Will Netflix be the end of the studio era?

netflix the conquerer
Illustration by Sarah Cascadden/Contributor

 

The way viewers consume media is drastically different today than 20 years ago.  Many Americans, especially the younger generations, have probably not rented or bought a physical copy of a movie in ages.

Today, audiences are watching media via DVR or online streaming instead of viewing during the broadcaster’s original time slot.  Youtube reported that over six billion hours of video are watched every month … and this statistic is increasing.

In this age of media evolution, it seems that one company is staying on top:  Netflix.

Studios have been the go-to source to produce and finance content since the onset of film production, but often all it takes is one bad movie to send a studio into bankruptcy.

While Netflix has centered its approach around an online viewing experience, studios such as Fox still seems to be focused on traditional advertising and box office numbers.  This attention to audience might be the key to remaining in the film game.

Michael Berliner of The Guardian delivered the early August article, “House of Cards, Breaking Bad and binge viewing pull audiences online,” which not only explained the habits of viewers, but also the different marketing strategies that were used.

Berliner said, “Audience insights were used by Netflix to target market House of Cards to its subscribers via 10 different trailer cuts, depending on your past viewing habits on the platform. For example, people watching Bridesmaids or The Heat saw trailers featuring the show’s female leads.  Kevin Spacey fans were shown trailers focussing on him (sic), while cinephiles had a version highlighting director David Fincher’s influence on the show.”

One thing is clear.  Whether or not this tailored attention is the cause, people are watching Netflix.

In fact, viewers are loving the new model of delivering entire seasons of shows at once.  Data firm Procera reported in February that over 650,000 people binge-watched the entire second season of “House of Cards” on Netflix in one weekend.

Because people are viewing more and more content outside the traditional means, online platforms such as Netflix get more viewership and more money.

As Netflix’ worth grows, so does its power to acquire more content.  Just last week, Deadline Hollywood reported that Netflix struck a deal with Sony TV for the new NBC series “The Blacklist” for a net $2 million per episode.

Deadline also reported that Netflix paid around $1.35 million in a previous deal for AMC hit “The Walking Dead.”

As Forbes reported in its September 2013 article, “How Much Longer Can Netflix Keep Ratings a Secret”, Dorothy Pomerantz explained how Netflix is notorious for not reporting its data on viewership.  But with the reported amounts from Procera, we know that the online giant has buying power comparable to the largest film studio.

We’ve already seen Netflix produce original programming such as “Orange is the New Black” and “House of Cards” after starting out as a distributor.  Netflix has also produced multiple comedy series and even an Oscar-nominated documentary, “The Square”.

In a recent article by Forbes, “Netflix Will Rip the Heart Out of Pre-Sale Film Financing” by Schuyler Moore, he writes, “Netflix may be a vibrant, important source of new financing that disrupts the studio system and bypasses standard distribution channels.”

Is production of feature films the next logical step?  Netflix Chief Content Officer Ted Sarandos hinted to Variety and other outlets last year that movies are in the pipeline for the growing company, though a full film has yet to make its debut.

In the meantime, instead of taking a territory-by-territory approach like many distributors around the world, Netflix already has reach into Latin America, Scandinavia, the U.K. and other European countries.

Dominic Rushe of The Guardian reported, “International revenues now account for 25% of Netflix’s total streaming revenue and the company said it expected international revenues to eventually surpass those in the U.S.”

But Netflix is not stopping there, which makes sense given that an online audience is a worldwide most likely due to being linked by language more so than country borders, which have bound traditional media in the past.

As Forbes’ Moore continued, “When Netflix is done, people in every part of the world will be its customers, and those customers will be able to toggle what language they want to watch a film in.”

This means that instead of having to sell a movie license separately to each country, a filmmaker will eventually need only to sell to one worldwide distributor because of the worldwide reach of the internet.  Because internet giants have access to the web, they can release a movie everywhere in the world in one day with little or no help from local distributors.

What’s evident now  is that viewers are becoming less dependent on the mega-studio as millennials grow older.  As media-consuming habits change, so will media-producing habits.  Whether this is good or bad for the viewing public, we’ll have to wait and see.

Netflix is a huge force.  What started as a DVD-by-mail company could eventually be crowned King of Hollywood.