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VoD subscription paradigm

As mentioned in the previous installment, from the late nineties to the present, with the advent and subsequent consolidation of the Internet and, subsequently, Netflix, global audiovisual markets have noticed accelerated transformations in their models. 

Mg. Luis Fernando Gutiérrez Cano
Mg. Luis Jorge Orcasitas Pacheco

With this growing and uncatchable media convergence, which includes, as already said, the Internet and the countless alternatives to receive communication and information, from Smart phones, Smart TVs, vehicle devices, multipurpose players such as iPod, among others, both the audiovisual industry and content providers face levels of complexity, dynamics of change and impositions to innovate never experienced before. 

This is how in our days, Netflix is exposed as the archetypal platform of innovation, raising an evident transfiguration of those traditional windows that make up the ecosystems of the film and television industries (Heredia, 2017). In the same vein, Izquierdo-Castillo (2012), agrees with Heredia's position and points out that: 

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Media convergence is transforming the audiovisual business model. The consumption of film and television content on the Internet imposes the rupture of the traditional value chain. The bases of online business models for the distribution and consumption of these contents are analyzed. The sources of financing and their reconfiguration are taken with respect to the traditional model: flat rate, pay per view and advertising (p. 385).

In accordance with the above, the "model" implemented by Netflix, (commented succinctly in the previous article) and what, analogously, have also tried to establish other platforms such as Hulu, Vudu, You Tube and even Amazon, has generated profuse evolutions, configurations and re-configurations, in the increasingly intricate and disputed audiovisual scenario. Therefore, the media environment has contemplated how Netflix, gradually, is at the forefront of the audiovisual markets, based on a series of essential strategies that it has carried out in its innovative journey and that, according to Heredia (2017), focus on: 

     The implementation of a fully convergent content business model, that is, the addition that the platform makes to the three main information and communication media: Internet, film and television.
     A novel method to distribute and exhibit film and television products through the global network.  
     The production and distribution of own content such as series, films, animations, etc.
     Provide users of the platform with innovative consumer experiences, focused on the management of algorithms around decisions, recommendations and experiences of its users.

For the different actors involved in the cinematographic and television environments, it is undeniable that the transformations that Netflix has conceived have generated various concerns and reflections in different areas, which go beyond the exclusive ecosystems of the platform. Therefore, in this second installment, we examine some academic introspections based on some considerations of Ojer and Capapé (2012), Tyron (2013), Wolff (2015, Heredia (2017) and Levy (2018).

Custom Media
One of the most obvious transformations recorded by the audiovisual  media ecosystem converges in what Tyron (2014) has titled as Personalized Media, a notion that points to an individualized and fragmented consumption, which is configured from the choices made by media users  , from  complex forms, that is, as consumers of media and information who have the ability to develop certain media environments, absolutely personalized, based on our particular inclinations, and predilections, personal and political (Tyron, 2014).

In the case of Netflix, it is clear that, thanks to the Internet and its streaming transmissions, users of the platform can choose to watch a movie or a series from a computer, tablets, a video game console or a Smart TV with Internet access, all from the comfort of home. 

Distribution of series and films
The Netflix "model" of distribution of series and films, replicated and offered in turn in a similar way by other platforms such as  Mubi, Crackle or Hulu, allows, according to Tyron (2014), that this distribution converges in novel and more dynamic distribution models,  where, in the case of films, they present a rapid transition from cinemas to VOD and, perhaps more likely, to video files available for streaming, either by subscription, such as Netflix, or through a PPV (Pay Per View) option, as offered by Mubi, Vudu or Amazon; thus, according to  Charles Acland, quoted by Tyron (2014), "the speed of moving images allows them to move from screen to screen, from format to format and, therefore, from a cultural circuit of relative exclusivity to other more accessible circuits" (p. 9).

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It is important to note that since 2007 Netflix had launched into the streaming and Video On Demand market; In this regard, Ojer and Capapé (2012), indicate that the company detected that streaming video transmission, taking advantage of Internet services and technology, were more appropriate and, at the same time, effective options for its users. This projects new forms of circulation, which have inevitably caused some inconsistencies, as users examine various affordable economic options to access films and television programs or series. 

One of the consequences of the above is binge-watching, as a new consumption habit of users of audiovisual productions. In relation to this phenomenon, Mareike Jenner, a researcher at Anglia Ruskin University in England, in her article Binge-watching: Video-on-demand, quality TV and mainstreaming fandom, explores the concept of binge (compulsivity) as a viewing "ceremony", associated with fan practices, industry practice and linked to serialized content of "cult" and "quality". 

Jenner analyzes binge-watching as an intersection of industry, audience, and text discourses. According to Jenner (2017), binge-watching, or compulsive observation, goes beyond actual or assumed viewing behavior, but has implications for the way VOD providers like Netflix or Amazon position themselves as an alternative to scheduled, synchronized, and "traditional" television. 

Digital television?
Michael Wolff, in his text Television Is the New Television: The Unexpected Triumph of Old Media in the Digital Age, rubrics that, platforms such as Netflix, are not bringing the digital world to television, but are "bringing" the digital programming, values and behavior of television as, for example, passive observation for screens that used to be interactive and related to computational media; In that sense, it is appropriate to ask the question, are the media ruptures attributed to streaming platforms overvalued? 

We must assume that the distribution of video over the Internet is only one of the strategies used for the distribution of content, which, as Jenner (2017) emphasizes, according to the new display models that VOD and streaming companies have introduced, also take advantage of their services, and the apparent "autonomy" of their users, to observe and imbue them into schemes that push them to bing-wtaching, in an attempt to predict and manipulate the behavior of the viewer in relation to other content, with the slogan of offering apparently individualized "forms" of reception (or participation) (Machado, 2011).

Some thoughts
While Netflix paved the way for new DVD formats in the late 1990s and pioneered instant digital entertainment streaming, it finds itself in constant competition against organizations like Home Box Office (HBO) and other premium subscription channels, which also rival to keep viewers subscribed month-to-month; therefore, there is no doubt that, in order to sustain itself as a benchmark for innovation, Nerflix must continue to produce high-quality original content, otherwise it may be destined to be crushed by an avalanche of new competitors armed with larger budgets  and wider media networks. 

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Today, Netflix is a global benchmark as a successful business model in the era of post-television: online video club became one of the largest providers of streaming services, always with exponential records of growth in the number of subscribers and with a stable evolution until mid-2011; however, it has also had stumbles, such as when it increased the price of the mixed service (streaming and DVD) to 60% or when it communicated the referral of the DVD rental service to a different website with another name: Qwikster, which generated discomfort among consumers and reports losses of 20% of its value on the stock market in 2011,  as well as 800,000 subscribers. 

This shows that Netflix is not infallible and, similarly, its stumbles, also opened a broader competitive framework to companies such as Amazon or Hulu. In that sense, the question that can be raised is whether, in the case of platforms such as Netflix, can it be the original content that marks the pause in the business model of audiovisual distribution by streaming? In this regard, Levy (2018) states that: 

"Netflix's current business model is not necessarily successful, the dumping it applies to the market, its multimillion-dollar losses sustained over time, its dominant position and the cultural hegemonization it promotes are not at all admirable or worthy of being reproduced and I can affirm almost with total certainty, that without the practically unlimited financial muscle that the corporation supports, Netflix would have failed in its first year. A model whose success is based on the patience of investors to endure constant and sustained losses, until the market is hegemonized, is not at all admirable and therefore in addition to being a dangerous practice is highly harmful to an industry. "

In that order of ideas, the pattern in the business model will be set when investors can no longer stand to sustain an unviable business model, necessarily have to increase costs, decrease the production of new products and, when that happens, surely there will no longer be a competitor that balances the market and users will feel and assume this blow, surely triggering a historical and unprecedented setback in this industry.

In short, the global audiovisual scenario faces a vertiginous evolution as a business, with more innovative and impactful original content that, in turn, provides users with new consumer experiences.

Richard Santa, RAVT
Author: Richard Santa, RAVT
Periodista de la Universidad de Antioquia (2010), con experiencia en temas sobre tecnología y economía. Editor de las revistas TVyVideo+Radio y AVI Latinoamérica. Coordinador académico de TecnoTelevisión&Radio.

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