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Traditional TV is Doomed, And Netflix has the Data to Prove it

Netflix executives use the term "linear TV" to describe how most people consume television content today. It's linear in the same way your daily calendar is composed of a string of successive and exclusive time slots. There's just one 9:00 p.m. spot available to fill with a broadcast on each night, so if you don't like what's on TV at that time, you need to switch channels and hope something better is being presented elsewhere.

Source: Netflix.

Netflix says that process amounts to a fundamentally worse experience for consumers than the emerging Internet-based TV model. The new approach, "which is on-demand, personalized, and available on any screen -- will eventually replace the linear TV experience," the company predicts.

Last week Netflix put some fresh data behind that big claim.

The new data

Its data hounds ran an analysis of seven months of viewing behavior on two dozen of the streaming giant's most popular shows across 16 global markets. The goal was to calculate the exact number of episodes required to "hook" a viewer. For purposes of this test, a hooked subscriber was one who had at least a 70% chance of finishing the entire first season.

Netflix found that the time commitment showed a wide range: It took six episodes to hook a Mad Men viewer but just two to create a season-long fan of Breaking Bad . Here's the full list of tested shows along with the episode that proved to be the binge-watching turning point:

Source: Netflix.

A few interesting cultural differences also came out in the analysis. Netflix said that viewers in Australia and New Zealand, for example, tended to require longer to get hooked on almost every show. And French consumers warmed up to How I Met Your Mother quicker than others.

Scoring with singles

But one data point stuck out across geographies and shows: None of the series produced a committed fan by the end of the first episode, the pilot. This is hard evidence confirming what Netflix predicted over two years ago when it broke fresh TV ground by releasing the entire first season of House of Cards at one time. Executives at the time said that innovative approach poked at a huge weakness in the broadcast TV model. Here's what management said in January 2013:

For linear TV, the fixed number of prime-time slots mean that only shows that hit it big and fast survive, thus requiring an extensive and expensive pilot system to keep on deck potential replacement shows. In contrast, Internet TV is an environment where smaller or quirkier shows can prosper because they can find a big enough audience over time. In baseball terms, linear TV only score with home runs. We score with home runs too, but also with singles, doubles and triples.

Netflix also explained how it thought this difference put the company in a much better position than broadcast networks. "Linear channels must aggregate a large audience at a given time of day and hope that the show will attract enough viewers despite this constraint," executives pointed out. But Netflix is free of those limits and so "we can spend less on marketing while generating higher viewership."

The company claimed that the full-release strategy would be as good for content creators as it is for Netflix's business. And that idea seems to be supported by this analysis, too. Since viewers have plenty of time to build loyalty to a series, show producers can let their plots unfold at a more natural pace. There's also no need for cliffhangers, rigid timelines, or prior-episode recaps under this model.

"The constraints of the linear TV grid will fall, one by one," Netflix predicted two years ago. This week's data illustrates how the heavily marketed, appointment-based broadcast pilot is one of the constraints that's clearly on the way out of the TV watching experience.

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The article Traditional TV is Doomed, And Netflix has the Data to Prove it originally appeared on Fool.com.

Demitrios Kalogeropoulos owns shares of Netflix. The Motley Fool owns and recommends Netflix. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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