Is Netflix a premium channel?

Originally starting as a DVD rental business offering a service of sending actual DVDs to consumers' homes, Netflix was established in 1997 Having more than 220 million members in more than 190 countries, it has become the biggest streaming entertainment service available worldwide since its founding two decades ago. One wonders sometimes if Netflix belongs in a premium channel classification. Well, this is precisely what this paper will address.

Pay-per-view television or PPV for short are television networks that are available on cable but the viewers are usually charged an extra fee to be able to access them apart from the basic cable network. Key features of premium channels typically include:

In many ways, Netflix does share some major similarities with premium cable networks:

Similar to the premium channels, Netflix is also a non-interrupted, ad-free, and commercial-free watching platform with no interruption from programs. Most of the subscribers are willing to have Netflix, particularly for this non-obtrusive mode of watching.

Thus, over the last decade, Netflix has not only invested billions of dollars in the creation of original content but has also achieved significant success in this area. Other popular series such as Stranger Things, The Crown, and Ozark can be compared with premium channels in the aspects of picture quality, actors’ performances, scripts, and directors.  

Even now, Netflix’s selection of movies has shrunk as studios have begun to remove their titles to launch or promote their streaming offerings, Netflix can still purchase the rights to a theatrical film after it has been released in theaters. HBO, Showtime, and Starz also have theatrical movies as their part of their inventory since they acquire output deals with Hollywood studios.

It is important to note that Netflix provides a lot of TV shows and movies that are marked as adult ones, including those shows and films that contain scenes of a violent nature, use bad language, and sexual scenes, which is quite similar to the content of the premium channels. Another feature is that parents can block the possibility of accessing adult content.

Despite the commonalities, experts argue Netflix differs from premium channels in fundamental ways:

Premium channels are encrypted and can only be accessed if one has a cable subscription besides paying a monthly premium add-on fee for each channel. Netflix has a simple service for consumers, with no bundling, subscription, or other additional services. It does not contain any hidden fees in terms of content since it is already covered by the monthly subscription fee.

Another thing that should be mentioned is that Netflix, unlike such cable and satellite television networks as HBO, Showtime, or Starz, has no live TV content or live streams of various performances and sporting events. Streaming is never live, but rather it is on-demand.

They will later introduce affordable subscription plans with ads—a model that goes against the grain of the free-end premium networks. We only know that ads affect the viewing experience but it is yet to be seen how much this experience will be affected.  

Premium channels mostly air programs that they acquire from other studios while Netflix invests billions for owned originals—meaning they fully control more and more of what’s on their service.

It is evident that Netflix has quality programming akin to premium cable networks like HBO or Showtime; however, structural factors such as the direct-to-consumer model that does not require subscription through cable packages, which are characteristic of Netflix, are significantly different. Netflix competes directly with those premium channels [of broadcasting] in critical forms of entertainment such as original series and movies although it sets itself apart from such premium channels through flexibility in the on-demand provision. That is why its upcoming ad-supported tier also removes it from the pure premium category that belongs to commercial-free networks only.