Statistics show television is slowly losing its viewers with a decline in ratings since 2011, with the biggest drop happening from 2013 to 2014. If that isn't enough to scare TV executives, paid streaming services are gaining users. In 2014 Time reported that 40% of US households subscribed to a streaming service, up from 35% in 2013 and 2.8% of American homes have internet but no television service.
Netflix offers many advantages to TV such as portability, choice of content, at a lower cost but lacks live coverage.
Streaming services offer many advantages to TV which could explain why TV is dipping and streaming is on the rise. Streaming services like Netflix allow users to watch on their desktop, laptop, tablet, gaming console or phone giving them access to shows and movies anywhere that they have internet access. Technologies like Smart TV's that have built-in Netflix apps allow people to easily view Netflix on their televisions at home as well. Even most "regular" televisions today have a spot
for an HDMI cord to be plugged in letting people sync their computer to their big screen TV.
Netflix also offers the most flexibility to viewers allowing them to choose what to watch when ever they feel. The ability to choose what to watch makes Netflix much more powerful than television. Even with 1,000 channels to choose from, people can still struggle to find something that they want to watch because someone else is making the choice of what goes on the air. With Netflix users have the ability to watch as many episodes as they wish at a time, allowing them to watch a series at their own pace. The no-commercial format of Netflix also keeps users focused on the program and enhances the viewing experience.
Despite all of these advantages, TV still offers live coverage, and new content daily, something Netflix cannot. The ability to broadcast live is still one major advantage to television because it allows for full coverage of breaking news, sporting events, and other events such as awards shows. Coverage of these events extends beyond Netflix's current capabilities.
Studies show that people ages 18-24 is the demographic that TV is losing the most.
Data compiled from the start of 2011 to the end of 2014 shows that each year, young people, specifically people ages 18-24 are watching less and less TV. In 2011, people ages 18-24 averaged watching just over 25 hours of TV a week. Compare that to the 2014 average of about 19 hours and 15 minutes per week, and there is a loss of almost six hours of TV per week, nearly an hour a day.
The data also shows that the biggest drop in TV viewership of young people came in 2014. The monthly average of time spent watching TV for 18-24 year olds dropped significantly from the fourth quarter of 2013 to the fourth quarter of 2014. At the same time, the amount of time spent watching online video, and video on smartphones rose from 2013 to 2014.
The loss of these young viewers hurts television stations as they make up a sizable chunk of who advertisers are trying to target. For many advertisers, people ages 18-49 are the ideal target audience because they typically have the most disposable income. As the amount of people in this key demographic watching a program drops, the value of advertising time during that program drops, and as a result stations lose money.
Despite the drop in total TV viewership, the overall popularity of TV shows is actually higher.
Even though Netflix is taking viewers away from their TVs it is actually increasing the popularity of many TV shows. Research shows that when people start to watch old episodes of ongoing TV shows on Netflix, TV stations actually get a boost in ratings when they air new episodes of these shows. By selling the rights to stream old episodes of on going series stations are actually broadening the fan base of these shows and with Netflix's ability to allow people to catch up quickly, more people tune in to the premiere of new episodes.
Perhaps there is no better example of this effect than with the AMC drama Breaking Bad. Remembered now as one of the most popular drama series in recent memory, Breaking Bad had a slow start. Through the first three seasons, the show struggled to get a million viewers per episode. After the third season, all of the episodes were added to Netflix. This certainly added to the popularity of the show as the season four finale racked up 1.9 million viewers, 23%
more than in season three. The more time that Breaking Bad spent on Netflix, the more popular it became and when the second half of the fifth and final season began, almost 6 million people tuned into the premiere. The number of viewers only increased during the second half of the final season, reaching a peak of 10.3 million viewers for the series finale.
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Netflix could be shaping the future of television by putting its app in Smart TV's and cable boxes, and also creating its own content.
Today many people do not just own a regular TV, but a Smart TV that has built in apps and internet access. Most of these Smart TV's have the ability to access Netflix just by using the remote control, making it easier than ever to stream Netflix on your big screen. In 2014 Netflix announced that it had made a deal with four different cable companies to put its streaming services in their cable boxes. This gave roughly 1.7 million people the ability to stream Netflix on their TV even if it isn't a Smart TV. Today Netflix is also available to be used in gaming systems like XBox, PlayStation and Wii. As Netflix becomes more accessible to people it can become a larger part of our everyday lives.
Not only is Netflix expanding how it's services can be accessed, it is also expanding its content by creating its own shows. The Netflix original series House of Cards and Orange is the New Black have seen great popularity and success despite the only way to watch being through Netflix. Netflix has also revived some canceled series that had regained popularity through their site. For example Netflix wrote and created their own season of Arrested Development, and two seasons of Trailer Park Boys.
The fact that Netflix releases their original content online and not over the air gives them certain advantages. One major one is that they do not need to censor their content. For example the nudity and strong language of Orange is the New Black would never be able to make it onto network television. Another advantage that Netflix has is that entire seasons are released at once, prompting lots of build up and excitement for the release, and as a result many people will binge watch the new seasons of their favorite shows.