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MA Dissertation

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Student Identification

 

Student Name or Number

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 12933086

Programme Title

 MA Film, Television and Screen Media

Module Title

 Dissertation

Module Code (listed on student timetables)

 BBK_AHVM020D7_1415

Module Tutor

 Dr Janet McCabe (Supervisor) Dr Mike Allen (Course Leader)

Coursework Title

 It’s Not TV, It’s New Media! How has the global television industry

evolved and adapted after the emergence of new media technologies to the market?



Word Count

 15,011

Date Submitted

Sunday 6th September 2015

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 12933086

STUDENT NUMBER: 12933086

MA FILM, TELEVISION AND SCREEN MEDIA

DISSERTATION

TITLE:

IT’S NOT TV, IT’S NEW MEDIA! HOW HAS THE GLOBAL TELEVISION INDUSTRY EVOLVED AND ADAPTED AFTER THE EMERGENCE OF NEW MEDIA TECHNOLOGIES TO THE MARKET?

Abstract

Recent years have seen scholars write extensively about how global television has moved into an age of convergence and its impact on the industry. The development of several new forms of new media has seen the emergence of a world where television content is proliferated amongst many technological devices which have caused change in how audiences receive their television content. This dissertation investigates the hypothesis that global television must evolve and adapt to these technological and cultural changes or face an uncertain future.

This hypothesis is researched using convergence theory which investigates how new and old media work together. Results have shown that convergence has initiated media deregulation which has allowed many media conglomerates to form. As well as this remediation has created new mediums for already-existing content. It has also shown that the new medium which has brought the most competition for traditional broadcast television is the internet. The results from this research show that dedicated online broadcasters like Netflix and Amazon Prime are developing original quality television programmes with the similar production values of established channels like HBO.

The study concludes that despite television’s adaptation of the current convergence related changes, it is a medium which has had many states of evolution and adaptation in its lifetime. Television studios have begun to work more and more with internet broadcasters as they come to accept them into the normality. However history dictates that another medium will come, through another period of convergence.



Contents Page

Introduction Page – 6

Chapter 1: Convergence and Contemporary Television Page – 9

Chapter 2: Remediation at Work: Old Content in a New Age Page – 17



  • Case Study: The Rise of Netflix Page – 27

Chapter 3: The Effects of New Media on Television: Advantages Page – 36

Chapter 4: The Effects of New Media on Television: Disadvantages Page – 49

Research Results and Conclusion Page – 58

Bibliography Page – 61

Filmography Page – 63

Appendix Page – 66



Introduction

This study aims to investigate what has become known amongst scholars of global television as the age of convergence. Convergence has facilitated shifts in the market in terms of the relationship between old and new media. Michael Kackman, Marnie Binfield, Matthew Payne, Allison Perlman and Bryan Sebok, for example, offer one of the best definitions of convergence in this regard. They define the term as ‘new textual practices…technological synergies and audience behaviours enabled and propelled by the emergence of digital media’1. It means that new technologies have merged with old technologies to form a brand new entity. The impact of convergence on television has been felt most keenly in terms of its reception and how it is consumed on a greater number of devices and platforms than before.

Henry Jenkins’ research attests that convergence is ‘the flow of content across multiple media platforms…the cooperation between multiple media industries and the migratory behaviour of media audiences who will go almost anywhere in search of the kinds of entertainment experiences they want’2. The flow of content across multiple platforms is representative of technological synergies. The result is ‘a cultural shift as consumers are encouraged to seek out new information and make connections among dispersed content’3. In order to make these connections the convergence actually happens within the brain of the consumer through their media choices and social interactions with other consumers. The increased collective intelligence is valued by the media industry because it goes towards further development.

This study hypothesises how global television has evolved and adapted to these market shifts and what it means for the future. In order to prove the hypothesis, convergence theory will be a grounding for the methodology which is to understand the relationship between old and new media. Do they work together in harmony and if so how? Or is it simply a case of the updated new mediums replacing the old and obsolete ones?

The chapters will then branch off under various themes which are related to convergence. Chapter 1 will discuss its immediate impact on contemporary television. The writings of Marshall McLuhan, Jay David Bolter and Richard Grusin will cover the process of remediation. The writings of Amanda D. Lotz, Michael Curtin, Jane Shattuc and Stephen B. Crofts-Wiley have been able to uncover an aspect of what the global television landscape was before and after media deregulation. What I perceive to be the most important addition to the industry that it has had to evolve and adapt to is the emergence of the internet.

The proliferation of internet based television broadcasters and video-on-demand services have had a large say in the direction the contemporary television industry is going in. I intend to cover these issues in a case study of Netflix which is included in Chapter 2. Netflix certainly didn’t invent the practice of online streaming but has popularised it during its lifetime.

Elsewhere in chapter 2 is an in-depth analysis of the remediation process at work. Here I analyse examples where digital television channels have bought already-established television content to expose it to a new audience, new territory or give it a reinvigoration. But what lasting effect would the increased global reliance on the internet and other convergence induced technologies and cultures have on the industry? Chapters 3 and 4 intend to analyse and identify these factors. Chapter 3 discusses the issues surrounding its advantages whereas Chapter 4 covers the disadvantages.

In the words of Chris Anderson, ‘the era of one-size-fits-all is ending and in its place is something new, a market of multitudes’4.



Chapter 1: Where Old Meets the New: Convergence and Contemporary Television

The age of convergence has had a capacious impact on contemporary television because it has redefined what the medium is and what it can achieve. In her research into television studies, Amanda D. Lotz writes that contemporary television ‘grow[s] more uncertain by the day as audiences increasingly view content long understood as television on a diverse array of screen devices and pay for that content through varied models’5. She speaks about recent technological developments that have evolved the medium beyond the tradition of a box in the corner of the family room.

The aim of this chapter is to provide an empirical analysis on the impact that convergence has had on contemporary television through the processes of media deregulation and remediation. These processes are closely linked to convergence because they both relate to the relationship between old and new media.

Media deregulation has facilitated key shifts in the global television landscape. The key era of this activity was the years between the mid-1980s and mid-1990s. I have identified this period as the point of contemporary convergence. The result of these processes have seen the development of digital technologies such as cable and satellite, bringing with it more channels and content than was previously possible. Michael Curtin and Jane Shattuc argue that new technologies have completely changed how the world ‘manufactures, delivers and understands its television culture’6. They write specifically about how television has shifted in the United States which is an area of great interest in this thesis.

The period between the 1950s to the 1980s is what Lotz refers to as the Network Era where three national television networks dominated the landscape. The American Broadcasting Corporation (ABC), the National Broadcasting Corporation (NBC) and the Central Broadcast System (CBS) controlled all elements of production, distribution and exhibition. However in the early 1980s US government regulations reduced these powers which relinquished their control. As well as this, cable technology was growing which gave rise to hundreds of new niche channels which ‘significantly fragmented the audience’7 while a new concept of subscription-based channels brought about programming free of advertisements.

Around the same time in the United Kingdom, the Broadcasting Act of 1990 was introduced which was a landmark for British television. Its main purpose was to deregulate broadcasting in order to expand cable and satellite services8. Danielle Albertazzi and Paul Cobley write that while the act did achieve this, the added competition had a negative effect in terms of the ‘creative development of existing channels’9. Furthermore the authors use the loss of sports broadcasting to Sky as an example when discussing the repercussions of the act on terrestrial television.

On the opposite side of coin however is an example of how deregulation can bring success across the board in a territory. In a 2006 essay Stephen B. Crofts-Wiley explains how a combination of media deregulation and technology development facilitated change in the television landscape of Chile in the early 1990s. A series of reforms saw state controlled television privatised and deregulated for the first time. The new regulations relaxed restrictions placed on foreign ownership which attracted a lot of foreign investment and content into cable television. The wealthiest Chilean’s now had access to transnational media flows such as MTV, ESPN, CNN and channels from Latin America and Europe. The growth was so rapid that in 1990 there was one cable operator in one city, the city of Santiago, which had no more than 20,000 cable subscriptions. By 1997 nearly all Chilean cities had at least 70,000 subscriptions from multiple providers which brought the national total to around 1 million subscriptions having access to over 1000 hours of content a day10.

These are very intriguing results which introduces a new development for the thesis. One that highlights just how quickly television can evolve and adapt through convergence. The success of cable and satellite throughout the globe is astounding but what is the reason behind it?

Research has indicated that these digital technologies have attracted new audiences with their niche values. Chris Anderson writes a lot about how niche content has developed: ‘every year network TV loses more of its audience to hundreds of niche cable channels’11. Going further forward Anderson suggests that the main effect of the extra connectivity is ‘unlimited and unfiltered access to culture and content of all sorts, from the mainstream to the farthest fringe of the underground’12. Media deregulation and technological development brought about this evolution but the process of remediation cemented televisions new paradigm.

As deregulation continues to impact both culturally and technologically, remediation is becoming more intriguing as new mediums are born. Remediation is most simply understood as ‘the appropriation of content from one medium to another’13 and is a key theory in terms of the relationship between old and new media. For example a television series that is based on a comic book, such as CW’s The Flash (2015), is basic remediation. It is a means for content to continue to exist in another form. In his seminal work, Understanding Media, Marshall McLuhan argues that ‘the content of any medium is always another medium. The content of writing is speech, just as the written work is the content of print and print is the content of the telegraph’14. In The Flash the content has remediated from the comic book from which it is based. McLuhan’s prominent argument throughout his book is that content should not be the main focus but instead it should be the medium itself because of this remediation process. In terms of this thesis it can be argued that the internet is vastly remediating traditional broadcast television.

Speaking about the launch of BBC iPlayer, James Bennett predicted in 2007 that video-on-demand would result in a transitional shift away from linear broadcasting which was to be ‘displaced by new forms of control opened to the user’15. By linear broadcasting he speaks of the traditional way that television is broadcast and viewed. In the years succeeding this publication linear broadcasting has indeed been somewhat displaced by new forms of control and this is evidenced by technological development and audience behaviour.

The emergence of online broadcasting and video-on-demand has brought further niche value and greater versatility than that of the broadcast-based competition. These online services have libraries of television shows and films available for their subscribers to watch whenever they want and usually on whatever device they want. The first foray into broadcasting and receiving television on-demand began with HBO-On-Demand which launched in July 2001. The service offered HBO’s subscribers online access to their award winning content at no extra cost. Lotz writes how the capabilities offered by on-demand viewing have ‘reduced the frequency with which viewers had the experience of finding there was nothing on when they tuned into the service’16. Which meant that if there was nothing appealing on the main HBO channel, the audience could go to HBO-On-Demand and watch something on there. In this scenario all parties win; HBO are keeping their subscribers tuned-in to their service and the audience can watch content they enjoy. Since HBO’s business model heavily relies on retaining and attracting new subscriptions, this was the perfect way to keep them on board. Especially in periods whenever popular shows such as The Sopranos (2001-2007, HBO) and Six Feet Under (2001-2005, HBO) were not airing. HBO’s journey into the world of video-on-demand served as the catalyst for other companies around the globe going online.

In the UK the BBC and ITV began to develop their own on-demand services in 2007. It was a way to tap in to the growing broadband market as research. The BBC’s then-Director of Future Media and Technology, Ashley Highfield, said that statistics had shown that for 16-34 year olds, 10% of their time is spent accessing broadband. Highfield went on to say that ‘the average viewer in that demographic watches 10 hours of BBC programming a week – so broadly that is an extra hour that can be got through on-demand’17. Content was the driver in bringing people to subscribe to these services, which meant that many video-on-demand services bought up rights to access many broadcasters’ archives.

The act of storing massive amounts of television archive in an online boxset format is ‘revolutionising distribution practices and pushing them into the post-network era’18. This causes a difference in audience behaviour between those of traditional broadcasting and those of video-on-demand that is so important to this transitional shift.

In his 2006 book, The Long Tail, Chris Anderson accurately predicted the internet’s future by writing the following: ‘Overall TV viewership is at an all-time high, so it’s not panic time in broadcast land yet. But the day when the internet becomes a real rival to TV appears near’19. In the time succeeding that books publication, his prophecy has come true so much that it can be comfortably argued that the internet is a real rival to TV. The new style of binge-watching TV in bulk over the internet is a major contributor in the internet’s recent televisual successes. But what is the appeal of internet broadcasting over traditional broadcasting?

Chris Anderson also suggests that ‘…the economics of distribution are changing radically as the internet absorbs each industry it touches, becoming store, theatre and broadcaster at a fraction of the traditional cost’20. Websites such as Netflix and Amazon have had great success by being able to provide more content due to the lesser need for any physical shelf space like a traditional store space usually would. Further evidence of video-on-demands rapid progression are as follows: Sky have recently reported a nine-year high subscription growth, some of which has been attributed to the success of its Sky Go and Now TV on-demand brands21. As broadcasters compete for online superiority with their respective on-demand services, independent companies have begun to join in as well. Buoyed by the success of Netflix’s original content (More detail in Chapter 2’s Netflix Case Study), Amazon announced in 2013 that the company had commissioned several pilots for new original shows and viewers would get to decide which would become full series22.

This new age of television viewing is certainly not free of criticism though. Academic Toby Miller bemoans practitioners Damon Lindelof (Lost, 2005-2010, ABC) and Tim Kring (Heroes, 2006-2010 and 2015 - Present, NBC) who have recently claimed that traditional television is dying. Lindelof argues that Tivo paved the way for televisions impending death23. Tivo is a television provider with a set top box which is continuously connected to the internet. Tim Kring claims that the serialised format of broadcasting television has become flawed due to DVR technologies and online streaming24. Toby Miller immediately leapt to television’s defence insisting that it ‘…still dominates as a mode of production, distribution and reception of the very genres that it helped create. Time-shifting and platform choice are versions of what has long been the dominant norm- watching material produced and bought by television networks’25. I would agree that Television is not dying but would like to propose an argument that Television is evolving through convergence.

If the definitions of convergence outlined in the introduction are to be understood effectively then one can summarise that television has been the world’s fastest growing medium ever since its invention because of its ability to evolve and adapt through convergence. Subsequently deregulation has contributed by allowing satellite and cable technology to expand and as technology has advanced television has been remediated.

Chapter 2 will develop this thematic analysis of the relationship between old and new media. The theory of remediation will be covered by referring to instances whereby broadcasters pick up content which has an established following in another territory or channel.

Chapter 2: Remediation at Work: Old Content in a New Age

Early in his book, Convergence Culture, Henry Jenkins writes the following: ‘If the digital revolution paradigm presumed that new media would displace old media, the emerging convergence paradigm assumes that old and new media will interact in ever more complex ways’26. This passage assumes that convergence is the key to bringing old and new media together. But I believe that the evidence gathered in chapter 1 shows that remediation should be given some of the credit as well. Remediation was born out of convergence and is the key to understanding why and how old media will find a new way to work alongside new media in order to survive in the new paradigm.

Bolter and Grusin write that remediation is a key aspect of new digital media because it is always remediating older media forms. According to them, new digital media forms ‘import earlier media into a digital space in order to critique and refashion them’27. An article written by BBC News in 2006 suggests that at the time Newspapers were struggling to cope with the competition brought by the emerging phenomenon of online news websites. The article suggests that there is a potential financial loss because news websites were funded by advertising and therefore free to visit. Newspapers such as, the French newspaper, Liberation suffered severe losses because of its strict advertising policy. Liberation ‘has traditionally shunned advertising it deemed politically compromising and relief on its cover price for its income’28.

However the situation is different in 2014, the table below, named Fig 1, shows the results of the National Readership Survey for the whole of 2014. The survey names the Daily Mail and its online brand, Mail Online, as the UK’s most widely read newspaper brand.



Title

Net readership

Print

Computer

Mobile/tablet

Daily Mail

23,449,000

10,636,000

11,318,000

9,908,000

Daily Mirror

17,484,000

6,847,000

6,060,000

7,941,000

Daily Telegraph

16,357,000

3,923,000

9,358,000

7,016,000

The Guardian

16,314,000

3,653,000

10,488,000

6,824,000

Metro

14,211,000

10,281,000

3,145,000

3,364,000

The Sun

13,628,000

12,658,000

959,000

843,000

The Independent

10,442,000

2,140,000

5,640,000

4,508,000

Daily Express

6,839,000

3,019,000

          2,288,000

2,200,000

London Evening Standard

6,718,000

4,924,000

1,596,000

1,159,000

The Times

4,911,000

4,358,000

469,000

348,000

Daily Record

2,978,000

1,395,000

923,000

1,181,000

The Scotsman

1,252,000

350,000

649,000

424,000

Fig 129

These figures are very interesting because they clearly show that in the years since the BBC News article, each newspaper has embraced online technology by having their own website to go with the main printed edition. The fact that a newspaper brand such as the Daily Mail has been named the most widely read online source is another indication that this industry has thrived through convergence and remediation. The act of combining the old style of printed news with new technology such as the internet has clearly attracted new readers to their brand.

Similar aspects of this theory about newspapers can be applied to the television industry as well. This being where an established product has thrived in a new environment. So on the agenda of this chapter will be a discussion of three scenarios where convergence has behaved in this way in television. Where a particular programme with an established audience has thrived in a new environment; i.e. channel, platform, medium or territory.

The scenarios in question are; The BBC’s acquisition of the two Swedish-language versions of Wallander to promote their own English-language remake, the history of ER’s broadcast in the UK by Channel 4 and later Sky and the cult success of AMC’s Breaking Bad in the United Kingdom.



Wallander

In the last decade BBC Four has become the most diverse television channel in the United Kingdom. Ever since the summer of 2006 saw the broadcast of French crime drama, Spiral (Canal Plus, 2005-Present), there has been an amalgamation of quality crime drama imported from the continent. As a result the channel built something of a cult reputation for itself30 with this quality European content. Following the success of Spiral as well as the Nordic Noir series The Killing (2007-2012, DR1) and The Bridge (2011-Present, SVT1/DR1) came the Swedish series Wallander (2005-Present, TV4).



Wallander is based on a series of detective novels written by Henning Mankell in the 1990s and 2000s. The 2005 series starring Krister Henriksson as the maverick detective was first screened on BBC Four in 2008 in order to coincide with the BBC One’s own English adaptation starring Kenneth Brannagh. The decision to broadcast both versions across the network resulted in a positive impact for both programmes the corporation. It was a way for the BBC to provide some cultural content for its fee payers by strengthening its growing library of European drama.

The BBC have identified a market in Nordic noir which can cross borders and have identified that an audience for it lies within the UK. Without a digital channel would the BBC or UK audiences get such content? Janet McCabe refers to this strategy as ‘a complementariness so essential in the age of convergence’31. It is essential because they have exploited a gap in the market where digital technology and effective scheduling can be used to attract audiences to niche products. Sue Deeks is the Head of Programme Acquisition at the BBC and has this to say on BBC Four: ‘Always with BBC Four, they are looking for something different, distinctive, and original’32. There is no other channel in the UK where shows like Spiral or the Swedish Wallander series can get a time slot in primetime. In doing so they are promoting the English language version to a potential audience. In a world where American media flows dominate the global television landscape, BBC Four’s pioneering of quality European drama is constantly challenging everyone’s definition of quality TV.



Wallander’s multi-channel and cross platform diversity is an example of just how far modern television has come in the age of convergence as audiences can watch one version live, another on catch-up through and another on a DVD boxset.

BBC Four brings little known global television programmes and gives it a primetime slot in its schedule. In 2009 BBC Four had just a 0.9% audience share, a number which had risen to 2.9% in 201233. The BBC Trust Service Review of BBC Television, published in July 2014, attributes BBC Four with making a ‘very important contribution’ to ‘culture and creativity’ and as a representative of world television in the UK34. The euro-drama might never have made it to the UK screens if it weren’t for Sky purchasing exclusive rights to US shows made by HBO, AMC and Showtime for Sky Atlantic. With such a large body of programmes now unavailable to the broadcaster, they had no other choice but to seek programming from elsewhere.



ER

NBC’s medical drama ER has always been a show associated with change and innovation in a plethora of ways. Running for fifteen seasons between 1994 and 2009, ER followed the lives and cases of a team of doctors in a fictional hospital in Chicago. In the UK the series ran on Channel 4 for its original run. The series with its quick pace and compelling characters was unlike anything anyone had seen before. Speaking in 1995 channel 4’s, then-Head of Purchase Programming, Mairi Macdonald said ‘It’s the fastest piece of television I have ever seen. The speed is breath-taking’35. It quickly became a tremendous success gaining an average viewership of 30 million per week36. Soon it was distributed internationally to 195 countries and subtitled in 22 languages.

A result of ER’s lengthy fifteen year run was that it was at the frontline during a strong period of convergence for global television. Since the first season, cable has become more common in households, DVD boxsets have been popularised and the internet has grown extensively37. It was also at the forefront of the digital revolution in the United Kingdom for its seventh season premiere. In January 2001 channel 4 had launched a digital channel, E4, which was aimed at a younger audience. For the launch, new episodes of ER and Friends (1994-2004, NBC) would be broadcast six months before the terrestrial channel did38. This is clearly an example of bosses at channel 4 exploiting the burgeoning digital market at the time. Previewing an extremely popular television series so early creates a greater appeal for customers to upgrade to digital for fear of missing out on watercooler conversation.

However as Tim Walker reports ER slowly jumped the shark, ‘ER slowly but surely edged closer to soap opera as the seasons progressed, with shoot-outs and a tank assault among the other less plausible plotlines’39. The end was nigh and it ended in 2009 with an average viewership of just 9 million a week in the USA.

The rights to broadcast ER in the UK would soon be bought up by Sky in 2011 who included the programme amongst the likes of other long since ended TV series including The Sopranos, The Wire and The West Wing (1999-2006, NBC)40 for a brand new TV channel called Sky Atlantic. Each would be used as bait to lure in new audiences (a move similar to BBC and Wallander) to the channel during which they would promote new content for Sky Atlantic.

What is so effective about reruns is their ability to create multiple ways of watching and reacting to the programmes. For example, if I refer back to ER, the tragic fate of Dr Mark Greene at the climax of season 8 was lauded as a turning point in the show as he was the main character and an original cast member41. On one side there is a brand new audience who react to every beat and development in the exact way that the writer’s intended. Then there is the sense of dramatic irony placed on original viewers of ER who may be re-watching it42. Mark Lawson calls the process of screening these classic shows from the beginning ‘end-to-end retrospectives’ and argues that it ‘bring[s] box set-style viewing to scheduled television’43. These comments perfectly summarise modern digital television in the age of convergence as sky plus customers can easily record their favourite shows and create their own box-sets.

Nevertheless the move proved to be a very lucrative one for sky. In early 2015 it was reported in Broadcast that Sky had gained more than 200,000 TV subscriptions during the last three months of 2014 which was their fastest growth for nine years. The boost in numbers helped the broadcaster grow its revenues by 5% to £6.5 billion and operating profit by 16% to £675 million over the final six months of 201444. Sky group chief executive, Jeremy Darroch, said ‘The strength of our performance in the UK & Ireland shows that out approach to segmenting the market with the complimentary Sky and NOW TV brands is working’45 . It can be argued that a significant contributor to such impressive numbers is its domination of and near total-monopolisation of American television in the United Kingdom.

Breaking Bad in the UK

The previous examples in this chapter has established the understanding that new and old technology can work together to proliferate products several times over. However what if traditional means just isn’t working in one territory leaving no choice but to seek something even newer? Breaking Bad (2008-2013, AMC) achieved tremendous success in the years it was in production and on the air, winning a total of sixteen primetime Emmy’s46. Throughout its five seasons, Breaking Bad achieved a level of cult status that had gone relatively unheard of since the finale of Friends in 2004. On the build-up of the season 5 premiere, it was reported by Variety that Netflix had won exclusive first run rights to broadcast the show in the UK immediately after its broadcast in the United States.

The reason this was highly significant in the history of the show was that despite the success, it has never had a permanent broadcaster in the United Kingdom. Season one was aired on FX in 2008 whereas channel 5USA picked up the second season but both channels failed to secure a large audience for the show so only aired the one season each. This failure resulted in seasons three and four to never have been aired on a UK broadcaster47 making a Netflix subscription the only way to watch it.

Streaming via Netflix has allowed Breaking Bad to reach a new audience and attain cult status in a territory which it had previously failed to conquer by traditional means. Breaking Bad creator Vince Gilligan has said the following about the deal: ‘Netflix has been instrumental in making Breaking Bad the success that it is- particularly in the UK and Ireland, where it has built an audience and become a huge phenomenon’48. Netflix has not only been instrumental in the success of Breaking Bad, its vast library has given a new audience to an extensively broad range of classic television comedy and drama.



The next section of the chapter is intended to expand on this point while also delving deeply into the market leader of internet broadcasting.

Case Study: The Rise of Netflix

Corporate History

When Reed Hastings and Marc Randolph founded Netflix in 199749 it was the beginning of a meteoric rise that would see it eventually see it become the innovative market leader of video-on-demand broadcasting. However the original remit was completely different to what the company is today.

Originally founded to compete with video rental stores such as Blockbuster Video50, Netflix’s simple business plan of offering an online rental service was unlike anything ever seen before. In an interview with author Aurelia Jackson, Hastings claims that the idea for Netflix was envisaged after he incurred a late fee for Apollo 13 (Ron Howard, 1995)51. The website would act as the store space and videos would be sent to and from customers via post. As a return envelope was included with the video, there was no need for his customers to expend extra energy by physically travelling to a store space to return an item.

The idea for Netflix as a solely online rental service would prove to be hugely beneficial because the lack of need for a large store space required by Blockbuster is expensive as Chris Anderson suggests: ‘An average record store needs to sell at least two copies of a CD per year to make it worth carrying; that’s the rent for a half inch of shelf space. And so on for DVD rental shops, videogame stores, booksellers and newsstands’52. However in contrast, having an online store to sell physical products offers a much greater inventory in terms of variation. Therefore this will prove most beneficial to the new company in the long run as these reduced costs, including less staff which Anderson does not mention, will build up meaning they have more money to put towards brand development.

The next ten years saw a slow but steady period of growth for the company as they continued to push boundaries. Having spent their first two years struggling to compete with Blockbuster Video, in 1999 Netflix launched a subscription service. The new service would offer customers unlimited rentals for a fixed monthly fee with no late fees53. It quickly caught on but there were a few obstacles along the way such as complaints of late delivery and lack of stock54. The following year the company launched its recommendation system, an algorithm which ‘uses Netflix member’s ratings to accurately predict choices for all Netflix members’55. While this sort of system is common today, academic and blogger Rick Newman notes that Netflix was an ‘early innovator’56. He says that Netflix had ‘understood that enhancing customers’ experience would build brand loyalty that’s crucial in such a cutthroat industry’57. Over the next few years their membership grew to 4.2 million members nationwide58.

Streaming and Original Content

The next innovative step into the future came in 2007 when Netflix changed their business again by offering streaming. Having taken the idea of online streaming which was pioneered by HBO, Netflix’s simplistic take on the process popularised it amongst the masses. It was a move that would prove very lucrative for the company. Aurelia Jackson notes that compared to already existing cable-based video-on-demand packages, Netflix users did not have to pay for each item they watched. There was just one base price which included the entire library and the postal service.

One thing that has contributed to Netflix’s ascendancy is the content which makes up its vast library. The massive library was initially a platform where subscribers have access to old, classic and award-winning content that they may have never seen before. Much like the examples explored in earlier in this chapter. But Netflix’s constant need to satisfy their subscribers for fear of losing them to a competitor raises the importance of this process.

This process to so important to them that they would even step in to save a popular property from network cancellation much like the two times it stepped in to save AMC’s The Killing (2011-2015). The US-version of the popular Nordic noir has had a somewhat tumultuous existence. The murder-mystery detective series first premiered on AMC in 2011 with 2.7 million viewers and lots of hype59. The season was full of gripping twists and turns as the two lead detectives investigated the murder of a teenage girl named Rosie Larsen. Towards the end of season 1 controversy arose amongst fans as previous episodes had strongly suggested who the murderer was only for the build up to be a swerve. The murder was not solved until the end of the shows second season but did very little to appease fans as it was unsatisfactory and made very little sense. Various sources606162 reported that a 33% drop in ratings as a result of disgruntled fans at season 1’s unnecessary cliff-hanger and budget restrictions is what led to its cancellation at the climax of season 2. Shortly after its cancellation Netflix stepped in to agree a deal with AMC where they would co-produce season 3 and hold exclusive on demand streaming rights63. After another season of low ratings AMC cancelled the show again which lead to Netflix rescuing The Killing for a fourth and final season comprising of six episodes and branded it as a Netflix original.



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