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sean silcoff

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Twenty years ago pay TV show The Larry Sanders Show made history by garnering a best-series Emmy nomination and ushering in an era of accelerated success and respect for the premium cable business. Now Netflix Inc. is enjoying a similar watershed moment after the subscription video streaming service's original series House of Cards garnered an astounding 14 Emmy nominations Thursday. Award nominations are not hard data (watch Netflix's second quarter results next Monday for that) but another reminder that Netflix and its peers are in the early days of upending the broadcast and cable sector.

This has been a year of redemption for Netflix, following a disastrous 2011, when the stock plummeted from around $300 (U.S.) to less than $70. It has signed content distribution deals with studios, posted ever-rising subscriber numbers, eked out a first-quarter profit – and its stock has made up almost all lost ground from the past two years.

But the most intriguing development is Netflix's push to become an original content provider. Visionary CEO Reed Hastings , who started the business as a DVD-by-mail-rental service, clearly sees the risks in remaining simply a distribution channel: those will someday be a dime a dozen. The key is to become a network, broadcasting exclusive and "curated" content. The more Netflix offers, the stickier the service will become: viewers will know they can not only watch standard fares that others offer, but a growing amount of content no one else does. Without a doubt, this is a company with a smart strategy to weather the competitive challenges ahead.

Netflix's success leaves cable providers, broadcasters, producers and even advertisers (who thus far have no standing on Netflix) trying to figure how to respond in the changing environment. Canadian cable providers say they will launch their own Netflix-type services, while TV producers are girding for a time when broadcasters say they can no longer afford to fund or air the programming they have been obliged to support under existing Canadian content regulations.

But as Netflix has shown, the role of the broadcaster is not dead – it's just evolving to suit the realities of the online medium. Clearly, the smartest folks in the game believe the winning strategy is not just about distributing through a new medium, but stuffing the channel with proprietary content – and not just user-driven content, like YouTube, but real, well-produced shows. (It also helps that Netflix can track better than conventional media exactly who is watching what, and when, a strength they leveraged when producing House of Cards.)

Broadcasters, however, built their business around event-driven, must-see television, and that buzz factor is still critical to the success of any channel. According to a new survey by research firm GfK, when people watch Netflix, more than half do so not on computer screens, but televisions, routing the site through set-top devices and indulging with their family and friends.

Even if on-demand has trumped time-sensitive programming, the latter is not dead: expect to see streaming services someday bid for rights to awards shows and the Super Bowl. When that happens, conventional broadcasters who are unprepared for the shift will be doomed.

Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights , and follow Sean on Twitter at @seansilcoff .

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 0:35pm EDT.

SymbolName% changeLast
CMCSA-Q
Comcast Corp A
+0.37%43.23
LX-Q
Lexinfintech Holdings Ltd ADR
+1.4%1.815
NFLX-Q
Netflix Inc
-1.3%605.53

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