Monday, January 12, 2015, 10:50 AM ET|Posted by Will Richmond
At last night's Golden Globe awards, Amazon's series "Transparent" won Best Comedy, with its star Jeffrey Tambor winning best actor - TV Comedy, while Netflix's "House of Cards" star Kevin Spacey won for best actor - TV drama. Granted, it's just one awards show, and just two programs, but the Amazon and Netflix wins further legitimize OTT as a bona fide alternative source of high-quality programming to broadcast and cable TV.
The operative word here is "alternative." Note that for years, Netflix in particular has characterized itself as "supplemental" to broadcast and cable TV. And to be sure, with around 37 million Netflix subscribers in the U.S. and cord-cutting still relatively muted, the reality is that today Netflix still is mostly a "supplemental" service.
However, numerous data points are beginning to demonstrate that Netflix (along with Amazon, Hulu, YouTube and loads of other OTT sources) are slowly but surely morphing into alternatives, not supplements, for a growing segment of viewers. For example:
- Last week, NATPE and CEA released results of a study finding that 51% of millennials consider their Netflix subscription to be "very valuable" vs. 42% for broadcast TV and 36% for cable subscriptions.
- Nielsen's Q3 '14 Total Audience report found a 19.2% decline in traditional TV viewing vs. Q3 '13 among 18-24 year-olds and an 11.4% drop among 25-34 year-olds, with a 20.7% and 27.9% increase, respectively, for watching video on the Internet.
- Leichtman Research Group found that 32% of adults age 18-34 years-old rank Netflix as most important to them, just slightly behind the 38% which rank live TV as most important.
Now consider that these data points are in the context of OTT's still relatively slim lineup of high-quality original programming. But OTT providers are investing heavily in originals, with tons of new and exciting programs with proven talent (e.g. Netflix's "The Unbreakable Kimmy Schmidt" with Tina Fey), coming to their services this year. As these launch, it seems almost inevitable that even more of their subscribers will seek these programs out as an alternative to watching broadcast and cable TV.
Ultimately there are only so many hours in a day, and with an exploding array of non-video activities as well (e.g. social, gaming, etc.), many people will be scrambling to find time to watch everything they'd like to. In this context, OTT's rising legitimacy is going to place greater pressure on existing pay-TV services to justify their high cost and combat cord-cutting and cord-nevering. It's all part of the extraordinarily fierce battle for viewers' eyeballs and spending that's playing out in real time.
Categories: Indie Video