How Netflix Dominated the TV Market
Joe Rittmeyer
In the upcoming December, the weather is getting chillier, and winter break is almost here. What better time than to binge-watch some Netflix. Especially in the past few months, Netflix and other streaming platforms have become increasingly popular, nearly dominating TV and revolutionizing the way we watch. With more and more shows coming out, they have all been easily accessible via streaming. There is no need to wait for downloads, or for the Blueray to come out. With a simple click of a button, viewers can access a plethora of newly released TV shows or movies all for the low cost of $14 a month. Why wouldn’t we subscribe to Netflix?
Netflix as an oligopoly has dominated the market because of the increasing consumer demand, consumer preference, and price increases.
Streaming is just better than regular cable or satellite. With on-demand videos and access to a profusion of TV shows and movies, streaming has been deemed better among the younger and even older generations. Streaming has even created an entire subculture of binge-watching on the internet and has revolutionized how people review and discuss TV. Normal TV cannot compete with these services. Only 33% of people have reported using cable or satellite and stream on a regular basis. Throughout 2020 especially, the demand for streaming services has skyrocketed. Online streaming has dominated the TV market, with nearly 55% of American households subscribed to streaming platforms. Within 3 months of quarantine, Netflix has gained 10 million new subscribers. For comparison, Netflix gained 28 million new subscribers in the entire year of 2019. Adults spent an average of 6 and a half hours a day watching TV online. Netflix is even the most popular streaming service in the world by a marginal amount.
Streaming services such as Hulu, include a subscription-based fee and individual fees for movies and TV shows. Services like Disney+ rely on exclusive content for subscribers. However, Netflix does not include ads, ad-based tier subscriptions, or heavily relies on exclusive content. Instead, Netflix heavily relies on its large popularity and loyal subscribers, yet it makes the most money ($20.5 billion in 2019). The fact is, Netflix is a shining example of how an oligopoly operates. Netflix was the first streaming service that made a variety of TV shows and movies available, next to Amazon Prime, who’s service was limited at the time, popularizing Netflix as the “grandfather of TV streaming.” If you’re interested in the history of streaming platforms, check out the History of Media Streaming. With Netflix’s availability on almost any media platform (TV, PC, gaming consoles) the company gained rapid popularity and reputation throughout the U.S. and would continue to grow internationally. Even with competing companies like Hulu, Amazon, or Disney, Netflix still holds consumer preference, as they’ve built their reputation as the first and best streaming platform. Consumers were first exposed to online streaming via Netflix and will continue, even if other streaming platforms might offer better prices. It is little things like skip buttons, or recommendation feeds that make Netflix more convenient than their competitors. Furthermore, they have gained loyal subscribers through no ads and consistent subscription fees. As like an oligopoly, Netflix holds the licenses to exclusive shows that can only be streamed on Netflix. With Netflix’s domination of the market, they can influence what people watch. The same could be said for all streaming services.
As king of the streaming platforms, Netflix has a very high influence on price control. In fact just last October, Netflix planned on raising monthly subscription prices by $1 and premium subscriptions by $2. Price increases have occurred in the past by increasing the monthly subscription fees by a little every year, Netflix can confidently keep increasing prices, without backlash from subscribers due to the very nature of subscription-based services. As Netflix gains more subscribers, they will raise prices because subscribers will tend to stay subscribed, without noticing price increases. This is also why Netflix and other streaming platforms offer free trials, as users who get a free subscription are more likely to stay subscribed than to pay up-front.
Overall, online streaming was bound to become the future of TV and it is only natural that streaming services would compete and operate as an oligopoly. Netflix was the first and most successful streaming platform that would spark a new age of TV. How many of you are currently subscribed to Netflix now or other streaming services? Would you ever change your way of watching TV or has online streaming already reached modern perfection?
Work Cited
Amol, Rajan. “TV Watching and Online Streaming Surge during Lockdown.” BBC News, BBC, 5 Aug. 2020, www.bbc.com/news/entertainment-arts-53637305.
Sams, George. “The Reasons Behind Netflix's Success.” FilmInk, FilmInk, 11 Feb. 2019, www.filmink.com.au/reasons-behind-netflixs-success/.
Sherman, Alex. “Expect Netflix to Keep Raising Prices.” CNBC, CNBC, 2 Nov. 2020, www.cnbc.com/2020/10/31/why-netflix-will-keep-raising-prices-with-confidence.html.
Steve, Liesman. “Nearly 60% of Americans Are Streaming and Most with Netflix: CNBC Survey.” CNBC, CNBC, 29 Mar. 2018, www.cnbc.com/2018/03/29/nearly-60-percent-of-americans-are-streaming-and-most-with-netflix-cnbc-survey.html.
Watson, Amy. “Netflix - Quarterly Revenue 2011-2020.” Statista, Statistica, 21 Oct. 2020, www.statista.com/statistics/273883/netflixs-quarterly-revenue/.
Zambell, Alex. “A History of Media Streaming and the Future of Connected TV.” The Guardian, Guardian News and Media, 1 Mar. 2013, www.theguardian.com/media-network/media-network-blog/2013/mar/01/history-streaming-future-connected-tv.
This is very interesting because with the movie theaters being closed Netflix is a great way to watch your favorite movies and shows. As you said Netflix is a very easy platform to use and provides people with the basic necessities they want on their living room couch. Personally one of your statistics that 55% of Americans have streaming platforms kind of shocked me. I would think around 75% of Americans are subscribed to streaming services because of the pandemic. Overall, I thought you did a great job of showing how they are dominating the industry and explaining the underlying causes for success.
ReplyDeleteI have just recently gotten the notification that the price of our Netflix prescription was going to increase and it made me think about how, when we first subscribed, it was around 7 or 8 dollars a month and now it’s nearly doubled that. One of the main reasons we bought a subscription was because it was so cheap, but now the prices increased to $168 a year. I think it’s crazy how much control Netflix has over its consumers because even though my mom thinks the price is incredibly high now, there’s no way she’d ever unsubscribe because it’s our only form of television.
ReplyDeletei think netflix was already doing fairly well in terms of the streamig services market, so with a pandemic forcing us to stay home I wasn't surprised that netflix would do well, but i was surprised just how much more people perfered it,
ReplyDeleteMy family has subscriptions to Netflix, Disney+, and Amazon Prime Video; I can confidently say that we definitely use Netflix the most, and we even have a one screen limit! Disney+ is great because it holds a great collection of movies and TV shows that I will love forever, but it is also very limited, I have already seen much of the content, and it lags a lot. Amazon Prime Video has a very limited amount of free movies and TV shows, otherwise you have to buy or rent them and I can’t keep paying a fee every time I want to watch something new. I definitely agree the Netflix is the best and I think that you were totally correct by saying it is because of the little things such as the no ads, skip buttons, and range of content.
ReplyDeleteI thought that this blog post was very interesting because of how the use of Netflix increased so much after people were put on lockdown. Since people could not leave their house, and the stay at home order was put into place, the use of streaming services increased a ton. This was mostly due to the fact that it is one of the top streaming services available and since people had more time at home, they had more time to watch TV. I also thought that it was important in the blog post how many people do not notice when their subscription price increases. This happened to me when I did not notice that my netflix subscription increased from 8.99 when I first signed up, and now it is up to 13.99 just to keep the same features.
ReplyDeleteI think netflix's stranglehold on the market is dying, as more and more companies pull their licensing rights and make their own streaming companies
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