Netflix joins a growing list of problems for local TV

Netflix and NBC do a dealNetflix and NBC Universal have announced a deal to bring copious amounts of quality on-demand programming to Netflix’s new “streaming only” subscription service. This is more evidence of the separation of content from source and more bad news for the broadcasting industry.

Netflix is a hugely popular movie service. I hear more young people rave about it than anything else in the new media realm, even Facebook. Now, in addition to movies, Netflix is offering TV shows from its library.

It hurts local television three ways:

  1. It escalates the model of separating content from source. This is the great disruptor of local TV, because TV stations get their sustenance from commercials placed next to those same programs. You can make the case that the networks will always keep first run programming for broadcasters, but that leads to the next problem.
  2. It supports the network’s perspective that affiliates need to pay them and pay them well for rights to those first run programs. Networks used to pay affiliates, but that’s now shifted 180 degrees. Affiliates negotiate fees from cable companies, and the networks want more. This strengthens their case.
  3. Netflix is enormously popular with a huge built-in loyalty factor and an audience. Unlike Google TV or Apple TV, which are basically vying for the same eyeballs, Netflix is already there. This accelerates the pace of the disruption, and affiliates have no time to respond.

Watch for deals coming with broadcast companies to stream local content via Netflix. The question is will Netflix demand advertiser-free content, the answer to which poses all kinds of other problems with the essential mass marketing model of broadcasting.

This is serious business, folks.

Comments

  1. I think it just adds to the difficulty for small advertisers to get their message out. In a huge consolidated media market like DFW, if a company wants to advertise only to the hyper-local viewers that could feasibly frequent their business, it’s already hard enough. You have to pay to saturate the DFW area, even if you’re trying to target, say Southern Lewisville.

    Something like Netflix could be a great way to microtarget consumers for messages, but isn’t part of the point of Netflix to allow consumers to further tune out the commercial messages?

    What do you think this ends up doing to local news?

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