At first, Netflix seems like its business would have nothing to do with Facebook and Google. The latter two are advertising platforms for other people’s content. Netflix is spending $6 billion a year to buy its own content, and it doesn’t show ads.
But zooming out to consider the full scope of the media landscape, this tech triumvirate is surprisingly interrelated, as one can see Mary Meeker’s annual slideshow extravaganza of tech and media trends. In many ways, the Netflix revolution in TV has created the perfect conditions for Facebook and Google’s extraordinary growth in mobile.
Here is the story, in three chapters.
1. Netflix is eating television.
When it comes to television, there are two Americas. In one country—Americans over 65—traditional TV is only getting more popular: The average number of minutes watched is rising, sending ratings for shows with older audiences, like cable news, to historic levels.
In another country—Americans under 65—the crisis for traditional TV couldn’t be more acute. Viewership is collapsing among people under 40, and merely falling slowly for people in their 40s and 50s, as millions of people abandon cable for subscription-based services such as Netflix and its brethren: Amazon Prime, HBO Now, Showtime, and Hulu. In the last five years, total viewership has declined by double digits on NBCUniversal, Disney, Time Warner, and Viacom—all of which sell ads against television—while Netflix is up almost 700 percent.