Traditional TV's Undoing: Netflix Leads Assault on Costly Cable Bundles

Netflix CEO Reed Hastings has good reason to boast in the wake of an impressive first quarter earnings report, which included a bigger-than-expected infusion of 5 million new subscribers — versus the 4 million that Wall Street expected.
During his earnings call on Wednesday, Hastings talked up a much bigger picture of how conventional TV is being overrun by alternative streaming services via Internet TV. Essentially, TV as we’ve known it is on its last legs. Apparently, Netflix and competitors are on their way to killing traditional television.

For consumers, it’s all good, especially since similar streaming services are popping up from all corners in a range of reasonable prices, including HBO Now ($14.99 a month), Dish’s Sling TV ($20 a month) and Apple’s anticipated entry into the streaming service landscape. The streaming space already includes Hulu, and Amazon’s Prime Instant Video. These services offer low monthly prices, compared to the traditional cable bundled services.
It was Netflix that pioneered the streaming service industry, becoming the first to gain widespread acceptance. Over the past few years, Netflix has surged on the strength of original programming, including “House of Cards” and “Orange Is the New Black.”
So when Hastings speaks about the future of television, everyone listens. Here’s what he had to say about Netflix and its competitors — versus traditional cable offerings:
Hastings: “I think HBO at $15 is a great value. I mean I have traditionally paid more than $15 for my cable company for it. So I think they are doing great work with their premium content. It does create an obvious underline of just how great the value is of Netflix with prices ranging from $7.99 to $11.99. But we are really comfortable with that strategy. We are continuing to grow with this strategy and it is an incredible value. But I think we you should really think about it is all the Internet services HBO Now, Netflix and Hulu are great values in comparison to the big bundle.”
Hastings on “Smart TVs”:
“Now, we have seen smart TVs just continuing to grow and grow in usage and sales. Virtually every new TV sold now is a smart TV, at least at the middle and high-end and it’s natural for people to use. Now, do they also watch on tablets? Yes, and on phones. So really all those categories are experiencing absolute hours growth, but on a percentage basis, smart TV is one of our fastest-growing categories.”

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