The premium cable and satellite network HBO differentiates itself from its broadcast and cable network competitors through its dedication to the cultivation of premium programming as well as its distinct business model. Time Warner’s network HBO is “the prime example of a network brand built via quality programming” as evidenced by its overwhelming accumulation of awards and accolades as well as dedicated audiences (Berman). This premium programming is a large part of how its subscription based business model is able to thrive in today’s entertainment landscape. To compete with traditional cable networks and remain ad free, HBO has 41.5 million subscribers which has generated 4,415 million dollars in total revenue; more than any other cable …show more content…
With the increased pervasiveness and accessibility of the internet in modern life, consumers have been abandoning traditional television and cable for online subscription streaming services. Media Convergence has played a key role in enabling cord cutting in that content that traditionally has been exclusive to the television set is now available via the internet on multiple platforms, such as cellular phones and computers, that were traditionally reserved for other media. Now that television programs are able to be exhibited portably on laptops and smart phones over the internet, consumers have been given the option to forgo traditional cable and almost exclusively consume content online anywhere with very minimal restrictions. Companies, such as Netflix and Hulu, emerged to take advantage of this opportunity and facilitated the cord cutting movement by charging subscribers a reasonable rate for access to an enormous quantity of television content. To save money and consolidate their media consumption, many consumers have abandoned their cable packages in favor of subscription based services that provide television content in a more accessible, and in some cases a more affordable, …show more content…
Cutting out a cable subscription can potentially save consumers 100 dollars a month, even after they subscribe to new online television services such as Netflix or HBO NOW (Bajaj). With these online subscription services comes a plethora of content and if a consumer were to exhaust the extensive amount of content provided by one subscription service, they can easily unsubscribe and switch to a new service with different content. However, while creating an appropriate response to the threat of cord cutting, HBO is still facing challenges potentially because of its online subscription service being limited to streaming only HBO programs while other subscription services such as Netflix provide a diverse range of content for consumers to choose from. HBO NOW has proven to have a somewhat underwhelming effect in that it only gained 800,000 domestic subscribers as of June 2016, in comparison to Netflix’s over 75 million subscribers internationally potentially because of its inability to directly compete with other subscription services that cord cutters find to fit their needs and interests better (Berman). So, while this new online media landscape provides both more fiscal freedom as well as freedom of content for consumers, it has the potential for setbacks cable networks such as HBO even if they
Because Netflix and other streaming services offer a substitute product for traditional cable (one that binge-watching Millennials are increasingly turning to), the declining growth in the cable sector is a source of new subscribers for Netflix. Low barriers to entry mean that a growing number of traditional telecom competitors (Verizon, AT&T) have announced recent streaming plays, and are crossing into internet publishing. But those providers see mobile video as a mechanism of increasing data usage, which is their real source of profit. Porter’s 5 forces model would suggest that this churn of competition will shrink the industry’s current robust profit
HBO (Home Box Office) owned by Home Box Office Inc., an subsidiary of Time Warner, is an American premium cable and satellite television network. As of December 2014, HBO had an approximately 138 million subscribers worldwide. (statista) It is one of the world’s most successful pay television services available in over 60 countries throughout America, Europe and Asia.
Hulu is a first mover in this space and is currently enjoying the first mover advantage. However with the ubiquity of internet technology accompanied by lower costs and the commoditization of the technology, the barrier to entry will be reduced and more players will be attracted to the profitable online video business, eating into Hulu’s profitability and success. Also, the increase in IT investments in the internet age causes “a Winner-take-all dynamic and high turbulence, as each group of dominant innovators is threatened by succeeding waves of innovation” (McAfee and Brynjolfsson, 2008) in Schumpeterian competition. This makes Hulu’s success vulnerable.
Rogers Cable is the leader in Canada’s cable television market, with a over 2.3 million cable television subscribers and 500000 internet subscribers. In 1993 the Canadian government relaxed the norms of telecommunications industry followed by an application in 1999, allowing local carriers to change the content of the information passing through their networks. This led to increased competition in the market and the customers enjoyed a lot of choice. As such Rogers Cable focused completely on increasing its subscriber base and
Comcast has been dominating the cable industry into a suspected monopoly that has about 296.6 million customers and has spent $586 billion to do so. With the discovery of online streaming companies like Netflix were born and offer hope in ending Comcast’s rein on the cable industry as their business become obsolete. By understanding that customers are frustrated by cable and what satisfies them about cable we can restructure a company like Netflix in order to achieve this goal. By maximizing on this information in conjunction with their recent re-branding and superb customer service this new, improved, and imaginary Netflix will capitalize and become a larger competitor to Comcast.
In late August 2015, Netflix was introduced to the Australian Market. Since its arrival Netflix has grown to have over 2.7 million users, surpassing Australian rivals Stan by over 2 million users (Roy Morgan, 2015). Netflix is a media streaming company that allows users to stream television shows and movies on multiple devices in high definition quality. Foxtel is a pay television company allowing users to access television shows, movies and events unavailable on free to air television. Founded in 1995, Foxtel had a monopoly on the pay television market (Foxtel, 2016). Netflix’s emergence onto the pay-tv market raises questions on how this has affected Foxtel’s customer base and profits, especially due to the Netflix’s low prices of $8.99 to $11.99 per month. As figure 1 shows, Netflix has been rapidly increasing in subscribers and Foxtel’s subscribers have been declining slowly.
However, in the era of the Internet, the market has changed. Cable television has been challenged by many alternative venues of media consumption, most notably in the form of the Internet. "There has been some competition from satellite TV players and (in a few areas) TV over IP" (Masnick 2008). "Thanks to the rise of Netflix, Hulu and hardware like the Roku box and Apple TV, cutting the cord to cable TV doesn't mean cutting yourself off from your favorite shows and channels" (Glaser 2010). However, most high-speed Internet consumers receive their Internet connection from the cable company, which indirectly funnels money to support cable TV.
Unfortunately, the competition has caught up and networks such as CNN and Lifetime have begun to offer competitive programs and thus competitive advertising outlets for the target audience. As a result, advertising sales is projecting a 10% decrease in the price for a unit of advertising (CPM) if the current strategy does not change. An internal weakness of TFC is that it does not know its customers intimately; as stated in the case “the channel didn’t have much in the way of detailed information about its viewers” (Stahl, 2007). Without this information TFC is unable to compete effectively against other networks who do know the target audience and their attributes and trends. If TFC is unable to maintain or increase its overall satisfaction ratings, they might face the possibility of being dropped by a network and lose a second source of revenue, affiliate fees.
Occasionally, people use to go out and rent DVD’s to watch a specific movie from rental stores. Advancement in technology has brought a sufficient change in customer’s behaviors, today DVD rental stores have almost gone. Moreover, by time we saw enormous increase in channels being provided by cable providers, but today even that has been replaced by streaming media devices, thus my time, role of cable providers might also disappear due to the introduction of devices such as Netflix, Apple TV etc. “DVD sales have also been hit. The Los Angeles-based Digital Entertainment Group estimates DVD sales in 2008 fell 8% to $21.6 billion from a year earlier, while DVD rentals were flat.” Charny, Ben. "Viewers Tap Free Web Content." Wall Street Journal, Eastern
Prestige shows such as Game of Thrones (2011—), and now Westworld (2016—), are valuable to HBO for their synergy. If a viewer is going to pay a premium for HBO then premium channels need to justify the cost to those subscribers, subscribed either through a cable/satellite provider or via an app on a device, that the channel is worth having. Promotion though a show’s synergy is evident through the networks investment. High production values, distinguished actors, and well-known directors, ensure that audiences are getting what they paid for, not to mention that the network garners recognition with such prestige shows. But this has been a slippery slope for HBO, as the network needs to meet to a certain level of expectation with their original programming in order to keep current subscribers, as well as to bring in new ones. The challenge in this is twofold. First, investing in a show such as Westworld, a sprawling hybrid of western drama and sci-fi, is a risk even for the cable-subscription network. If it fails, it fails hard. Production woes proceeded Westworld’s reputation, “all provided fodder for anyone skeptical of HBO’s ability to execute a big-budget sci-fi drama as ambitious as anything in TV history,” says Daniel Holloway, Senior TV Reporter at Variety, “…then the show debuted, became a hit, and spoiled a perfectly good narrative about how it was destined for disaster” (Holloway). Secondly, since most prestige show seasons are shorter than traditional television, ten
The evolution of the movie rental business has transformed society in the context of streaming data quicker and easier. Since Netflix became the "pioneer," of television shows, movies and streaming in 2007 people relied on watching movies instantly from the privacy of their own home (Netflix Inc. Annual Report, n.d., p. 1). The content streaming began through gaming device consoles like Xbox 360 that cost Netflix six cents for a standard definition movie, nine cents for high definition per one user stream at an estimated three gigabytes (Rayburn, 2009). Given that in 2007 the total paid subscribers of 7,326 on average streaming one SD movie daily would cost Netflix $439.56 daily with a monthly cost of $1758.24 and yearly $21,098.88 (Netflix Inc. Annual Report Ending 2008, 2008). The amounted revenue for Netflix of $1,205.340 in 2007 came at a low
As an individual who is looking to cut cable and pursue a streaming service, I believe that Hulu’s $39.99 Live Stream subscription, as described in the case, could be a strong supplement for pay TV. Although margins for this offering are predicted to be low, I believe that the development of such a subscription illustrates Hulu’s ability to complete market research and listen to consumers. This package indicated that Hulu understands that consumers want Live TV, but wishes to avoid costly bills and wasted
The impacts on the Film and Television industry by discussing the positive and negative socio-economic effects of streaming services and pay-tv on sectors such as retail, exhibition and free-to-air television.
As the world entered into the 21st Century, humanity has witnessed an ecology of innovation that ranges from artificial hearts and livers to iPods to Bluetooth technology to smartphones and many more ("21st Century Inventions That Made an Impact”). Each with its own unique attraction has become a catalyst in nature for how individuals think, act and live. Along with these state of the art developments, Netflix has become the cutting – edge service for internet streaming media. Deemed as “a worthless piece of crap” from Wall Street analysts, Netflix with tremendous leadership gained control of their industry and swiftly transformed the delivery of movie rentals ("How Netflix Beat Blockbuster: An Exemplar of Emerging Technologies”). Faced with impossible odds, we will discover how Netflix was able to survive, conquer and prosper as the emerging technology in their industry.
Video-on-demand or VOD, a service that allows users to select and watch videos over the internet, will be one of the greatest innovation as stated in the Netflix case study. It will be a great opportunity for Netflix, but it will also be a challenge to integrate or do away with its current business model. Its current business model is one that relies on the internet and the post service to deliver DVDs to its subscribers. Netflix should carefully enter the VOD market without doing away with its current model. This will allow it to maintain its growing position as a giant in this media industry. In order to better understand Netflix and the problems it faces, we must first identify its strengths. What does Netflix offer its customers that its competitors do not? What differentiates it from its competitors?