Interesting piece in The Drum on how Netflix does their research…
Vice president of content acquisition for Netflix, Kelly Merryman, revealed this week that the company she works for routinely use piracy sites to determine what television shows the company will buy. By gauging the popularity of shows on sites like The Pirate Bay, the company is able to determine which shows are really popular and help assist in making licensing decisions.
That’s brilliant. And it seems to be working well. The article goes on to cite “BitTorrent traffic in Canada dropped 50% after Netflix started there three years ago.” Their market skews younger, and they’re far more likely to be “cord-cutters” and view their favorite video entertainment online. Pay TV’s base is eroding and they know it.
Surely it won’t be long before pay TV services — cable, satellite and fiber — finally get smart by offering real à la carte service and dispense with the increasingly-annoying table d’hôte way of doing business. Their customers don’t want 15 shopping channels or 12 faith-based networks. They want CNN, The Weather Channel, ESPN and The Food Network — and maybe some locals. Offering packages of 200 channels for a fixed price is getting old.
Watch this video edit (4:55 RT) of actor Kevin Spacey speaking at the James MacTaggart Memorial Lecture at the Edinburgh Television Festival last month. He concludes content should be served/offered any way the customer wants it — movie theater, TV screen, iPad, streamed, iPhone et. al.
Here’s the full video (46:01 RT). Either one will lead you agree with his conclusion.
UPDATE: this report from Ian King of Bloomberg really gets into the details…
…a generation of technology-savvy, budget-conscious consumers who are taking advantage of the availability of high-speed Internet connections and the proliferation of smartphones, tablets, lower-cost TVs and other gadgets that make it easy to consume downloadable shows in a snap.
The shift in viewing habits is putting pressure on cable, satellite and phone companies by pinching subscriber numbers, which may have a knock-on effect on revenue growth. The impact on the $80 billion pay-TV industry is already being felt, with 2013 on pace to be the first year ever that total U.S. pay-TV subscriptions will decline, falling to 100.8 million from 100.9 million last year, according to researcher IHS.
And while 3.2 million new U.S. households were set up in the last three years, the paid-TV industry only added 250,000 subscriptions in that same period, according to market-researcher SNL Kagan.