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Rachael’s blog entry describes Netflix and the effect it has had on cable companies. Netflix, an online streaming video service, is a major competitor for television programming. Millions of consumers have already been lured away from cable with the promise of lower prices (Netflix is offered at $8.99 a month whereas cable packages start at $30.00), as well as the freedom for consumers to watch what they want, when they want.
Although Netflix has been very successful, with a notable 38 million subscribers, it has not yet killed off cable television. The main reason for this is that content-producers and TV operators have made sure that consumers cannot watch current and new episodes of their popular shows unless they pay for cable. Content-owners have restricted Netflix’s ability to buy rights to shows until after they have aired on television. Netflix may have had success with “House of Cards” and “Orange is the New Black,” but most hit dramas are still on traditional television. Additionally, Netflix has not bought rights to sports, so anyone wanting to watch live sports still needs a cable subscription.
Netflix still has a long way to go to kill off cable. However, with the promise of ‘better content as its subscriber base grows,’ as well as the option of watching on the go (streaming is available on your computer and mobile devices as well as on TV), Netflix is certainly a competitive threat and a disruptive innovation to traditional cable companies.
Sources
http://www.economist.com/blogs/economist-explains/2013/08/economist-explains-17
http://www.usatoday.com/story/tech/columnist/komando/2013/05/24/cable-bill-netflix-cable-bill/2326245/