Television has had a pretty disappointing summer with broadcast ratings dropping by around 4% and cable ratings were down by around 7%. Many think that the lost shares by Television has gone to Netflix, Inc. (NASDAQ:NFLX). A ‘Deadline’ article speculates that Big media companies selling contents to Netflix has backfired. Another ‘Re/Code’ article says that the reduced Television shares has gone to Netflix.
Bernstein Research’s Todd Juenger’s has made a report which suggest that the unprecedented drop in C3 ratings for advertisement supported television was due to the big media companies’ decision to sell their contents to Netflix, Inc. (NASDAQ:NFLX). Juenger noted that the overall television viewing drop of 4% from last year equals 13 minutes per day drop and Netflix viewing has increased by 12 minutes per day during the same period.
So Is Netflix, Inc. (NASDAQ:NFLX) a substitute to Traditional TV or a supplement to it?
“We don’t think those viewers are coming back. The trend is more likely to accelerate than decline, […] stop licensing to SVOD, or face years of declining audiences,” Juenger was quoted as saying.
He feels that if these companies stop licensing to SVOD that would cause a material drop in immediate earnings. He thinks that they will play a short-term game increase the amount of content they license to SVOD, to make up for the lost advertising revenue, which will only make the problem worse.
Some claim that the recent drop in TV ratings was due to miss in accounting for people who see TV in their smartphones and tablets. But Juenger thinks that many people don’t prefer watching TV on small screen when they are at home and have big screens. He added that DVR’s and VOD’s are also not contributing for decline in TV viewing. So only possible reason might be the Netflix, Inc. (NASDAQ:NFLX) and other streaming services.
A week ago NBC Universal CEO, Steve Burke acknowledged that the technology is impacting its ratings in recent days.
“Competition combined with new technology is making it harder and harder to deliver the kind of ratings that we have all been used to,” Burke was quoted as saying.
Juenger feels that companies like Disney, Fox, Time warner and Discovery might not get impacted a lot since they don’t depend a lot on advertising revenues. But the companies like AMC networks, Viacom, CBS and Scripps Networks which depend a lot on advertising revenues might have a lot of issues going ahead.
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