Cord Cliff Coming: What Happens to TV When Netflix Streams Live Events?

[Commentary] Sooner or later, it is likely that Netflix will go against the initial promise of its CEO, Reed Hastings, and stream live events.

“Cord cutting,” the increasing migration of TV audiences from pay-TV services to Internet content, is putting pressure on companies like Netflix to do so. New data show that 30 percent of US Internet users would consider cutting their expensive and relatively despised cable subscription to watch TV exclusively online. But the incumbent cable industry’s last remaining hold is live programming, and ultimately, Internet TV’s last barrier to entry in the TV market. With 29 million streaming subscribers in the US, Netflix has more video subscribers than Comcast. And not only does it have the reach, but it also commands an enviable share of viewers’ daily attention: According to BTIG analyst Richard Greenfield, if Netflix was a cable network, it would be the most-watched cable network on the air. Even more powerful than its reach is Netflix’s legendary ability to target niche audiences with a long tail of content. If live events and movie reruns were the start of HBO in 1972, Netflix could insert the thin edge of the wedge under various niche interests — and as the audience expands, so can the programming. Despite the virtue of Netflix providing premium content to a niche audience, live and mass-media event coverage could provide the Internet TV service with the revenue stream it will need to keep it competitive and justify its premium pricing, since advertising will never be a viable revenue stream as it is in the traditional cable networks.

[Elowitz is CEO of Wetpaint]