Netflix takes a new aim at Hollywood. Industry changer again?


We all know Netflix as the streaming services which defeated Blockbuster. With their innovative business model they were able to build up a huge customer database making it almost impossible for competitors to catch up with them. With their limitation to content (provided by the studios) they decided to take action into their own hands with the production of ‘House of Cards’, ‘Orange is the New Black’ and such shows. They were distributed exclusively by Netflix and thus excluding the big tv studios. And now they are back with something even bigger: they closed a deal with the Weinstein Company to release next year’s sequel to the movie ‘Crouching Tiger, Hidden Dragon’ at the same time as they are released in the movie theaters. Reasons for Netflix to come up with this is to be a game changer in Hollywood. The chief content officer (COO) at Netflix, Ted Sarandos, says that Hollywood has to adapt to the changing demands from movie fans. They want to change the traditional method of film releases: theater, dvd or blueray and later on availability for streaming services.

I personally think this is a great step taken by Netflix. First the own tv-shows really showed a legal alternative and with the release of Hollywood movies at the same time as in movie theaters I think the illegal pirating of copyright protected content could be hold back. As you know in Holland it’s forbidden to download illegal content as of jurisdiction from the European Court. The problem in my opinion is that people are willing to pay for content, but don’t want to wait for the content to be released in their region for too long. This way, by distributing Hollywood movies all at the same time, I think it would prevent more people from illegally downloading content and thus the authors and actors would get paid rightfully for their work. Downside of the Netflix distribution would be the lack of income for movie theaters, but what do you think? If we would make a industry wide cost/benefit analysis would the benefits of legally distribution by Netflix outweigh the missed income by movie theaters? Would more people subscribe to streaming services? Would Netflix’s increased market power be a bigger threat?

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Sources:

http://tweakers.net/nieuws/95335/kabinet-nederland-heeft-per-direct-downloadverbod.html

http://www.forbes.com/sites/gregsatell/2013/03/04/what-netflixs-house-of-cards-means-for-the-future-of-tv/

http://www.therichest.com/business/how-netflix-beat-blockbuster-and-became-huge/

http://www.nytimes.com/2014/09/30/business/media/with-crouching-tiger-sequel-netflix-takes-aim-at-hollywood.html?partner=rss&emc=rss&smid=tw-nytimes&_r=0

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2 responses to “Netflix takes a new aim at Hollywood. Industry changer again?”

  1. 337547nr says :

    The film industry is definitely having its problems with the internet and the piracy it offers. Mi opinion is that currently consumers do not want to wait for their content they want it right now. Survey among dutch cinemas showed that currently 47% of the dutch people aren’t visiting cinemas.(http://www.filmonderzoek.nl/bioscoopmonitor-2013-2014, 2014) Therefor I think the consumer do not want the whole cinema experience anymore, instead the consumer wants to watch the movie at home.

    Netflix offering premium movies through its services is a great contribution for this cinema at home principle. By offering it online in an easy way it is easily accessible for consumers. Instead of not going to the cinema and download the movie they can now stream it via Netflix for a reduced amount. This way the moviemakers still get their money and the consumer can watch the movie in his own time.

    For cinemas this would probably very problematic. Since the introduction of streaming Netflix puts even more pressure on cinema visits. Eventually I think the number of cinemas would reduce and they are only operating in a market niche. Showing only special movies for a small specific crowd.

    So to end piracy on the internet streaming is a good service but it will probably also end the wonderful world of cinemas.

    Niels Rudolphus
    337547

  2. 345510jr says :

    Netflix claims that whenever the service launches in a new market, that illegal downloading (via e.g. BitTorrent) rates drop in that same market. However, according to the Washington Post, Netflix is just as incapable as its ‘old-school’ TV rivals in stopping online theft of its content. An example is the ‘Orange is the new black’ series, which is a Netflix exclusive. This was the second ‘most pirated’ TV show in the world after ‘Game of Thrones’. The show has been downloaded approximately 60 million times in the first six months of 2014. This amount is higher than the total amount of Netflix users. Executives in the entertainment industry had hopes that services, such as Netflix, would persuade people to start paying for videos instead of downloading them illegally. However, this might not be the case and there are several reasons for this. First, pirating has become a lot easier in the past few years. The second reason is that younger Internet users grow up with the idea that they can watch movies for free and therefore they are used to it. Another reason is that Netflix is releasing entire seasons of shows at once. This might encourage people to put illegal content on the Internet quicker. It is also easier to illegally download a whole season of a show at once. Another reason why people keep downloading illegally is because the library of Netflix is ‘incomplete’. Therefore, it is the question whether services like Netflix will be able to significantly reduce piracy.

    Sources:

    http://www.forbes.com/sites/matthickey/2013/05/07/netflix-we-kill-piracy-bittorrent-yeah-so-about-that-piracy-thing/, 2013

    http://www.washingtonpost.com/business/technology/orange-is-the-new-black-is-now-the-second-most-pirated-tv-show-in-the-world/2014/08/24/4b9a4bf2-2977-11e4-8593-da634b334390_story.html, 2014

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