M+E Daily

Netflix: A New Way to Watch Pay-TV

By Paul Sweeting

Among the many intriguing elements of Disney’s newly inked movie distribution deal with Netflix one of the more interesting to watch will be whether it affects the total viewership of Disney titles during the pay-TV window. I suspect it will.

Apart from relying on broadband rather than traditional cable plant for delivery, Netflix provides a markedly different and generally superior user experience than traditional pay-TV channels can offer. Unlike HBO, Showtime and Starz, Netflix does not need to shoehorn itself into the limited user interface provided by standard cable and satellite set-top boxes. Netflix’s UI is much more user-friendly and easier to navigate. And, because it’s web-based, it can incorporate sophisticated search, recommendation, and social media tools that cable networks simply can’t offer.

Netflix is also accessible from a wider variety of devices, from tablets and laptops, to game consoles and Blu-ray Disc players.

Netflix has already shown that it can significantly improve discovery and increase viewership of both movie and TV content outside the pay-TV window. There’s no reason to think it couldn’t or wouldn’t do the same for content within that window.

If that proves to be the case, it could hold significant implications both for content owners and for distributors operating in other windows, including those in the transactional video-on-demand and DVD/Blu-ray rental markets.

Higher rates of viewership could make movies more valuable during the pay-TV window — something studios who have not licensed their titles to web-based platforms like Netflix during that window will need to think about. For the time being, at least, Disney will  also be providing viewers a better user experience than studios whose pay-TV rights are still controlled by HBO or Showtime.

An improved user experience in the pay-TV window could also ultimately shift some viewership from other windows into the new over-the-top subscription window, which could show up as lower revenue for distributors in other windows.

In short, ripple effects from the Disney/Netflix deal are likely to be felt throughout the movie distribution chain, not just in the pay-TV business.