The Netflix Effects on Australian Local Entertainment Production

Posted: September 07, 2016

Netflix is a worldwide producer of streaming movies and TV programs. It also has subscribers amounting to 75 million and above. It began as an American DVD-by-mail service in 1998 but later on it started streaming in 2007. In 2013 Netflix made history by being announced as the first web-series company to receive an award during the Prime Emmy. The company has transformed from being a small enterprise concerned with hiring out DVDs to providing a video-on-demand streaming service. The arrival of video streaming services into the Australian television market created the impact on the local market and subscription providers. Due to the dominance of Netflix, other platforms and online broadcasters have brought transformative development in Australian broadcasting industry, which provides the audience an exclusive way on how the content is created, consumed and circulated. However, this has posed a threat to local media content consumption, as foreign programs are taking over the broadcasting industry.

Netflix has also been cried foul for causing decrease in jobs in the market. The advent of the company has resulted to competitors leaving their DVDs retails shops, then joining the streaming service because of unfavorable competition, which reduced the video circulation center hence creating unemployment (Griff, 2004, pp. 22-33). Economically, it has reduced revenue of local Australian traditional broadcaster that was trying to cope up with the decline revenues due to increase in number of divided audience. Due to flexibility of the independent content creators and availability of funding to release the content, the digital platform was acting as TV network .This has caused media shareholders to raise serious concerns about increase in deregulation and privation in the sector that could have a negative effect on the Australian production industry. Advent of Netflix in Australian market has both negative and positive effects to the economy as whole.  

Entrance of streaming could the end of local content

Many media commenters in Australian markets have foreseen that the introduction of streaming services will drive out the Australian produced screen stories. Although the arrival of Netflix has introduced diversification and competition into the market that is good to consumer, the local production of drama showing TV received it as potential bad news (Ellingsen, seismic shift, 2014, p. 110). The Netflix has made aggressive distribution strategies, which are to go beyond international and give its audience access to various numbers of comedies and local children series (Zwolenski & Weatherill, 2014). They also highlighted that local content will be included in their online catalogue hence positioning itself distinctly in the Australian market. The Netflix has used the local actress such as Rebel Wilson to pre-launch their advertisement campaign which has been seen as upholding local content for local audience.

Online streaming has changed the way the local content is consumed by supporting the distribution of original content while turning off distribution of existing local contents. Although streaming services provides new pair of distribution opportunities, Australian content is more likely to disappear with availability of foreign content which is preferred by nationalistic audience. The streaming service is also likely to cause more Australians to consume a little of local content rather than more of foreign content.  This is the reason why torrents and streaming are as common among people as they don’t want to view the news show that other countries already have. Because of the above case, the internet is paving the way for future television. Netflix is gaining a huge popularity as people are eagerly waiting for the next season of its content.

Effects of Netflix.

Netflix has a positive impact on the environment as it has reduced energy required to ship products over longer distances and avoid carbon footprint in the local market. Although this is true, the usage of streaming services also consumes a lot of energy, the study indicates that energy used while browsing Netflix products for 30minutes will be more than the energy used in delivering the DVDs. Profit making being the driving factor of the company, energy conservation is not among the Netflix priorities.

The technological shift caused by Netflix has hugely impacted local television content production decisions and distribution strategies. Critics argue that consumption of Netflix and OTT in Australia market has caused interference in social life of Australians. Streaming service is having the negative impact as it lacks ratings and its contents being unregulated compared to the local productions which are regulated. Consumption of Netflix has reduced the bond people used to enjoy during consuming of local TV entertainment, as families had specific times where they gather together and sit down in front of TV and watch programs (Matrix, 2014., p. 119). However, the streaming service provides an unlimited time to watch the show as well as offers no advertisements; another appealing offer for consumers.

The Netflix has caused shake up in the local market, causing the local competitors’ to experience shortfalls in revenues due to large loss of their market shares.  Netflix also continued to penetrate easily in the market as it had many opportunities such as join the industry of classic television binge viewers that typically belonged to the Pay TV providers. They have also made it easy for viewers to watch any program they love on different types of devices. Rival services Stan, Quickfix and Presto were all fighting in the same industry, but they lacked competitive advantage and maturity in the market. They also lacked originality of contents and proper existing content deals. Although they provided their products to consumers at low prices, consumers still consumed Netflix services as substitutes and later on finding themselves dumping local companies over Netflix. Estimation indicates that 340,000 Australian subscriber’s use the American service which indicates a reduction of revenues of local companies’ therefore increasing unemployment which has negatively impact on the economy. (Mullins, 2015., p. 36)

Sustainability of Australian screen

The Australian local entertainment can improve and protect its local content consumption by changing the way they structure their original programs, schedule and cast. The local TV entertainment has to come up with innovative methods for online streaming service to distribute their content that resembles the one of their competitor Netflix. In the past, television industry was forced to depend on unreliable and inaccurate feedback from consumers to measure how well their programs were doing. Netflix having operated for a long period in industry it has access to big data therefore, it can easily record the number of consumer of content and receive correct and reliable feedback. Netflix also uses algorithms to insight into audience behavior using ‘factor-based approach’ to pursuing its content. The approach enables it to know how many subscribers watch a particular program and it can predict how many are going to watch the following program. The technology capacity has made the Netflix to know its consumers better. With the development of this technology over a period the local Australian broadcasting can tap into it to recognize true practices and preference of local content consumers. The technology could be of importance as it helps the local companies to manufacture content that serves both commercial functions and a national purpose.

Conclusion

Although there is fear that Netflix will cause downfall of local content in the Austrian market, the research conducted by US-based analysts firm HIS suggested that viability of the domestic streaming will remain relevant as it revealed that Netflix will pose little threat to the rivals such as Foxtel, Stan and Quickflix. The researchers identified the impact Netflix had when it was launched in Europe and they founded out that the effects on local entrainment industry was not adverse. Therefore they proved that while impact will have some damage on Australian local entrainment, this will be limited to the TV show downloads and personal sale movies. They claimed that the effect of Netflix introduction in the Australian market would not pose an overly negative impact to the existing streaming video on-demand service as increase in revenue of competitors being the evidence. They also revealed sales of DVD disc and Blu –ray that has been under stiff competition from online piracy and structural alteration in the entrainment market will be less affected.

Continuous awareness of the streaming service has created hope for local existence as they are viewing for possible partnerships with foreign content producers. Although it seemingly a long process, the cowering local market are hopeful of this development. To increase supply to already overcrowd local market the analysts suggest that the Australian local producers of streaming service should partner with the Netflix to meet the customers demand while sustaining the local industry. This arrangement will provide new opportunities for local entertainment production community. Therefore, this will improve the income for the local companies as they can compete squarely as they make profits. It will also reduce the rate of unemployment as those staff thought of losing their jobs because of the collapse of local broadcast industry will be protected. The social fabric will also be maintained as local content will be integrated with the foreign one to give the viewer’s diversity of its kind while enjoying watching with the TV with their families.

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