10 pages of hypothesis, and 5 pages of methodology. \nCombine together the finished chapter and the chapters from following stand point.\n1. big data in the customer behavior analysis\n2. big data in the decision making process\n3. Netflix\’s preformance in recent 5 years\nAbstract\nAnalysis of the Success of House of Cards\n\n\n2013 was a good year for Netflix. The first Netflix original programming, House of Cards entire first season, was launched on February 1, 2013. It allows subscribers to binge watching, frees them from anxiety of waiting, and of course, becomes popular. More than that, high quality of the show fetched positive critics’ reviews and nine Primetime Emmy Award nominations which is a first for online-only web television series. Its success led to the renewal of the third season. In the era of the convergence of traditional and new media caught everyone’s attention. Content providers acquire new distribution channel. Media owners combine their resources. It makes combining the function of two or more devices and new way to distribute content happen. Some of critics and/or researchers deem Netflix is the future of television. \nHowever, the famous House of Cards is not the only Netflix Original. In fact, there are 23 other Netflix original shows in the year of 2013 only. And Netflix is not the only site with online-only series. It seems to be a coping mechanism to extend on-demand content selection, so that, Netflix wouldn’t be just a platform for customers to access and manage their entertainment. By investigating into Netflix, we may understand what made House of Cards stand out and how it influenced the future of streaming media. \n\n\nIntroduction\nNetflix is a subscription-based on-demand internet streaming and DVD-by-mail media, established in 1997. Based on viewing habits and reviews by its customer, Netflix offers a personalized video recommendation. By the second quarter of 2014, it reported more than 50 million subscribers worldwide. \nNetflix commissioned a 26-episode online only political thriller House of Cards in early 2011, a remake of early 90s’ British miniseries, which was produced by Media Rights Capital (MRC) and distributed by Sony Pictures Television. All 13 episodes of the first season debut on February 1, 2013 available for binge watching. This approach extensively used for Netflix originals to suit the changing nature of audiences’ viewing behavior. Starring by Kevin Spacey and Robin Wright had also helped it to be a great success for the company. \nHouse of Cards is not the only original; in fact, Netflix has distributed a number of exclusive programs. The first Netflix Originals, Lilyhammer, paved the way for House of Cards. It is a Norwegian television series which premiered on Netflix in North America on 6 February 2012. It marked the transformation of Netflix, from a content delivery system to a content creator. A lot grown after that, including House of Cards, Orange Is the New Black, Hemlock Grove, and long-awaited fourth season of Arrested Development. Netflix-exclusive programs cover numerous genres: original series, specials, miniseries, films and continuations of previously canceled shows on other networks. (Exhibit A) \nThe audience behavior of screen episodic storytelling is changed. There is an opportunity to mainline all in one day, when Netflix streams the entire House of Cards first season instantly available. The approach Netflix used is not really innovational. It’s how a lot of people comfortable and preferred method to consume past season television shows on Netflix. And the water was tested by Lilyhammer. \nWith Netflix debuted as a creator of scripted programming, Amazon seizes the opportunity, internet-delivered TV, and makes advance in television marketplace. In the beginning of 2013 Amazon Prime Instant Video premiered its first two originals: Alpha House and Betas. Microsoft is programming for Xbox video game console. Others, from Hulu Plus (2010) to AOL (2014) to Sony to Yahoo Screen (2011) and an increasingly large list of other companies are followed. \n\n\nBackground\nTo evaluate the outcome of the new venture for Netflix Originals, in this case, House of Cards, and determine online subscription video services’ influence on the future of television, the researcher must be familiar with how traditional television is facing new media, how companies are competing with each other, and how they are evolving. \nIn its history, television appears to be the dominated the front in the war for audiences’ attention spans. However, hundreds of web potatoes hanging on the internet and other multimedia platforms do overcrowd TV executives’ field of competitors for their viewing-ship. As Pat Mitchell, executive vice president of TBS Productions, a subsidiary of Turner Broadcasting Inc. said, \”The worry that multimedia and online services will cannibalize TV is the old argument that film would kill radio, then TV would kill film, the home video would kill network TV and so on. None of this has happened.\” But the old method to market can no longer get a way. The one of the most challenging is, Netflix. \nIn the old time, more of a compliment than substitute, Netflix only offered past season television series and off-theater movies. And comparing to traditional television, Netflix is lacking sports, news, current primetime hits, or any reality shows which weaken the ability to shake the foundations of cable, satellite and Telco business. It simply did a better job in marketing and assisting customer to manage their entertainment with extended availability to multiple screens.\nNowadays Netflix represents the change of the way of appealing to the audiences, producers, and performers. Cable companies receive the monthly payment from their cable subscribers, are spurred to come up with more show that they can call them their own to keep them. The biggest satellite distributor in the country, DirecTV, is introducing its first taste of homegrown show. The proliferation of programs and platforms may invoke cable and satellite companies’ concerns about customers switching to broadband cord. However, many cable and broadband shared supplier. \nThere are researches hoping to unlock the value of new media to TV. It helps networks, television studios, brands, and media agencies understand points of attention and value across different devices and services. It is about the platforms and channels solve the problem of processing, understanding and leveraging data around television. \n\n[draft]\nIts streaming-only package currently sells for $7.99 per month —less than two video-on-demand movies from most major pay TV providers and as little as half what HBO costs per month.\nIndeed, Netflix’s eye-popping growth and cut-rate plans have prompted pay TV operators to respond with new marketing tactics and services, such as “TV Everywhere” authenticated content, to fight off the insurgent. \nAnd Comcast, Verizon and Dish Network, among other operators, have stepped up the TV Everywhere push to deliver on-demand content — including HBO original series — across PCs, tablets and smart phones. \nWhat’s prompted the reaction is that, besides adding subscribers like crazy, over the past year, Netflix has been stockpiling a growing amount of TV shows and movies for streaming. \nNetflix has tried to point out that it augments the content ecosystem, rather than cannibalizing it. Since it began streaming Starz Play content in October 2008, the number of Starz subscribers through traditional pay TV distributors has grown, as HBO’s rolls have declined over that time. “In other words, the evidence is pretty clear that content that is also licensed to Netflix generates more money for its owners than content that is withheld from Netflix,” Hastings and Wells said. \nThe providers have the last-mile advantage — it’s the economics of moving content over a public backbone versus over a private network. The question is how long it takes [service providers] to effectively marginalize Netflix. \n \nLiterature Review [draft]\nTelevision Industry and Internet TV\nThe television industry has transformed over the last couple of years not only in terms of content but also broadcasting methods and platforms. Most TV stations are today facing the pressure of service to the values of entertainment and information. This is in addition to market pressure to maximize profits in an already dynamic and competitive global and local market. The internet is possibly the major threat to the traditional broadcasting platforms. Emergence of web based streaming platforms such as Netflix is an indication of the impact that internet and technology in general is having on the TV industry. In order to study internet television, its audience and the impact, is imperative to understand the definition of internet TV. According to Stafford & Gonier (2004) internet TV should be understood as a separate media. A review of relevant scholarly literature indicates that this new media has had significant impact on traditional broadcast TV and how various audiences use the mediums of broadcast. \nStafford & Gonier (2004) define Internet TV as a conventional television which is obtained over a public domain such as the internet and is accessed by means of computer. It uses video streaming technology. The emergence and development of internet television has resulted in several kinds of online programming. One of them is the offline streaming of television programming to internet for both promotional and non-promotional purposes. The promotional aspect of this transfer is meant to encourage the user of the web to watch a particular TV program on cable, satellite or broadcasting platforms after they have sampled it on the online platform. The second category of online programming is content, which originates from the web. They include webisodes, supplemental web materials and interactive mini productions. Loges & Jung (2001) state that such items are usually meant to complement the regular TV programs. Zackon (2009) identifies the final category as the full length programs which are often available both as video streams and downloads. They include short documentaries, animated films, movie pictures, sitcoms and drama episodes. As the internet TV expends, its unique programming is also gaining popularity based on the wider audience, support and criticism.\nThere are several studies and statistics that reveal the changes that have been taking place in terms of traditional TV viewership and online streaming. According to a study done by Nielson, more consumers are accessing various TV programs and movies via the internet. The study estimated that about 82 million of the 130 million consumers who access the web using broadband connections are watching movies and television online (Nielsen.com, 2012). Another study carried out by Integrated Media Measurement Inc. revealed that about 20 percent of TV viewing in the United States of America takes place online. Within this 20 percent, 55 percent was categorized as “TV replacement” while 33 percent as “catch up viewing”. The remaining 12 percent was categorized to be “fill-in viewing” ( Emigh 2008). The two studies show that the television market is divided into cable, digitally recorded, online and satellite segments. However, the web based platforms are continuing to attract more consumers.\nIn the Nielson 2009 Ratings for the web based programming platforms, YouTube was ranked top with about 7 million streams. It was followed by Hulu and Yahoo. The ratings were done on the basis of the time spent viewing the various content available to the users on such platforms. In 2009, the Council for Research and Excellence funded a study which was done by Nielson to determine the viewing trend in the United States of America. The study revealed that contrary to the views that more US nationals were rediscovering free Television through the internet, computer viewing appeared to be very small averaging about two minutes. Zackon (2009) posits that the traditional TV still takes the greatest amount of viewing time especially among the baby boomers. Americans aged 45-54 years tend to prefer the traditional broadcast than those aged 18-24. The first group averages about 333.7 minutes a day will the latter accounts for 209.9 minutes of live TV viewership.\nThere are scholars who propose that the internet will not affect cable TV like it has done to the old media industry including print, broadcast TV and music. However, major industry players and conglomerates like Viacom, NBC Universal and even Time Warner have made the protection of the cable television their top ranking priority. They have done this by finding avenues of preventing consumers from cancelling their annual subscriptions. A viable option for 35 percent of the consumers, according to a research which was done by Sanford Bestein Group, was cutting the subscription within five years. These trends have made media conglomerates to rethink their strategies. The Times Warner executives have come up with a solution that offers the cable shows via the internet for free provided that the viewer has authenticated his or her cable or satellite subscription.\n Arango (2009), states that the action by top executives in these cable media conglomerates is not coming as a surprise. A good reason for this is that the cable and the satellite networks have felt the influence of technology and the internet and thus they have to allow consumers to access the programming via several channels. Without doing this, they risk losing out to the free online video streaming platforms.\nTV and Internet Audience Study\nAs the web continues to redefine and influence how content is disseminated to various market segments, studies on the motivations behind the television and internet audiences are becoming more important. There is a significant amount of research work which suggests that the viewers have specific reason for watching TV. The internet users also have a different set of factors which draw them to using the platform (Phelp et al. 2004; Papacharissi & Rubin, 2000; Lu & Lo, 2007). In order to understand the different motivating factors for these two groups, it is imperative to explore and understand how they use the two types of media. Existing literature and scholarly studies from early and late 1990s is usually critical on the convergence of television and the web. This is fueled by the stand that personal computers use was bound to reduce TV viewership time. Others suggested that people did not have enough time to use the computers while at the same time viewing television. Coffey & Stipp (1997) argue that web based activities such as browsing are more interesting compared to TV viewing. Children are therefore growing up more accustomed to computers. The impact is that they will be using TV less often compared to the older generations.\nSuch assumptions were not convincing enough to other researchers. With the accumulation of new data, new assumptions favoring media convergence came up. One good example is the study by Carey (1996) on broadband users. This ethnographic investigation interviewed eighteen people in twelve different households. It made an observation on how this population interacted a lot with web content. Carey discovered that there were various computers in different locations in the households. They included the bedrooms, living rooms, study rooms and the dens. Moreover, it determined that the internet users considered in the study were using several browsers and bookmarked the various websites they frequented. On the basis of extra observation Carey (1996), was able to reveal that the web and television were used together. This came in the form of using the television as background noise while browsing or alternating between TV viewership and web browsing. Others users were also watching and browsing simultaneously while some visited sites of the various programs prior to, during or after watching the programs. Online chatting about the programs was also noted. \nCarrey (1996) concluded that his group of broadband users had latent appetite for online video as most of them discovered the clips with the passage of time and started to watch them even more frequently than the traditional broadcast TV. Just The same way the internet based television is used in the current generation, the participants in Carey’s research looked for and watched these clips with the hope of finding breaking or special news. Nevertheless, it is essential noting that the researcher did not note the novelty effect of the internet in his findings since the users were attracted to the internet as a new media form. He however remarked that the hypothesis tested required more quantitative study on long term basis among a larger audience. \nInternet and television have been coexisting and interacting over the last decade bringing about more studies that were meant to explore the dynamics of each of the medium such as satisfaction of television users, the gratification of web users and the needs of each group. Others have looked at how the web is becoming an alternative to the television. A study by Lu & Lo (2007) on the television audience revealed that satisfaction was of greater importance when comes of audience loyalty. In this study, the viewers who felt satisfied with the content and programs available in the televisions indicated and showed that they were watching the same TV channel or program more frequently. Scholars have heavily relied on and used gratification theory in studying the behavior of media users. The gratification theory formulated by Blumler and Katz (1974) view the users to be goal oriented. As such, the play a very active role when it comes to selecting and consuming media content that will fulfill their needs. The uses and gratification model therefore significantly shifts emphasis of the communication research work from the effect perspective to a more audience-centered perspective. It assumes that the users have a wide variety of content that they can choose from and consume in various platforms. \nStrathman & Joireman (2005) remarks that the motivation of a particular audience population to use a give type of media has been investigate through this particular theory in cases where a new communication media has emerged. An example was the use of the theory in looking at how young people adopted new technologies (Phelps et al, 2004), impact that VCR had on communication, companion gratification in watching TV and past time as a motivator to TV watching (Carey, 2004). A research carried out by Stafford et al (2004) before the wide availability of internet television summarized the reason for watching television. They included gaining gratification from the aired content, getting gratification in the process of obtaining that given program and gaining gratification from the various social interactions that result from consumption of the content in a particular program. On the basis of these three types of gratifications, online surveys among the users of both the internet and the conventional TV were also conducted by Coffey& Stipp (1997). The results were able to show that the process of watching a program via the web leads to the greatest gratification. When it comes to conventional TV, the first motivation was the content o the program. Such findings are widely used in management of internet and conventional TV programs and services. \nMore recent studies are indicating that television viewing is gradually changing due to the change in what motivates the consumers to watch the programs and the content. More and more people are therefore starting to consume items via the web. A recent report by Sandvine showed that about thirty percent of available broadband and bandwidth in the United States of America is used by Netflix. More people are also striving to enrich their viewing experience by means of new content forms. Online video providers such as Hulu encourage the social viewing trends by allow users to tag and comment on specific locations thus increasing the level of interaction. Nielsen.com (2011) points out that such types of interactions are more complicated compared to the conventional TV interactions which basically involve changing channel and volume. It is for this reason that it suggests that for this mew and complex interaction to be available in the traditional TVs, new input devices may be required calling for a total change of the original design considerations both at functional levels and requirements levels.\nIncreasing Popularity of the Video Streaming Services\nThe last few years have witnessed the spread of broadband internet access in North America. Therefore, the high bandwidth services such as HD video streaming which were earlier limited in terms of quality and duration is now easily available. Majority of the population now has this access and is using it to watch several media contents which they were not having access to before the increased roll out of the broadband internet access. The number of internet users increased sevenfold between the year 2002 and 2012. In this same period, there was also an increase of 22 percent in the number of Americans who were using the internet to watch videos. The viewing time also rose by 80 percent. According to Nielsen.com (2011), one of the key contributors to the rising popularity of internet based video on demand services is Netflix which started as a DVD by mail service. It has gone ahead to introduce and popularize internet based streaming services. In a report by Sandvibe in 2010, it was indicated that Netflix accounted for about 20.7 percent of all downstream internet use in the United States of America. Seven months after the release of this reported, the number had risen to 29.8 percent of the downstream internet access.\nOther video service providers like Hulu and You Tube have also grown in popularity. The latter has concentrated on offering short clips and feature content delivery. On the global scale, about 4billion clips and videos are viewed on YouTube on daily basis. Hulu has also reached the 1.5 million mark in its paid Plus services. According to Arango (2009), this success appears to be driven by the increased growth of the systems which help bridge the gap between the users and the computer or the TV. The systems include a plethora of devices ranging from Roku, DVD/Blue Ray Players, game consules and Apple TV. Most of the current game consules have mechanisms which allow for live streaming of Netflix content. The services provided by Netflix and Hulu which had traditionally been restricted to the personal computers are now available in different platforms and diverse devices. The availability of such services in a wide range of platforms has also resulted in the movement of the services from technolpolite market to a larger population.\nA 2011 study by Nielson found that 50 percent of all Netflix users watched the content from gaming consules. In the same research, it was revealed that about 163 million US nationals owned the game consules. The implication was that the consules became a natural way of delivering the content. Emigh (2008) points out that the need to manage the viewing experience has further led to the emergence of applications such as the XBMC and Window Media Center to facilitate the interaction. Web based devices such as the Apple TV are currently more appealing to most Americas as they allow for quick and easy streaming of video and content. A study by Guthrie (2007) on why the users prefer such internet set top devices showed that the users opted for them as they allow for the consolidation of content and management of local libraries. It was also noted that as the devices offer highly interactive and customizable experience, there will always be the need to have more studies on a variety of robust input methods which will facilitate the gaining of such experiences and gratifications.\nResearch has also been done on various market segments with the intention of understanding how each group embraces the changes in the technology as well as the television industry. This is fuelled by the continued interest on the impact which such innovations seem to be having on the general populations. Most of the works appear to have a converging view that each segment embraces and adopts innovations such as Netflix and the internet in dissimilar ways. There is also a common ground that the younger generation is more receptive of the change in comparison to the older age bracket. According to Valkenburg & Soeters (2001), youth and children are usually enthusiastic adopted of internet based communication channels and platforms. They regard the internet to be flexible and various scholarly studies have identified their main reasons for using internet based platforms as alternative to the conventional platforms. \nValkenburg and Soeters (2001) summarizes the reasons to include PC affinity, entertainment, avoiding boredom and online and offline social interaction. A number of studies have also identified both attitudinal and behavioral differences among people who use the internet TV and those who rely on the conventional TV broadcasts. Unlike in conventional TV viewing where parents appear to execute mediation and control over programs watched, internet TV provide young people with free access since the viewing is difficult to monitor. This is the reason why it is common amount children. Such people grow up and become more accustomed to the web based television and entertainment avenues compared to the cable, satellite and broadcast television.\nBreaking into Internet Television\nThere has been significant research on strategies within the TV industry. However, limited research has been done on internet streaming strategies especially pertaining Netflix as a firm within the industry. There is a large body of literature on the various events, strategies, interactions, being first and second movers as well as the home movie segment of the market. Such studies are vital in understanding the adoption of internet based streaming by firms. Trimarco-Beta (2007) analyzed whether it was better for the various firms in the TV industry to move first or second towards new initiatives. The study considered a setting where commitment was more valued. The results of the first move were not quite evident. Hope (2000) also investigated the relationship between first and second mover when it comes to adopting new trend and technology. It looked into the various costs and uncertainties associated with the technological inventions. The research specifically focused on four main effects that included preemption, business-stealing, spillover of information and surplus effect. These four factors vary based on the timing of the adaption of a particular technology or trend. The study concluded that the second mover was better off compared to the first. The findings of this study clearly relates to the trend which is being seen in the television industry with regards to the adoption of web based streaming. Firms appear to be more appreciative of the trend after other original trend setters like You Tube and Netflix had tried and succeeded in it.\nAccording to Trimarco-Beta (2007), content licensing agreement has been one of the major strategies used to gain access to additional content with the aim of increasing consumer gratification. A study by Nielson.com (2012) found that both Blockbuster and Netflix have always utilized the content licensing agreements which come at high costs. Such deals are very critical when it comes to continued success in internet media streaming. Trimarco-Beta (2007) says that such deals at times experience the winner’s curse which often reveals itself in a drop in the value of the firms after such deals are stuck. The winner’s curse is defined by Hope (2000) to be an effect characterized by the inability of the firms to benefit from the acquisitions they make. Netflix is usually willing to take in this kind of loss with the intention of ensuring its long term success. Due to the expensive nature of the deals and the benefits associated, testing is always paramount.\nNielson.com (2012) remarks that TV over the web is no longer just television, but rather a source of new opportunities. It gives avenues for restructuring the TV industry and altering how programming is done and content produced. Several networks as well as niche markets have embraced web television. News syndicates were the pioneers in embracing various video formats by producing items which was specifically meant to be aired through the web. Sport syndicates then followed the trend as second movers. In the year 1999, live transmission of videos to three different locations outside the United States of America was started by NFL.com so as to cater for the needs of the diverse online fans that had accesses to high bandwidth internet access. In 2000, the National Basket Ball Association also began producing highlight items and then streaming then as web packages to various fans in different locations. Zackon (2009) says that the goal to combine immediacy and information depth with the current TV programming directed NBA executives towards adopting the internet to offer fans a complete coverage of its league. This was a vision which was carried by news executives. ABC News, CNN, MSNBC and CBC all identified the web as a platform which could bridge the conventional cycle of morning and evening news. Currently they are the major providers of content.\nOther studies have however pointed out that consumers are not ready for web based television. Hope (2000) states that the technical requirements, plain disinterest and other general hindrances are barring several people from viewing TV from the web. A media research carried out by Points North Group showed that out of a sample of 1000 internet users, it is only 13 percent who watch an entire TV program which is available on the internet at least four to five times weekly. Twenty seven percent were found to have a very strong interest in watching their favorite shows via their computers. Based on the findings, the researchers predicated that internet TV will continue to attract a niche clientele until the associated technology gets easier. Carey (2009) points out that others like Netflix have decided to attract completely new audience. It further remarks that Netflix is continually finding new consumers for the existing video content to rediscover the lost TV audience in most households.\nFrom the existing literature, it is evident that the internet and technology have had an impact on TV viewership both in terns of content and dissemination platforms and modes. The traditional TV appears to be controlling the greatest amount of viewership time. However, with the integration and use of internet coupled with increased high bandwidth internet access, more Americans are shifting towards the online video platforms with Netflix playing a leading role. Historically, consumers have changed their viewing habits and prefaces. On this basis and on the basis of available data and scholarly literature, it is likely that even the traditional audiences who are yet to embrace the web option of TV and video viewership will take steps towards it.\n\n\nResearch Methodology\nThe purpose of this chapter is to present the philosophical assumption underpinning this research, as well as to introduce the research strategy and the empirical techniques applied. The chapter defines the scope and limitations of the research design, and situates the research amongst existing research traditions in television series case study.\n
