Television may look significantly different in the future if Netflix, Inc. (NASDAQ:NFLX) is right.
Netflix Chief Product Officer Neil Hunt spoke at New York’s Internet Week conference on Monday, laying out what he believes is the future of TV. While traditional broadcast television distributors may take issue with some of Hunt’s predictions, it should be said that Netflix has a successful track record of changing how consumers watch movies and TV.
Breaking traditional media consumption models is one of Netflix’s strong suits. From its origins in 1997 as a DVD rental service by mail, it quickly overtook its retail competitor, Blockbuster, with the lure of “unlimited” rentals for a small monthly fee. While Netflix’s early success is credited to its DVD-by-mail service, the introduction of its video streaming service in 2007 put the young company in an ideal position to change global TV and movie viewing habits and attain nearly 34.2 percent of prime time Internet downstream traffic in 2014.
Now, the competition has shifted away from broadcast TV and toward online viewing, and Amazon.com, Inc. (NASDAQ:AMZN) and HBO Go are trying to get a big piece of the streaming video market.
Hunt predicts that by 2025 or sooner, the Internet television landscape may be vastly different than it is presently.
Hunt envisions a departure from the current cable and broadcast television model of channels, which he believes will follow Netflix’s lead with its personalization and recommendation engine, which will be able to recommend “one or two content suggestions that perfectly fit what [viewers] want to watch now,” Hunt said, according to Wired.
Early efforts at such refinements are already visible on the Netflix app for the Sony PlayStation 4, which attempts to recommend shows through a gamified quiz that it calls Max.
Other media services have found some success with their own attempts at a “concierge” model in the online music streaming market, including Songza, which delivers playlists designed around moods, time of day and various activities, which was later emulated by its larger competitor, Spotify, in August 2013.
Demise of ads and the rise of original content
Citing the success and popularity of the ad-free subscription model, Hunt envisioned few to no ads in the future's Internet television landscape, which will make advertisers find new platforms to replace broadcast TV.
“Internet TV is divorced of the need of advertising revenue because we can develop direct relationships with the consumer,” Hunt said, according to the Drum.
However, he also proposed an alternate vision of future, in which advertisers could use Netflix’s recommendation engine to provide fewer but more targeted ads to relevant consumers.
While the relief from the annoyance of constant commercials could provide an immediate benefit to the consumer, it could also potentially affect the way TV shows are produced.
Free from depending on advertising, producers, directors and editors could tailor a show’s length to their desired audience's preferences instead of broadcast and cable networks' need to have shows fit into 21- or 41-minute formats, replete with segues for commercials breaks.
The potential impact this could have on productions is already visible in Netflix's original series, such as “House of Cards,” which has episodes of various lengths, with some as short as 47 minutes and as long as one hour, tailored for both the pacing viewer and the binge watcher.
4K streaming and smart TVs
Hunt also predicts that ultra-high definition content, commonly known as 4K, will be delivered primarily over the Internet, citing the unlikelihood of a successor to the physical Blu-ray format, according to TechCrunch.
However, proposed Internet fast lane rules by the Federal Communications Commission (FCC) could hinder the push for higher resolution content streaming if enacted in the United States.
Hunt expects every consumer to own a smart television by 2025, which will cause manufacturers to compete for the title of "king of the living room."
In the meantime, set top boxes and video game consoles appear to be bridging the gap between standard flat panel HDTVs and smart TVs, providing streaming and interactive content through Apple TV, Amazon Fire TV, Roku, Microsoft Corp.'s (NASDAQ:MSFT) Xbox One and other devices.
Live television and sports may not be in the cards for Netflix immediately, but they could be in the future.
“It’s not an area where Netflix has the total advantage over everyone else,” Hunt said, according to Wired.
However, should the TV landscape change as much as Hunt predicted, live sports on Netflix is certainly a possibility.