Earlier this week, Netflix announced its latest quarterly financial results. Now the company has set out its vision for the future of television, in a Long Term View document published on its website.
The summary sets out its stall: “Over the coming decades and across the world, Internet TV will replace linear TV. Apps will replace channels, remote controls will disappear, and screens will proliferate. As Internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way.”
The document continues in that vein, citing the growth in tablet and smartphone viewing, but also tablet and smartphones as “touch interfaces for Internet TV” as key factors in the changing market.
“Twenty years ago, the mobile phone was quite large, expensive, limited to voice communication, suffered static and was trivial to eavesdrop on,” explains Netflix.
“It was hard then to imagine that by now, there would be 6 billion active mobile phones in the world, central to so many of our lives. We see a parallel in the rise and intertwined improvement of Internet TV apps, broadband, and devices over the next 20 years.”
The document sets out Netflix’s business strategy too:
“We are commercial-free unlimited-viewing subscription TV. We don’t have pay-per-view and we don’t have advertisements. Those are fine business models that other brands do well. We choose to be the best at our model, and to have our brand stand for commercial-free, unlimited viewing, low flat monthly fee.”
It also breaks down some of the company’s costs: $450m a year on marketing, $350m a year improving its service and apps technically, and $2bn on licensing content and commissioning original shows.
The document is also interesting in the way it defines two kinds of competitors: those that compete with Netflix for content, and those that compete with it for “entertainment time and spending”.
“The network that we think likely to be our biggest long-term competitor-for-content is HBO. They recently won, for example, long-term exclusive domestic movie output deals with Universal and Fox. They bid against us on many Original projects,” it explains.
“They are not currently a bidder against us for prior-season television from other networks. They have global reach and strengthening technology capacity.” Amazon, Hulu and BSkyB’s NOW TV are cited as three other rivals in this category, but it’s the HBO rivalry that Netflix is keen to push as defining its future.
“It wouldn’t be surprising to us if HBO does their best work and achieves their highest growth over the next decade, spurred on by the Netflix competition and the Internet TV opportunity.”