroad
European and overseas expansion of Netflix, provider of an on-demand online streaming media,  has been happening slowly but steadily. US giant Netflix has now been looking into expansion in Europe. It started with the UK, Ireland and Nordic countries in 2012 and Netherlands in 2013. During the launch of Netflix in the Netherlands, Vice President of Content Acquisition, Kelly Merryman stated that France and Germany are going to be ‘’Netflixed’’ later this year. Especially these two markets are very important for this fast growing US-Corporation. ‘’Germany and France are leading the way in terms of numbers for internet users in the European Union. If Netflix is to succeed in these two countries, then it may well do good in other parts of EU.’’ this is according to Assistant Professor Erkan Saka from Istanbul Bilgi University. In order to be successful the company is monitoring European bittorrent sites to see what the viewers would want to watch before they try to buy rights to a certain series. They currently have no plans to launch in Turkey. ‘’Netflix may be first looking into bigger internet markets in Europe and Turkey has had problems with censorship and broadband problems.’’ continues Saka. ‘’Clearly, Turkey may not be getting the priority over bigger European internet markets.’’ Saka also mentions the ongoing copyright problems as a possible reason for Turkey to be left out in the expansion pack. ‘’Internet copyright in Turkey is still not where we want it to be. Protection of digital copyrights is covered by the law but there are still some issues. Netflix may not risk entering the Turkish market, at least during the first phrase of expanding.’’

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Competition broadcast
Netflix reached 44 million total users worldwide in Q4 of 2013, while BSkyB (British Sky Broadcasting) had to provide a new service called NOW TV, which provides on demand online content as well, to compete.

BskyB provides a wider selection of content, therefore it has to compete in different levels of field; like securing rights to broadcast Premier League football or The Champions League. Therefore Netflix enjoys being a specific broadcaster, concentrating on its own dedicated compilation. BskyB lost the rights to broadcast Champions League and Europe League to competitor BT Sport in 2013 and that directly influenced their profit yet increased the user fees along the way. Today Sky Movie Bundle pack costs you 21.50 pounds (approximately 26.19 Euros) per month. Sky also had to pay 2.3 billion pounds to have the rights to the English Premier League which again contributed to its first profit loss in years.

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Business Innovation
Netflix exclusive drama series Lillyhammer and House of Cards play an important role in the business model. The production of the first 13-episode season of House of Cards cost Netflix a total of 100 US Million Dollars. To cover that 7.99 US Dollar rate would require a lot of users. Lillyhammer is the first original series that was created and licensed for Netflix. It was shot for the internet viewers in mind, without even thinking about the linear television. Whole Season 1 was available in one sitting; meaning you could watch the entire of season 1 on launch date of the show. This is clearly a shift from the traditional linear concept in terms of production, licensing and distribution.

Netflix enjoys a simplified business model as they don’t deal with football rights or stuff like that. An US account costs you 7.99 US Dollars per month. It was the same price last year and the year before. While the Internet and linear TV providers adjusted the prices, Netflix is keeping it steady. However monthly price has been augmented a Euro in Ireland after weeks of rumours This may be viewed as an experiment for the business model. Let Ireland be the guinea pig and see what happens; adapt it to US or stay with the current fee.

Netflix – leading Internet TV into the next level?
Netflix isn’t doing anything NEW but developing and offering a concept that has already been around for almost a decade now. Providing digital content for a digital traveller on any gadget is clearly the lightsabers of our time. BskyB and other linear platforms prefer to respond to anything Netflix and competitors do. Still, Netflix is relying on ISP’s reliability and speed to provide its content. That can be considered as an Achilles heel. Against this little odd It would be fair to say that Netflix is forcing the internet TV to the next level because it’s cheap and simple.

Header picture by: http://www.flickr.com/photos/hinnosaar/2655128664 /edited

Edit: Justine Slawik

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