If “Orange is the New Black,” then streaming is the new cable.
Streaming companies are expanding rapidly in the market, said Rahul Telang, information systems and management professor at Carnegie Mellon University.
Telang and his colleague, Michael Smith, coauthored Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, a book which focuses on companies like Netflix and Hulu changing the entertainment industry.
Interestingly, Netflix began as an outsider to the industry when it first became a TV and film distribution center, competing with Blockbuster, Telang said. Now, it is a big player in the business. Not only does it supply content to viewers globally, but it produces content, too.
Netflix spearheaded the movement, integrating content distribution and production, with Hulu and Amazon following its lead, Telang said. It has played a significant role in how we consume entertainment.
Traditionally, studios would green light a pilot program, order trial episodes and consider it for renewal based on ratings and viewership, according to the book. Netflix’s “House of Cards” radically changed that.
In the pilot episode, within the first couple of minutes, data showed a 50 percent viewership decrease because of a gruesome scene involving an injured dog, Smith said.
“Conceptually, if you were running a broadcast network, and you were able to observe half the audience tune out, that would be an incredibly bad signal,” he said. “You would say, ‘Cut that scene.’ So the question is: Why didn’t Netflix cut that scene?”
Smith said this is most likely because Netflix is based on a fundamentally different business model than that of traditional TV networks.
“A traditional broadcast network can show one show at a time in the Thursday 8:30 time slot,” he said. “They have to get as many viewers as possible for that show.”
In contrast, if a person tunes out of “House of Cards,” he or she can find something else on Netflix, Smith said. The very act of tuning out of a program in favor of another is data the company can use to market other content.
Streaming platforms often track the information gathered by browsing history and profiles to direct them to shows that appeal to their demographic and viewing habits, he said. Streaming companies also cater to a wider audience with different tastes, and many have begun producing original shows and movies.
Certainly, some shows only appeal to niche audiences, but the market is there, Smith said. And because original programs do not depend on number of views per show, unlike traditional TV, producers of these shows are not bound by the same constraints.
He said with original shows, writers have more creative control because they own the content, and they do not have to let the audience’s wants direct the story lines and plot.
Other than the companies, it also gives subscribers more control as well.
Nursing junior Amber Goods said she watches Netflix because of the convenience factor. She can pause and switch between programs at her leisure, and if she doesn’t have time at the moment, she could come back to it later.
Certain cable companies allow for that, Goods said. But those tend to cost more and not have as many options as streaming platforms.
This doesn’t mean cable, theaters and DVDs won’t still have a place in the future, Smith said.
Flipping through channels can lead a person to stumble on something they never thought they’d like, math freshman Angela Avila said.
Moreover, studios are still putting out highly marketable spectacle films, which have big budgets and tend to be action-oriented.
People will more likely want to experience these on the big screen with surround sound, author and filmmaker Wheeler Winston Dixon said .
There’s also a matter of image quality and buffering, he said. And some people just prefer to have a physical copy of their favorite shows because these companies like Netflix display a revolving inventory, shifting available programs.
“You’re dreaming if you think that Netflix is a library or that things are always going to be there,” Dixon said. “They’re not.”
Digitalization does not mean everything will be streamed or “in the cloud,” Smith said. It simply indicates a shift in power away from people who dominated the entertainment industry, the major studios and networks, to people who own the consumer data.