After a difficult second quarter that saw Netflix lose domestic customers for the first time last quarter followed by a poor earnings report released in July, the streaming service giant is trying something new as it plays with its business model swapping “binge-watching” for the “batch-model” distribution -- at least for one upcoming program.
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Netflix has always distributed its content all at once, providing entire seasons of shows for viewers to watch ad nauseam, but this approach often leads to spoilers and some media critics believe hampers long-term momentum for content.
However, streaming industry expert Dan Rayburn told FOX Business Network that it's not the binge-watching business model that led to a disappointing second quarter, as their flagship show "Stranger Things" doesn't debut until the third quarter, when projections are expected to level out.
“Netflix obviously has their data," Rayburn said. "They know what their consumers want with their platform, and clearly their data shows that binge-watching isn’t a bad thing for their consumers,”
“They have created a new user experience, you don’t have to spread it out over months, you can watch it whenever you want, and it’s changed how consumers consume content. If Netflix had a reason to permanently change their business model, they would. They have the data that shows this is what consumers want.”
Now, the world’s leading streaming service, with 60 million U.S. subscribers and a total of 139 million subscribers worldwide, is temporarily shifting their business model for the network’s upcoming reality show, a hip-hop competition titled “Rhythm + Flow.” Netflix’s will present the series by breaking it up into three batches, which will air over the course of three weeks.
Netflix’s rival Amazon has streamed live events like the NFL while Hulu has not always utilized the binge approach either.
Hulu uses a weekly approach, where several episodes are made available to start, with the remainder of the season spaced out weekly. Disney and Apple’s upcoming streaming services are reportedly set to follow that same model.
Netflix says this is a one-off move due to the nature of the competition programs which rely on secrecy as contestants are whittled down to determine the winner of the show.
Netflix’s original content shows like “Orange is the New Black" and “Stranger Things” have proven to be massive successes for the streaming service using the all-at-once distribution system. Said Rayburn, “Netflix knows what’s best for their business," he said. “They have a responsibility to shareholders and consumers alike so that the business can survive. If the binge-watching model did that much damage to their bottom line, they would change it.”
The entertainment business has traditionally been the victim of business has fluctuations. "It’s not the first time Netflix hasn’t reached a goal in a quarter, and people will point to their competition. ‘Oh, their competitors are eating away at Netflix,' yet Disney and Apple’s streaming services haven’t even launched yet,” said Rayburn.
Disney and Apple will be entering the steaming service market beginning in November, and HBO Max set to launch in spring of 2020.
Meanwhile. Netflix's "Rhythm + Flow is set to debut on Oct. 9, with the likes of Cardi B, Chance the Rapper and T.I. to serve as judges for the competition.