Wednesday, 20 April 2016

NetFlix up 100% in 2 years NewsCorp down 23% - internet vs traditional TV

With NetFlix hitting over 80 million subscribers the nights are drawing in for the traditional operators. Below, in no particular order, are some of the key differences between the 2 distribution models which while mostly irrelevant to the consumer make an impact on the business models.

1. Internet delivery is by default global while traditional TV has always been highly regional.
2. Barriers to entry for internet TV are very low indeed while merely getting an EPG slot for traditional TV is difficult and expensive.
3. Traditional TV infrastructure is command and control based with a limited level of true interactivity. Internet delivery is far more open, difficult to control and with very high degree of potential interactivity.
4. Traditional TV remains a more stable platform for the delivery of very high volumes of live content. Once multicasting is fully enabled on IP networks this will probably change.
5. Micro payment for content is far easier and cheaper on internet TV.
6. It seems that the monthly price point for internet TV is under £10 per month while traditional TV manages to edge up to £50 per month at the moment.
7. Internet TV requires virtually no installation and it plug and play. It does require a high speed broadband connection.
8. Advertising rates on traditional TV are significantly higher.
9. Audience metrics are capable of being far more accurate on internet delivered TV as the return path is in place.

For those who believe the market is never wrong the judgement is clear - a mainly traditional operator such as News Corp has seen its share price fall 23% over the last 2 years while NetFlix has seen its share price increase by 100%.

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