The Netflix Revolution

Scott Rasmussen
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Posted: Jul 13, 2017 12:01 AM
The Netflix Revolution

While the nation's political elites obsess over daily controversies of official Washington, a far more significant development is taking place on television screens across America. After years of steady growth, the number of subscribers to streaming video services like Netflix has topped the number of cable subscribers.

ComScore reports that 51 million households now receive their television programming through what the industry calls Over-The-Top television. They watch an average of 49 hours of streaming content per month. About a third of these households have dropped cable and satellite programming completely. Looking ahead, the streaming services are expected to continue growing rapidly while the cable and satellite numbers decline.

Netflix is the biggest driver of this transition. Fully 74 percent of households that stream video watch Netflix. The content giant accounts for 40 percent of all OTT viewing and nobody else is even close.

Those who mistakenly believe that change is led by political decisions made in Washington are likely to dismiss this as little more than a curiosity. Who cares whether people watch "Stranger Things" or "The 100" on Netflix instead of watching some other show on a cable network? In reality, though, the way that people consume entertainment and information has massive political implications.

In the 1970s, 94 percent of Americans watched one of only three national television networks. When the President of the United States gave an Oval Office address, all other programming was either cancelled or delayed. If you turned on the TV, you had to watch the president. In such a world, presidential speeches earned massive ratings (over half the country tuned in). But as soon as cable networks like ESPN, HBO and others gave people a choice, ratings for presidential speeches declined dramatically. Today, when the president gives a speech, only the president's base supporters and political junkies are likely to tune in. New entertainment options made the president's bully pulpit far less powerful.

The ultimate political implications of the Netflix Revolution could be even more significant. While cable offered more choices, the timing of when to watch any given show was still controlled by network executives. Millions of people still watched the same show at the same time.

In contrast, OTT viewing schedules are entirely in consumer hands and everybody's schedule is different. People watch what they want, when they want, and on whatever device they have handy. Among other things, this has created the phenomenon known as binge watching. Many fans watch entire seasons of their favorite show in one sitting. Some observers believe that releasing full seasons at one time has already created a compelling new form of storytelling. Whether that's true or not, the ComScore report does show that it has increased weekend viewing time among those who use streaming services.

Not everyone, of course, enjoys binge-watching. But, it's great that each of us can decide such things for ourselves. It's exciting to see broad cultural trends empowering everyday Americans at the expense of traditional institutions and gatekeepers. It's especially thrilling when you realize that we live in a land where the culture leads and politicians lag behind. Sooner or later, the political system will catch up.

I can't wait!