Why the new watching TV is like the old

The arrival of Netflix and co. would give the old television model the final death blow. Friend and foe agreed on that. But economic reality is forcing streaming services to increasingly revert to the tried-and-true recipe of traditional TV channels, including advertising.

Pieter Dumon

Netflix CEO Reed Hastings has always struggled with the right name for his brainchild. He doesn’t want to call it a technology company, that doesn’t do enough justice to the creative work they do in the Netflix headquarters. But it shouldn’t be called a television company either. That refers too emphatically to an industry that, according to Hastings, is on the brink of death. What Netflix does – again according to the same Hastings – has nothing to do with the traditional television business. The introduction of binge-watching was the future of TV. Hastings was convinced of that. But that once rock-solid confidence is beginning to falter more and more emphatically.

Hastings also increasingly drops the episodes of his most popular series in staggered order, so that watching your favorite series in one go is no longer an easy task. There is an emphatic eye for sports and live broadcasts, and there is also a growing chance that Netflix viewers will soon have to take a commercial break. What does that remind of? To, yes, the traditional television channels Hastings had long buried in his mind.

Where did the sudden turnaround come from? It’s the economy, stupid! Ever since Netflix kicked off, Hastings and co. got a lot of competition. Disney, HBO, Apple and Amazon are just a few of the hijackers on the coast. Moreover, this competition is slightly less strict in the binge-watching field, which is gradually giving them a competitive advantage. Dropping new series at a rate of one episode a week turns out to have a lot of economic benefits. For example, it considerably extends the life of such a series. In the traditional Netflix model, a new series is in the spotlight in the run-up to release or extensively, as soon as that series comes online and the fans have watched it in a few days, that attention quickly disappears. After which you – being Netflix – soon have to come up with a new candy. A strategy that puts pressure on both the company’s creative and financial reserves.

slower pace

Then the competition will have a better look. Now take a series like west world, of which HBO drops a new episode every Sunday night. Over and over, that makes for a slew of social media posts of all kinds, websites come up with summaries describing what happened and fans amuse themselves speculating online about what’s going on. That slower pace has another advantage: those who closely follow the series must immediately take out a subscription for several months. This is called recurring income in the technical jargon.

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According to Tom Evens, professor of communication sciences (UGent), this is the holy grail that all streaming services are looking for. “People often focus on the number of subscribers to determine the success of such a service,” he says. “But the sustainability of the relationship you have with those subscribers also plays a role. A subscriber who pays for several months in a row benefits you more than someone who takes out a subscription for one month, looks through your entire catalog and then disappears from the radar for half a year.” Which immediately explains why Netflix is ​​releasing the new season of a popular series like Stranger Things splits into two parts. For example, fans of that series have to pull out their credit card twice.

“At Netflix they may have underestimated the social nature of watching TV,” thinks Dutch media advisor Elger van der Wel. “People want to be able to chat about the latest episode of their favorite series over the coffee machine. But that is of course only possible if everyone has seen it at the same time.” As a result, fixed agreements are increasingly being used in the streaming world, a phenomenon that we are familiar with from the broadcasting schedules of traditional channels. HBO launches the new episodes of its hit series on Sunday evenings. Disney is programming new Marvel of star warsseries then again on Wednesday evening. “Just like traditional TV channels, those streamers look at which days there are opportunities,” explains Van der Wel.

Those fixed agreements are therefore not the only trick that the streaming services have picked up from traditional TV. The attention for sports broadcasts also comes directly from the script of the old television industry. “Yet again a matter of recurring income”, explains Evens. “Whoever acquires the rights to a particular sports competition knows that the subscribers who come to it will remain on board for at least one sports season.”

Add to that the advertising model that Netflix wants to show off – it just concluded an agreement with Microsoft, will be responsible for the technology and the sale of advertising space – and the new streaming services will start to look very much like the old television channels. Though that may have been the intention from the start. “Netflix wanted to shake up the television market by making radical choices,” says Van der Wel. “They succeeded. It is only logical that there are now some sharp edges here and there.”