-‘House of Cards’ and Other Originals Attract New Subs
-Pay TV Will Have to Offer Something Better than TV Everywhere
– OTT Services Go Head-to-Head against Pay TV with Original Content
Netflix showed the world it is a force with which to be reckoned this week, when it announced its better-than-expected quarterly results.
Netflix added an amazing 1 million new subscribers outside the States, thanks to launches in Europe. In the US, Netflix added 2 million subscribers, bringing its total there to 29.17 million, ahead of its pay TV rival, HBO, in terms of US subscriptions. That’s about one of every four US homes.
OTT services are here to stay. Pay TV providers are going to have to offer something better than the current spread of TV Everywhere to compete effectively against Netflix and others. Netflix offers lots of content, both older titles, full seasons of favorite TV shows, and even headline-grabbing original content, all on-demand, available on any device – all for $7.99 per family.
Pay TV providers should be worried. Their customers who also subscribe to Netflix may be tempted to shave their cords to HBO, Starz or Showtime in favor of economically priced Netflix subscriptions that offer more content, all of which is available at any time and on any device. Netflix now has its icon on over 700 devices. Their subscribers will definitely shave off some of their pay TV viewing time, which will mean they won’t see many of the ads on pay TV channels.
With over 29 million US subscribers, Netflix has surpassed HBO in subscriptions in the US for the first time, and Netflix CEO Reed Hastings estimates there’s still a lot more room for Netflix to grow.
SNL Kagan estimates HBO ended 2012 with 28 million subscribers in the US, though it has a whopping 114 million subscribers around the world. We haven’t heard HBO’s first quarter numbers, so there’s a chance HBO could catch up with Netflix’s growth. The difference between the two as it stands now is only 400,000 subscribers.
The bigger picture here is that there are around the same number of Netflix subscribers as HBO subscribers. Linear premium channels have a subscriber ceiling of around 30 million here in the US. HBO’s subscriber growth has plateau’d over the past three years as well.
Hastings said he estimates Netflix’s total available market to be two to three times that of HBO’s pay TV network, so around 60-90 million in the US. During the earnings call, he pointed to the size of the library, the availability across devices and across broadband networks, and the fact that all the content is available on-demand, meaning more utility to wide audience – wider than that of premium linear TV.
Hasting was consistent in his comparisons that he was talking about “linear” TV. Hastings knows and has been open about the fact that a standalone service such as HBO Go could give Netflix a real run for its money.
Hastings also knows that pay TV providers are going to have to offer something better than the current spread of TV Everywhere to compete effectively with Netflix for eyeballs and subscribers.
Netflix Now Dependent On Exclusive and Original Content
The earnings report has put an end – for the time being – to the debate that Netflix’s $100 million gamble on “House of Cards” wouldn’t pay off. “House of Cards” proved to be a driving force behind the 2 million US subscriber increase, the company said less than 8,000 viewers signed up for the trial and then cancelled the service before it was over….
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