APB PANELLISTS
6 NEWS & VIEWS
March 2016
Linear television still has a role to play despite the Netflix effect
by peter bruce
Was January 6 at CES 2016 in Las Vegas the day that changed the broadcast and media world forever ?
Since Reed Hastings , co-founder and CEO of Netflix , presented the keynote speech at CES 2016 with chief content officer Ted Sarandos , Netflix has left governments , regulators and , most of all , TV stations in a spin . Netflix has been discussed in parliaments ; had calls for its banning ; a rush of arguments regarding withholding tax ; and TV stations and telcos wanting to block the Internet video-streaming service . Meanwhile , in some regions , cable operators are fighting to sign up and partner the subscription-video-ondemand ( SVoD ) media company .
The two executives from Netflix announced the launch of their services into another 130 countries . So what is all the commotion about ? Well , it effectively turns Netflix into a global operation and without borders ( with the exception of China , Syria and North Korea ), and has started many discussions in many countries .
So , let ’ s try to address some of the controversies here .
The business model
If a conventional broadcaster were to try what Netflix is doing , it would take years to obtain the requisite licences in every territory . Additionally , as many contribution channels running in each region have found out , a whole industry has grown up locally to address the various censorship and regional sensitivities of the material — broadly known as ‘ compliance ’. In many cases , permission would not be granted , or it would take years for approval in each country to deliver content .
So similarly to Uber ( the taxi booking company ), Netflix has simply launched , and while it may face many individual legal challenges over the coming months and years , these are likely to be fought off one by one as they arise .
Meanwhile , consumers will be signing up in their millions , making it extremely challenging for governments to reverse the roll-out of Netflix in their territories . This disruptive business model uses connectivity in a digital world to enable phenomenal global growth , placing Netflix in a similar camp as Uber in terms of expansion . Already , TV stations are questioning why Netflix is operating under different rules compared to freeto-air terrestrial or cable networks .
When Netflix announced its plan to open up to a further 130 countries globally , it took the world by surprise . Overnight , much like Uber , Netflix is now live in 242 countries , and the plan appears to
be one of “ jump in and see what sticks ”.
By now , government ministers in Malaysia have called for a total ban of Netflix ; Indonesia ’ s film censorship board , LSF , has floated the idea of having Netflix blocked ; while in Singapore , local telcos StarHub and Singtel have adopted the stance that if “ you cannot beat them , join them ”, offering Netflix-inclusive pay-TV packages to their subscribers .
It ’ s all about the content !
It ’ s really all about the content — and how we receive it ! A recent survey ( eMarketer ) in the US asked “ why people subscribed to Netflix ?”. Some 82 % of respondents replied that it was the convenience of streaming , on-demand programming . What the concerned national TV stations are missing is that if they do not move to new forms of distribution , then others will .
At present , Netflix only has 70-plus million viewers worldwide ; this is not a huge number for a worldwide media organisation . Reed Hastings ’ comment that Netflix is not the “ 800-pound gorilla in the room ” when YouTube has more than one billion views per month may be valid , although this does highlight that viewing habits are changing and the world is turning into Internet binge viewers . This is an issue that linear TV stations must address .
During the Netflix announcement at CES 2016 , there was a reason why its chief content officer , Ted Sarandos , was co-hosting the launch . Netflix knows that it is not only convenience that matters but , most importantly , content is still king . This is predicated in both the quality and choice of programming , as well as expanding the number of languages — and of course , adding 4K / Ultra HD ( UHD ) programming , which is coming soon . Netflix is also investing heavily in high-quality , original programming with titles such as House of Cards , Lilyhammer , Hemlock Grove and Orange Is the New
Netflix is now available in an additional 130 countries around the world , as the SVoD service continues its aggressive global expansion .
❝ The reality is that local TV will not be replaced by Netflix , although local TV stations need to sharpen up their content and distribute in a similar manner to Netflix .❞
Black . All these elements differentiate Netflix from the traditional governmentrun ( or private , in many cases ) TV channels to a greater or lesser extent .
However , while Netflix may circumvent local regulations , rights are a different and more challenging issue that it does need to address head-on . Indeed , Netflix is already dealing with regional rights issues ; a cross-reference table of what is allowed in various territories highlights the problems of being a totally global video distributor .
As a result , depending on international rights , the content structure is different in each territory . Some Singapore viewers have already expressed disappointment that some programming is not available in their region . Netflix has announced that it will block proxy servers from viewers subscribing from the wrong region , effectively banning content hunting .
The death of linear television ?
Traditional TV stations are more than worried . With programming being produced outside of the region , and a “ short circuit ” between the content and viewers on their TV and mobile devices , the question is whether the local linear TV station still
Andrew Anderson
Head of Broadcast Operations Seven West Media
APB PANELLISTS
Stan Moote CTO IABM has relevance .
The truth of the matter is that Internet TV kicked off several years ago , with the initial debate being TV versus the Internet . The reality is that local TV will not be replaced by Netflix , because local issues , traditions and values still matter to local people . Local TV stations need to sharpen up their content and distribute in a similar manner to Netflix .
National and local TV brands such as BBC , ZDF , Mediacorp and RTV still have value . However , if the TV stations do not move to adapt to new , convenient viewing habits , they will become irrelevant . Broadcasters such as the BBC have been successfully implementing catch-up TV ( with BBC iPlayer ) for years now . If broadcasters continue to produce local news with local programming , there is still room for them .
However , they must learn to be lean and adjust their distribution networks and not rely only on the terrestrial platform — terrestrial broadcasters need to remember that Internet TV is their friend and not their enemy . If they exploit new distribution models , they will be able to more than survive Netflix , Amazon and whoever else arrives in the future .
Peter Bruce is Director of the IABM , APAC .
Joe Igoe CTO MediaCorp