Broadcast TV – Sword of Damocles

If broadcast TV is smart, it will do a deal with Netflix.

• Netflix is on a similar path that Google, Microsoft and others found themselves on some time ago and where they failed, Netflix might just succeed.
• Netflix is trying to convince the broadcasters to put its application onto their hardware and thereby massively increase its reach.
• With the right terms this could be beneficial for both the broadcasters and Netflix.
• Netflix because it would massively accelerate its reach and broadcasters because it will secure them a future as the world moves to over-the-top television.
• Less than 10% of US households have actually cut the cord meaning that the market for over-the-top TV remains very small in the grand scheme of things.
• I have no doubt whatsoever that it is the future, but at the moment the broadcasters still hold all the strings.
• Almost every TV exec I have ever met is in complete denial when it comes to the ending of the broadcast TV bonanza.
• For this reason I am fearful that the industry will not see the light until it is too late.
• Netflix and its competitors are going to destroy broadcast because they offer a more convenient way to watch content and because the user only has to pay for what he wants.
• The one exception is sports, where users will not put up with time-shifted television.
• Some drama and reality TV shows are attracting a strong social media following and these too may also see some resistance to the move to time-shifted TV.
• All of this aside, right now broadcast still has massive power because of its better than 90% reach in the US market and globally.
• Its most dangerous adversary is currently, cap in hand, wanting to do a deal and it is now that broadcast will get the best terms.
• In 10 years time when 30%+ of the US has cut the cord and the numbers are rapidly accelerating, the terms will be much worse.
• Broadcast has the opportunity to give something away now in order to secure its long-term future.
• It would be wise to take it as the sword of Damocles hangs by a thread.