Analysts have long heralded the movement toward “cutting the cord,” meaning canceling cable subscriptions in favor of getting what’s still quaintly called “television” through Internet services such as Hulu, YouTube and Netflix. But many popular and critically acclaimed shows were not available through those services or arrived only after the original broadcast time. Devoted fans kept their cords intact.
The move by Netflix to produce its own shows has upset the equation, especially now that it has made good on its goal of developing high-quality series in the model of premium cable channels such as HBO. Many analysts expect the Emmy nominations for Netflix to encourage more companies to produce their own shows and prompt those already experimenting — such as Amazon.com, which is developing several new series — to expand their ambitions.
“It is a watershed moment for video content,” technology industry analyst Carl Howe of Yankee Group said. “We’re now starting to see awards that don’t pay attention to how content is distributed. . . . What the awards people are saying is: We don’t care anymore.”
Cable channels had their own breakthrough in 1999, when HBO’s “The Sopranos” became the first series not carried on broadcast television to be nominated for best drama.
So new is Internet television that there is no standardized tool for measuring viewership, as Nielsen ratings do for shows delivered through traditional channels. The average Netflix subscriber watches 87 minutes of television on the Web site per day, more than on any cable network, according to BTIG Research, though Netflix has declined to release figures for how many people watch its original content.
The news is not all bad for cable operators. Many of the firms that deliver cable television also deliver broadband Internet through the same wires. Falling demand for traditional television may correspond with rising demand for data.
“The marketplace is very vibrant, there’s a lot of choices for consumers and there’s a significant amount of competition going on,” said Brian Dietz, a spokesman for the National Cable & Telecommunications Association. “A lot of cable customers subscribe to Netflix and Apple TV and other services, and a lot of the data shows that those services are complementary to the cable services.”
He added: “Having the best Netflix experience requires having a robust broadband connection, and cable provides that.”
Many cable markets have a single dominant player, giving them the power to raise prices and maintain profit margins. (The Washington Post Co. owns a cable system based in Phoenix.)
One of the biggest threats to that market dominance, telecommunications company Verizon’s FiOS, has slowed its expansion and entered into a cross-marketing deal with four major cable companies.
Yet the pressure to provide consumers with more choices — and lower-priced options for individual shows or channels — is likely to grow as a generation of viewers accustomed to getting video over the Internet comes of age.
“The more easily consumers can control their own choices and pick winners through broadband video, the less power the traditional cable operators have,” said Gene Kimmelman, a former Justice Department official now with the New America Foundation. “This is a threat to the traditional cable dominance.”
Netflix reportedly spent $100 million on “House of Cards,” hiring high-profile stars such as Kevin Spacey and Robin Wright to lend artistic credibility to the tense political drama. Its 13 episodes were released together in February — allowing the most devoted fans to binge their way through the entire series in a weekend. Both Spacey and Wright won nominations on Thursday, among the nine for the show.
“Arrested Development,” an offbeat comedy originally made for Fox and revived by Netflix after Fox dropped it, received three nominations. “Hemlock Grove,” a horror series, got two nominations.
For a company that first rose to prominence by mailing movie DVDs to subscribers, Netflix’s decision to create its own series was designed to distinguish the company amid the increasingly busy market for streaming video, with Amazon Prime, Apple’s iTunes and Google’s YouTube becoming major players as well.
Less than two years ago, Netflix’s future seemed in doubt. Chief executive Reed Hastings wound up apologizing for a botched effort to get customers to pay separately for the mail and streaming versions of Netflix. The company’s stock price has more than doubled since then.
In an interview with The Washington Post in February, Hastings said making original series was intended to create “subscriber enjoyment and the buzz.”
“If there is more buzz, more people join,” he said.
Netflix’s overall subscriptions for streaming video continued their long-term upward climb this year, topping 29 million viewers in the United States — surpassing HBO’s subscriber base — according to data from SNL Kagan, a research firm.
Cable television remains a staple in many homes, in part because there are few other ways to get live sports and local television news, though the Aereo service, which uses antennas to deliver such programming through the Internet, has begun to challenge that hold in some markets.
The overall trend, analysts said, is toward breaking apart the model in which a single conglomerate produces a show, markets it and delivers it directly into living rooms through cable wires. More companies increasingly will be involved, allowing for more creativity — and possibly lower prices for those who want only certain shows.
Someday, even individuals without production companies might be able to deliver a high-quality series and distribute it over the Internet, said analyst Whit Andrews of Gartner, a research firm.
“The big question,” he said, “is when does a YouTuber get nominated for an Emmy?”