Netflix argues it is a supplemental channel to cable, telco or satellite TV, not a replacement. Netflix now has more subscribers than Comcast, for example, but seems to be cannibalizing premium TV channels more than anything else, to the extent that users are watching movies.
To the extent that Netflix offers TV fare, it has been characterized as “rerun TV” by some.
That “is fundamentally correct,” says Netflix CEO Reed Hastings. “Our focus for TV shows is on prior season TV,” he says.
“When we offer prior seasons of ‘Glee’ or ‘MadMen,’ we think we grow the audience for current season,” Hastings said. “We hope over time that HBO and Showtime will let us prove this proposition for them.”
“We think more and more evidence that prior season on Netflix helps current season on MVPD (cable, telco or satellite TV) will become apparent from our deals with Disney,Viacom, CBS, NBCU and others,” said Hastings.
“Content owners that license to Netflix make more money, now and in the future, than content owners who don’t license to Netflix,” Hastings argued. “A few media executives are still vocal about their fears of negative long-term impact on MVPD subscriptions from Netflix, but the evidence continues to pile up against their concerns.”
Hastings has clear business incentives to say those sorts of things, as content owners recently have gotten concerned that Netflix is becoming too powerful in the distribution business.