Why Netflix Won’t Rescue U.S. Broadcast Networks: A Deep Dive into the Future of Television

Netflix recently made waves by partnering with TF1 to include their channels in France. This move has sparked conversations in the broadcasting world, as it marks Netflix’s entry into linear TV with a major local network. One industry veteran summed up the surprise with a simple message: “Holy shit.”

Many are curious whether this partnership will serve as a model for Netflix’s future strategies. While it’s possible, the U.S. market presents unique challenges that may not allow for similar deals anytime soon.

Netflix is facing a ceiling in the U.S. Most households already have access to it. Recent efforts, like cracking down on password sharing and introducing an ad-supported tier, have slowed subscriber growth, but there’s only so far this can go. Once all interested households sign up, expanding further becomes challenging. Netflix seems to be shifting its focus from acquiring new subscribers to engaging current users for longer periods, which could boost its ad revenue.

In contrast, markets like France may still hold untapped potential for Netflix. By adding a local broadcast network, Netflix can not only attract new viewers but also ramp up local content—something that many countries are pushing for.

Local broadcasters like TF1 see this partnership as a crucial step in adapting to the changing landscape of media consumption. If the agreement is beneficial for both sides, Netflix might solidify its position as a comprehensive media platform.

The situation in the U.S. is different. American media companies have been fine-tuning their business models to maximize profits from traditional pay-TV. They often bundle different channels together, making deals complicated. For instance, if you want access to one major network, you often have to subscribe to several others. This bundling strategy is showing signs of unraveling, but it still seems far-fetched that U.S. companies will unbundle networks anytime soon.

Moreover, the American pay-TV market is very mature. The current economics favor traditional broadcasting, where companies charge significant retransmission fees to pay-TV providers. According to Kagan, in 2024, this fee is projected to be $21.48 per subscriber monthly, with a large portion going to local NBC, ABC, CBS, and Fox stations. Consequently, the wholesale price for a major broadcast network is estimated between $3 to $5 per subscriber monthly. Given Netflix’s standard plan at $18, replicating the TF1 agreement in the U.S. doesn’t quite add up.

There’s always a chance for change. Should pay-TV subscriptions decline more than expected, companies might rethink their distribution strategies. This shift could favor platforms like Netflix and YouTube. Furthermore, if Netflix opted to follow the lead of Amazon and YouTube, it could evolve into a content aggregator, offering additional channels for a fee. While this would mark a departure from its original subscription model, Netflix has shown a willingness to adapt.

In summary, while Netflix’s deal with TF1 might inspire similar partnerships worldwide, the unique challenges of the U.S. market make it unlikely to replicate this success in the near future. Only time will tell how these dynamics will play out in the ever-evolving media landscape.



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