Getting the Revenue Streaming in: The Case of House of Cards

80 million people in the U.S. pay to watch TV and films online

05/12/2014 Madrid

House of Cards
The popular US series "House of Cards", hit show of the Netflix streaming platform / Photo: Sony Pictures

Greed. Corruption. Criminal instincts. A democratic congressman, played by Kevin Spacey, and his wife who will stop at nothing to get what they want.

These are the elements that made American drama series House of Cards a huge success with both public and critics when it screened exclusively on the streaming platform Netflix in February of 2013. By the end of this year, Netflix will have 50 million subscribers who will be able to watch the third series of House of Cards in 2015.

Figures point to a sea change in the entertainment industry as it adapts to leverage the fastest-growing consumer trend: online viewing. And the subject was the focus for a recent discussion hosted by IESE’s Institute for Media and Entertainment, which drew some interesting conclusions for the sector.

“Within two years the average time spent watching digital media in the United States will overtake the time spent watching television,” said Prof. Loreto Corredoira. Correidoira is co-author of a study carried out by the University of California Los Angeles on digital entertainment, which finds that a significant segment of the viewing public is prepared to pay for quality content, as they do with Netflix.

“Some 25% of the US public are streamers; that is, they subscribe to an online audiovisual content service, and 59% expect to watch more television and film on smart TVs in the future,” said Corredoira, a graduate of IESE’s PDD Management Development Program.

And the data backs her up. In 2016, twice as many US homes will own TVs connected to the Internet as in 2012. These smart TVs have become an alternative to cable, which is shedding viewers and market share.

The Future is Streaming

Corredoira described online multiscreen users (mobiles, tablets, laptops and television) as “the viewers of the future.” The audiovisual sector is going to have to adapt itself to them to meet demand and attract them as new subscribers she says: “They will have to offer quality content, flexibly, and on easy-to-use devices at a reasonable price.”

47% of US viewers aged 18-34 already watch online or streamed video at least once a day. And these numbers are set to rise inexorably. Today there are 80 million streamers in the United States using either transactional systems, such as iTunes and Amazon, or subscription-based systems such as Netflix, Amazon Prime Video and Hulu. Furthermore, a large number of those who pay to watch films and series via streaming are adults who also buy newspapers and magazines.