Golden Globes Offer More Proof Internet Shows Are Overtaking TV

Just as HBO and Showtime in their heyday overtook the four big broadcast TV networks, Netflix (NFLX) and Amazon (AMZN) are now the place to go for the most compelling serial entertainment. 

The Golden Globe nominations earlier this week underscored that Internet-based streaming platforms are fast overtaking more traditional outlets like broadcast and cable networks.

"The success of Netflix and Amazon should be a wake-up call," said Jim O'Neill, a principal analyst at online video technology company Ooyala, a U.S.-based subsidiary of Australian telecommunications giant Telstra.

Viewers are moving online because that's where they're finding the best entertainment. The Golden Globes, which are selected by the Hollywood Foreign Press Association, have historically highlighted the most compelling, edgiest programming.

Netflix led the pack with eight nominations followed by Time Warner's (TWX) HBO with seven, Starz (STRZA) with six, and relative newcomer Amazon (AMZN) Prime with five. Disney's (DIS) ABC snatched up five nominations, Fox received four, and CBS snagged only one nomination, ahead of Comcast's (CMCSA) NBC, which grabbed absolutely none.

Three years ago, HBO ruled the Golden Globe Awards with 17 nominations. Next in line came Showtime followed by the traditional heavyweights, Disney's (DIS) ABC, CBS and Comcast's NBC. The largest entertainment companies ruled the industry, just as they'd done for decades.

Now, the nominations reveal that traditional media companies no longer own the formula for popular programming. Not surprising, ratings at the Big Four networks are slipping, according to Nielsen.

And even though Netflix and Amazon don't release viewership numbers, the popularity of their programs speaks to their success at attracting audiences. Netflix's Orange Is the New Black and Narcos, as well as Marvel offshoots Daredevil and Jessica Jones are clearly ascendant.

Meanwhile, ratings for the gritty ABC drama How to Get Away with Murder, whose star Viola Davis landed a Globe nomination, have slipped significantly. Over the first eight episodes in season one, which premiered last year, the show averaged 16 million viewers, compared to 11.1 million viewers watching over the first eight episodes in season two.

Even longtime CBS heavyweight The Big Bang Theory, snubbed this week for a Globe nod, has seen a slight decline in ratings, with 21 million viewers tuning in over the first eight episodes this season compared to 21.8 million viewers last season.

"It's not a level playing field at all for broadcast networks," said Paul T. Sweeney, a senior media analyst at Bloomberg Intelligence. "Premium cable and streaming networks have an advantage in terms of more freedom to push boundaries with their shows. What we hear from Netflix is similar to what we heard from HBO in the past 10 to 15 years, that they've really invested in original programming to drive their subscriber base."

One trend on the rise over the past few years, according to reports, is access to subscription video-on-demand services.

Nielsen's Total Audience Report estimated that in the third quarter of 2015, 46% of homes in the U.S. had access to a service such as Netlix, Hulu and Amazon. A year earlier, Nielsen estimated that 40% of homes in the U.S. had access to an SVOD service.

A recent PwC report found that high costs were a top reason why consumers were canceling their cable subscriptions. In 2015, 65.1% of U.S. TV viewers had a Netflix account, compared to 42% two years earlier, in 2013, according to the report. One-fifth of consumers surveyed said they would cancel their cable during the next year.

So what are the Big Four networks doing to counter these trends, and what else can they do?

"Get aggressive and commit to an online presence with original content that can attract tomorrow's audience," from SVOD-loving millennials on, said O'Neill. "If the networks go all in with great content, viewers will follow."

That means that NBC's stand-alone comedy streaming service SeeSo, set to launch in January, and CBS's All Access, which has excitedly talked up a new Star Trek series exclusive to the online platform in 2017, had better pass muster. Broadcast networks are also increasing their own programming budgets to introduce new shows throughout the year, similar to Netflix, rather than just following the old standard of debuting new shows primarily in one burst in the fall, with reruns during the summer, said Sweeney.

"First SVOD disrupted how people watched TV, and now, it's disrupting what's being watched," added O'Neill.

 

 

  This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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