Netflix CEO Reed Hastings
More and more people are getting their entertainment through online distribution services, a niche Netflix is poised to dominate. The online-rental-service-now-turned-video-streaming giant just hit a major milestone, when it streamed 1 billion hours of video in June.
Netflix CEO Reed Hastings announced the milestone July 3 on his Facebook page, writing:
“Congrats to [Chief Content Officer] Ted Sarandos, and his amazing content licensing team. Netflix monthly viewing exceeded 1 billion hours for the first time ever in June. When [Netflix Original series] House of Cards and [the Netflix exclusive fourth season of] Arrested Development debut, we’ll blow these records away. Keep going, Ted, we need even more!”
The video distributor giant has been investing millions into its streaming infastructure in a bid to rival television, and it seems to be working. Netflix, which charges only $8 a month – a considerably cheaper price than cable subscriptions – has begun to “cannibalize cable-TV viewership and it could start cannibalizing advertising,” said Wedbush Securities analyst Michael Pachter. In this economic downtown, various households have cut the cord and canceled their cable services. (It’s a common trend among 18-year-olds to go completely cable-less once they go off to college, with few bothering to switch back once they leave dormroom life.)
Netflix competitors, meanwhile, have made calculated deals of their own in an effort to unseat Netflix as the online streaming king. Amazon has been steadily securing licensing agreements with traditional content creators including Fox, NBCUniversal, Viacom, Paramount Pictures, the Discovery Channel and, just last month, MGM Studios. Meanwhile, Hulu Japan recently struck a pair of licensing deals with HBO and AMC. Amazon charges an annual fee of $79 to access its Amazon Prime library of online streaming content, while Hulu charges the same fee, $8 monthly, as Netflix.
Pachter predicts Netflix will have to start charging more for its streaming subscription, but if it wants to compete with Amazon the opposite might be the case. Amazon’s Prime subscription is $1.50 cheaper than Netflix per month, and its library is set to be more extensive.
Photo by JD Lasica.