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Week In Review: Netflix Hits It Out Of The Park; Will HBO Move To All-At-Once Distribution? 

1. Netflix Hits It Out Of The Park

Netflix subscription stats for Q2 and Q3 2016 were more than a bit troubling. The streaming giant was missing the marks it had set by a country mile (or a country kilometer, in the case of its overseas projections.)  Q2 in particular set off alarm bells, as Netflix only added 160,000 new subscribers in the U.S.

Those days seem well behind them now however, as Netflix more than exceeded expectations for Q4 2016, adding 1.43 million new subscribers in the U.S. and 4.39 million overseas, for a grand total of 5.8 million overall.

Why It Matters

Netflix’s business model relies on constantly growing their pool of subscribers in order to keep funding their original programming while keeping subscription costs low enough to attract new subscribers. More than that, they are pioneering a new form of television: ad-free, non-linear and international. For a while it looked as if they’d hit their subscriber limit in the U.S.—DVRs, after all, only have about 50% penetration despite being low-cost and easy to use.

Some of the new growth may have come from a deal Netflix struck with Comcast that integrates Netflix into the Comcast X1 box and program guide, but the 1.43 million number indicates penetration way beyond Comcast.

What You Need To Do About It

If you’re an MVPD, you want to do what Comcast did—striking a deal with Netflix (and Amazon and Hulu) will increase stickiness among your users, virtually eliminate cord cutting and get you additional marketing and promotion from Netflix.

If you’re a network you’ll want to re-evaluate your relationship with Netflix. Yes, they can help promote your shows so that viewers tune in to watch the new season, but with all that new original programming, they can also steal viewers away from you.


2. Will HBO Move To All-At-Once Distribution?

During Netflix’s earnings call, the notion was raised that HBO and other premium networks might move to a binge-friendly all-episodes-at-once delivery system too. The BBC’s recent decision to go this route is what prompted the speculation. While that would suit Netflix’s purposes, it might not be in HBO’s best interests.

Why It Matters

HBO, along with Showtime and (to a lesser degree) FX and AMC have turned the notion of the linear must-see series into a strong marketing ploy. For HBO and Showtime, Sunday night— previously a relatively dead night for TV—has become their sweet spot, it’s when audiences make sure they are home at 9PM to watch the latest episode of Game of Thrones or Westworld or Homeland. There’s an event quality to this flow, and even though many viewers might wait and binge the series when the season is over, the buzz that’s created by the live tune-in still gives HBO and Showtime a lift and keeps conversation around their shows at a maximum.

It also holds down churn on their standalone OTT apps— if Game of Thrones unfolds over four months, that’s four months of service a fan is going to stick around for, as opposed to a long weekend of binging. These networks have a different set of concerns than the BBC, and it’s why TV[R]EV doesn’t see HBO going that route anytime soon, especially for their tentpole shows.

What You Need To Do About It

Not much for advertisers and MVPDs to do here. If you’re a network, you’ll want to weigh the advantages of moving to this sort of distribution model and what it might bring you. If not for all your shows, than perhaps for some of them.