1 Big Threat to Traditional Broadcasters

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A handful of broadcast and cable giants including Comcast's (NASDAQ: CMCSA  ) NBC and News Corp.'s (NASDAQ: FOXA  ) Fox networks are beefing up their prime-time offerings to better compete with growing competition from online streaming companies. Netflix (NASDAQ: NFLX  ) turned up the heat earlier this year with the launch of its new hit series House of Cards. Established TV networks, on the other hand, continued to bleed viewers.

The battlefield of viewership
Original content from online streaming outlets such as Netflix is stealing viewers' attention away from NBC, Fox, and others in a big way. In fact, "all of the major English-language networks have so far lost prime-time viewers in the 18- to 49-year-old demographic that advertisers covet," according to The Wall Street Journal.

For years, Fox and NBC have gotten away with low-cost productions like reality shows and game shows. However, even Fox's American Idol contest isn't attracting the massive audience it once knew. It's time for these networks to invest more money in content development or prepare for financial losses down the road.

With more people watching shows on their mobile devices, it's become harder for broadcasters to determine what constitutes a hit show. Ratings aren't what they used to be. As a result, Nielsen is working on new services that would measure online viewing.

However, for Netflix, the success of its House of Cards series is evident in the company's recent subscriber growth. Netflix added 3 million new subscribers to its streaming service during the first quarter. This momentum should continue thanks to the company's upcoming lineup of original content debuts.

Nevertheless, broadcasters aren't going down without a fight. With a lot riding on the success of their upcoming shows, NBC and Fox are each premiering their prime-time lineup this week to advertisers. Moreover, broadcast networks developed around 104 pilots this season -- the most in several years, according to estimates from Horizon Media.

Content is king
We'll have to stay tuned to see if either Fox or NBC can deliver a hit series in the upcoming TV season. However, at least for now, it appears that Netflix is on the fast track to programming dominance.

Netflix's first-mover status is often viewed as a competitive advantage. However, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

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  • Report this Comment On May 13, 2013, at 3:25 PM, Easttexas9 wrote:

    it appears that Netflix is on the fast track to programming dominance.

    Give me a break. They don't even own their so-called original series. They lease it to lease it to you. Great business model. ha.

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