The television is an invention that without a doubt changed the world. Televisions have been available for the general population to own since the early 40s. At the end of World War Two around 20,000 households owned a television. Now the number of UK households that own a television stands at 27.02million. At this point in time televisions were all black and white, small, and had no more than a few channels to choose from. But now fast forward 8 decades we have widescreen televisions with colour, cable TV with hundreds of channels to choose from and online streaming platforms giving your favourite shows at your fingertips.
I have carried out and gain my primary research through surveys and interviews with industry professionals. I have also sourced secondary research using search databases to find online articles, books and videos. The information I have gathered from these methods will form the main body of my extended essay. In a world that is forever evolving, I am going to examine in detail in this essay, the effect streaming services like Netflix are having on traditional cable TV and its broadcasters and how the future of TV will shape up with all these advances in technology.
The impact of online platforms is huge, causing the viewership for broadcasters to plummet, is it due to the quality of TV, ease of access or cost? Either way it visible that now we are in the digital age of TV, where everybody can get their favourite shows whenever and wherever the want on any device.
Broadcasters are at risk of being left behind if they don’t make drastic changes. I hope by the end of my thesis to come to a conclusion on whether traditional TV is dying and whether online platforms are the future of Television.
Netflix has enjoyed rapid rise starting off from a mail order DVD rental service in 1997 to becoming arguably the most dominant global video streaming service in terms of value and viewership (Chapman, 2017). In this article Chapman went on further to talk about the subscription figures Netflix is producing. In 2017 it was reported that Netflix had recorded up to 98.3 million it now has over 139 million worldwide (Jarvey, 2019). The growth of the streaming giants is not expected to stop there, Netflix subscription numbers are projected to soar reaching a figure of 175 million by 2020 (Wang, 2016). Netflix is constantly surpassing expectations and producing exceptional shows, there is no telling the heights that Netflix will be reaching in the future.
In 2009, a worldwide trend was born the term ‘Netflix and chill’, which derived from a young girl on twitter in 2009, this caught on and became a national phrase that younger people would commonly use particularly in a romantic partnership. The phrase ‘Netflix and chill’ spread through the Internet like digital wildfire and has become a common phrase amongst us all. This reiterates the point I made previously in this written piece, that young people hold an enormous amount of power in society combined with the power of the internet is unimaginable. The mere usage of this term via Twitter, Tumblr and any social media gives free publicity through word of mouth to Netflix and it is widely regarded as the go-to place for video streaming (Leong, 2018). This single tweet elevated the viewing figures of Netflix massively and made people more aware of this streaming service.
It is widely reported that people are watching shows and films through the streaming medium via Netflix, Amazon Prime and other services. The ease of access, cost-effectiveness and quality of original content is encouraging people to abandon cable and look to streaming instead. In a recent study by Ofcom, the regulator for the communications services it is reported that the number of subscriptions to streaming services like Netflix has surpassed the figures for traditional pay TV for the first time. In the first quarter of 2018 streaming services recorded figures of 15.4 million and pay TV services fell to 15.1 million (Ofcom, 2018). This research shows that there is a rapid change in the viewing habits of the TV audience (White, 2018). With more platforms to watch your favourite shows than ever before, broadcasters are finding themselves having to compete for viewers in a world divided by the way they consume Television.
In the article submitted by Ofcom its states spending on new programs by the 4 biggest UK broadcasters BBC, ITV, Channel 4 and Channel 5 fell to a 20 year low. spending of only 2.5 billion on original content in 2017 represented a record low for these broadcasting giants and is ?1bn less, than when spending peaked at ?3.4bn in 2004. In an article published by the Independent, White made a statement suggesting that streaming services are going from strength to strength and broadcasters are being left behind. The CEO OF OFCOM then goes on to say, ‘We have seen a decline in revenues for pay TV, a fall in spending on new programs by our public service broadcasters, and the growth of global video streaming giants’ (White, 2018).
In addition, the use of the traditional TV set is increasingly under threat, with 43% of 12 to 15-year-olds using their mobile phones to watch TV (Sweeney, 2018). In an age where young people embody everything digital, there viewing habits in how access TV is rapidly changing (Sweeney, 2018).
In today’s society we live in an age where watching your favourite shows, whenever, wherever and whatever device of your choosing. The emergence of streaming services such as Netflix and YouTube kids, has acted as great comfort for parents of young children. They can give them a phone or a tablet to watch their favourite shows on the move this has proved very convenient, as it enables the parent to satisfy their child’s every needs of quality kid’s TV at all times.
Through primary and secondary research, I have concluded that 16-34 most common age band for which online streaming is used. Given this information I would assume that students/workers with busy schedules, who are constantly on the move would be the prime users of on-demand/streaming.
Eight in ten adults in the UK use on-demand platforms like BBC iPlayer or streaming services such as Netflix to watch multiple episodes of their favourite series in one sitting (Ofcom, 2017). To put that into perspective that is 79% of Adults or 40 million adults elect to watch online rather than sit in front of a television set.
Binge viewing has such a strong allure over its audience that many say they don’t intend to do it, but the pull of what is going to happen in the next episode keeps their attention. More than seven in ten (74%) say they sometimes watch more than they intend to, while 18% say this always happens (Ofcom 2017). These sorts of figures are not being produced by British Broadcasters, reason being streaming services are easy to access wherever you are, broadcasters don’t release the viewers favourite shows one wave, and the quality of shows don’t match those of Netflix. If broadcasters changed their ways to how Netflix do and produce more good quality original shows, it would help them get back their viewers. This would be beneficial because large viewing numbers due consumers binge-watching their show would lead to increased revenue. However, it is understandable that these public service broadcasters will never be able to do some of the things Netflix can do like input $8 billion into original content because these channels are owned by the government, whereas Netflix is a private company, therefore they are at liberty to operate however they wish.
The graph below taken from the online database company Statista, shows the population of the UK by age group in millions.
After interpreting the findings in this graph it is evident that the age groups from 20-54 are the most heavily populated groups. This data brings to the forefront the biggest downfall TV broadcasters face, which is the power the younger generation hold over TV viewing habits.
Streaming is not something you would associate with the elderly viewers, with that being said, it is safe to make the assumption that the predominant audience for streaming providers is a younger audience most probably 16-29 years old. 16-35-year-olds subscribed to Netflix in the UK (59% of people between the ages of 16-35 are subscribed to Netflix according to YouGov) Young people are central to most changes that happen in the world not just TV. Hence the emergences of streaming sites, these companies see that the world is populated by youth and they need to target them and make advances if they are to keep up with their competitors.
Netflix has become the world’s leading entertainment provider in terms of creating great dramas, with very successful series such as ‘Black Mirror’, ‘The Crown’ and ‘Orange Is The New Black’ to name a few. Netflix commissioned its first original series back in 2013, being ‘The House Of Cards’, this took the world by storm and ever since then Netflix has had a constant stream of quality dramas coming out of the pipeline. Netflix has experienced accelerated growth from the start, not only from a business stand point but also as streaming provider that generates high budget, flawless dramas.
Netflix makes a variety of dramas that everybody will like, and they inject a lot of money into their productions. In 2018, Netflix had an annual budget on licensed and original content, with the expectancy to be around $8 billion (Jarvey, 2018). This leads me to believe they really care about making great content for its viewers. It is plain to see that Netflix is trumping broadcasters and other streaming services in terms of revenue, expenditure and the quality of content they produce. Netflix are rewarded by having a loyal fan base as many people opt to renew their subscription, 89% of streaming video subscribers, subscribe to Netflix and Netflix’s renewal rate is also impressive standing at 93% (Ewing, 2018)and In comparison to big British Broadcasters (BBC, ITV, Channel 4 and Channel 5) who only spent a combined total of 2.5 billion in 2017 on UK-made programs (Ofcom, 2018).
You may ask, what are the reasons people may opt for streaming services overpaid for TV service providers such as sky and virgin. Positive Content delivered online without steep cable and extra charges.
In comparison to Sky and Virgin, Netflix offer services at far cheaper prices, they have three subscription types. The first priced at 5.99 per month, which is the cheapest membership this allows subscribers to watch on one device at a time in standard definition. The second stands at 7.99 per month Viewers can watch in HD and on two devices at a time. The most expensive plan is 9.99 a month, where subscribers can watch in Ultra HD if available, on four devices at a time.
On the other hand, Sky’s cheapest TV package is more than double Netflix’s cheapest and is priced at 22, with their most expensive package valued at an eye-watering 56. The website money saving expert by Martin Lewis posts articles giving help and advice on everything money. In a particular article I read it analyzed the cable prices and why they seem to be on the rise. Millions of Sky TV customers will be hit by a price hike in June, with the service fees for some going up by up to as much as 72 a year (Borrell, 2016).
Whether customers decide to cut the cord on these providers in the future it remains to be seen:
TV critics have called it TV’s golden age, but others say ‘peak television’ is coming to an end. – (Thielman, 2016)
Cable will never die because providers also offer Broadband deals unless Netflix came along and decided to become an internet provider then they could totally wipe out tv providers
Paid for TV subscriptions such as Sky and Virgin have seen a fall in revenue for the first time, after a period of sustained growth. Spending by the BBC, ITV, Channel 4 and Channel 5, on newly produced television programs, fell to a 20-year low. At the same time, viewers are spending less time in front of their television screens: the average daily broadcast viewing on the television set fell by nine minutes in 2017 and is down 38 minutes since 2012 (Ofcom 2018).
Netflix, Amazon, Apple TV, Hulu, Now TV and Disney Plus.
Broadcasters have tried changing when they introduced BBC iPlayer, ITV player, moving bbc3 online but that doesn’t seem to be enough.
The opinions are divided, on whether TV is dying, one individual who is pretty adamant TV is dying is the CEO OF Netflix Reed Hastings.