The future of Netflix (and other on-demand streaming services)

Cafe Society
1

My wife and I dropped our cable last year, and have relied solely on Netflix for our TV entertainment. And for the most part, we are happy. We like the idea of watching what we want, when we want. And I think video-on-demand is the future of television.

We only encounter “cable envy” occasionally, and most of it has to do with sports. We miss watching the Tigers on Fox Sports Detroit, and I’m going to miss watching Michigan football games on the Big Ten network and ESPN. And it sucks being a season behind on ‘Mad Men,’ ‘Breaking Bad,’ ‘Walking Dead,’ etc.

I recently read thisabout Netflix approaching cable companies in an effort to get them to distribute Netflix to their subscribers as a pay cable channel, similar to HBO. My problem with this is that it’s backward thinking.

I’m less concerned with Netflix being available to cable subscribers than I am having access to *some *of what cable has to offer live. People, like my wife and I, are dropping cable and dish subscriptions in favor of streaming subscriptions. So instead of Netflix partnering with cable/dish companies like Comcast or Dish, I’d much rather see them partner with cable networks like ESPN, AMC, BigTen Network, MTV, etc. to offer on-demand access to live cable network programming.

Let people subscribe to ESPN or Comedy Central for a flat monthly fee. Or let people subscribe to a network for a 24-hour window to watch the latest ‘Breaking Bad’ or college football game or MTV’s VMAs.

Is something like this feasible? To me, this makes more sense for a video-on-demand company to expand into networks-on-demand, rather than hopping **into **the relic of traditional cable television as a “channel.”

2

I think it’s pretty much irrelevant, no matter which way you look at it.

Netflix has fumbled its options over and over again and survived only because they had no real competition. They still hold the lead over other streaming providers. But by next year, they will be one player in a crowded field, and will either remain a minor player or vanish entirely. Grasping at cable delivery over internet is straw all the way down.

3

The one thing that you can out on is that cable TV will be all-IP in the near future. Whether you call it “TV” or “Internet” is insignificant. It will be a blending of on-demand and broadcast services that you can switch between at will. It’s only a matter of time before Netflix, NBC, Roku, YouTube and Hulu become essentially the same from the consumer’s point of view.

4

Despite your prediction of irrelevancy of Netflix, I’m basically saying what you just did.

I can’t figure out why they would want to become part of a cable television model that’s essentially a 20th-century model. They (and by “they,” I don’t just mean Netflix-- I mean any streaming service) should innovate and offer networks-on-demand for people that want the on-demand shows and movies of Netflix (or Blockbuster on Demand), but also want to watch sports or first-run programming like “Breaking Bad.”

So in addition to being able to click on a movie or an episode of a TV series on Netflix, I’d also be able to click on MTV or ESPN to get 24-hour access to that channel. Or for longer-term viewing of a channel, pay a monthly fee for each channel I want access to.

5

To me, the ideal has always been simple (in thought anyway, if not implementation).

Everything should be pay-per-view. Although most things wouldn’t be at the prices we’re accustomed to seeing for PPV. A heavyweight title bout would maybe still be $29.95 or whatever, and a fairly fresh film would still be 4 or 6 dollars. But we’d also be able to watch just-released films for theater prices ($12-15), and the nightly network news for maybe 25 cents a pop.

The prices would be all over the place and would include all types of media–traditional cable and broadcast, live concerts, newly-released blockbusters, live sports, You Tube clips–even music and talk radio and online newspapers. Everything from You Tube clips (at .002 cents to a dollar or so depending on interest levels) to Champions League soccer finals ($2.00??).

You wouldn’t have to order most (or any) of this stuff, you’d just watch it and you would be billed. Kinda like how you used to make long-distance calls from your landline and it would just show up on your bill.

Everything would be à la carte but there would still be subscriptions available where you could save money by ordering ESPN by the month or NBC by the year. Sure hope it happens… it’d be nice.

6

I disagree. Moves seen in the streaming industry - which is, admittedly, still developing - indicate that the next wave in the industry will be the partnering of content providers with streaming services. Amazon, Comcast, and so forth will need to lock down content that they can pitch as exclusive to survive.

Here’s where it gets interesting for Netflix. Unlike most of the other streaming services, Netflix doesn’t have an obvious content partner…

Or do they? They do.

Prediction: If current trends continue, The Walt Disney Company will purchase Netflix within the next four years. The foundation for this was laid when Disney signed a deal to provide streaming content for their entire library through Netflix exclusively starting in January 2015. That means that Netflix will be the exclusive provider for Disney’s stuff - including the wildly popular tween shows - as well as Star Wars, Indiana Jones, Marvel, Touchstone and ABC content. That’s a powerful thing for Netflix to have. Toss in their contracts to distribute Dreamworks and Weinstein content exclusively and you’re looking at a monster. And Disney’s the one who can partner and grow it.

7

I think the likelihood of this happening is right up there with Netflix losing 15% of its streaming subscribers because of a single, brief outage, as you predicted last winter. Meaning, it won’t happen.

8

Sony just reached a tentative deal with Viacom to stream their services over the Playstation Network. I don’t know if they’re going to offer it a la carte or if you’ll have to subscribe to whatever cable suite Sony is planning to offer, but I’ve got my fingers crossed for buy-what-you-want.

9

Ugh. What a nightmare.

I much prefer a flat monthly fee that I can use as a stable budgetary item. Too easy for me to go over budget on your system and I just can’t afford to do that if I also want to pay rent and eat.

10

I don’t see a reason why we can’t have both. Pay-per-view, pay-per-minute, or pay-per-bandwith. Different packages for different needs across different platforms.

11

When I think about the “conduits” (Netflix, Comcast, AT&T, etc.) securing exclusive contracts with big content providers (e.g. the Netflix / Disney deal mentioned above) I feel more strongly about my predictions for an a la carte system (however, tech things change so much and so fast that I’m sure I’ll be wrong;););)).

Consider a hypothetical–If Netflix is the exclusive provider of Disney, and Comcast (let’s say) the exclusive provider of Universal, and X is the exclusive provider of Y, and A is the only provider of B, etc., etc., then how else other than a la carte PPV are you going to be able to watch a wide variety of programming without subscribing to 10, 15, or more different delivery companies?*

Used to be you could subscribe to cable or satellite and be confident you had access to the widest range of entertainment offerings (give or take a premium channel/tier or two). But more and more, as streaming becomes the primary way people access entertainment ISTM that customers will likely resist having to pay for 20 different delivery subscriptions just to keep the broad choice of programming they’re accustomed to.

This is one of the changes I think we will see with the Brave New World of IP / streaming dominated entertainment delivery. I just can’t see how a subscription-based model can remain the dominant method of accessing entertainment when content delivery companies are increasingly locking up viewing choices with exclusive contracts with content creators.

It’s possible, as Glazer mentioned, that we will see several different procurement options available because some folks (like me) would prefer a la carte while others (like Broomstick) might prefer straight-up subscription. But I still think that at some point there will be just too many subscriptions you would have to buy in order to watch the variety of stuff that you’re used to now.

*This all touches on “network neutrality” too. That’s something I worry about a lot. Comcast, Time Warner, AT&T, etc., should be movers of whatever data their customers want–not gatekeepers controlling what you can and can not access on their proprietary version of an “internet”. An ISP should be considered a utility. To me it’s a really big deal, but I’m not going to get into the whole mess now.

12

I don’t get why the networks just skip the middle man and go straight for the custiomer. Right now, networks only get paid about $1 per subscriber. If they offered their services in real time programing, they could go straight to the customer via the internet, and charge three times that amount. HBO and the like could charge $10.

13

Perhaps that is going to happen. I think that cable TV will wither away and die within the next… oh, I really couldn’t guess when. Of course the cable companies would still exist, but they may only be internet and phone providers–not cable TV (as we know it) providers. Now, if you get your internet via cable then you’ll still get your “TV” via cable too. Only it will be internet TV (or IPTV-- see below) instead of 300 channels of cablecast programming.

It’s more complicated than that because of the net neutrality issue. What’s at stake is whether we’ll all get true streaming internet TV or whether the cable companies will still control what channels we get (as they do now) but by using proprietary “IP television” instead of the direct cable TV signals that they do now.

The difference between internet TV and IP TV is that internet television means you are choosing where you go on the net to find streaming video (like Netflix, etc.) whereas IP television is pretty much like cable TV is now except with different technology. I.e.: the cable company offers you packages and tiers of various networks and channels, but ultimately you can only watch the channels that they have paid content providers (ESPN, Paramount, etc.) to transmit.

Ultimately there is the concern with IP TV that a cable company would only provide you the content that they have a direct or indirect financial interest in. Sure, you’d still get the good ol’ internet from them, and you could choose to stream internet video from media that are competitors of the cable company’s content partners. But first of all, you would already be paying the cable company for their IP TV service and anything streamed over the internet would likely have an additional subscription fee.

And secondly, if there is no net neutrality and the cable ISPs are using significant portions of your cable bandwidth to deliver their proprietary IP TV channels that inhibits your available bandwidth for streaming stuff you want via internet from the cable company’s competitors. Worse still: the cable ISPs may deliberately throttle the bandwidth of a competitor’s internet streaming site so you’ll be compelled to watch their content partners instead.

OK. Sorry this is so long and convoluted. My head hurts and I am tired. Here is a much more coherent explanation of the differences between IPTV and internet TV.

14

The flaw in your assumption is that the cable companies/streamers/whatever has the same interests as you do. They don’t care how many other subscriptions you might feel a need for, what they care about is that you watch their stuff so they can charge you. If a person can only afford a limited number of providers the providers don’t care, they’ll just compete for the limited pool of subscription dollars. I don’t see where the providers have a motivation to sell their wares a la carte.

15

I am by no means Netflix’s advocate, but where did you get your information that by next year, they will be one player in a crowded field? It’s September 2013 already, what other major services are about to launch that aren’t now, but will be running by mid-2014, and will be running so strongly that Netflix is diminished so greatly and quickly?

Wow, where is that prediction? Just curious.

16

Call it a hunch.

Netflix will be the next AOL, WordPerfect, AltaVista. They’ve run out of room to make mistakes and fail to keep up with what customers want. I don’t see any sign that they’ve learned from their string of crack-brained choices and their most recent “improvement” is to shovel dumpster after dumpster of z-grade movies into the pile while becoming almost useless as a mailed-disc provider. One more half-thunk pricing change, service rearrangement or renaming and they’ll drop to minor player, outmaneuvered by a reorganized RedBox, Vudu or Amazon Video.

17

Here.

18

I’ll also note that Netflix is like those other failed giants because they got really, really good at a particular service (mailed discs) that was difficult and expensive for others to try and compete with. The market evolves (for WordPerfect, it was to Windows) and for all their expertise at one thing, they prove completely inept at evolving to match. Then they fall apart at the job they were good at, and make one panicky move after another to try and capture the new market, which fail.

If Netflix is significantly unchanged in subscriber base or service by the end of next year, you’re welcome to call this post up and tap-dance nyah-nyahs all over me. It’s a prediction, not a prophecy.

19

Amateur Barbarian, do you have Netflix? I’m not sure where you get the idea that their content sucks. It did for awhile, but it’s pretty good now. My watch list of movies, documentaries and TV shows is a mile long and I’ll never get through it. Netflix is much better than Amazon Prime, or the last time I checked, Hulu Plus.

For the average consumer (like me), I don’t think a la carte in will work at all. What a nickel-and-diming PITA. I’d rather just get a block of channels, although it doesn’t have to be as big as what I have now.

20

I love Netflix but I find that for a streaming service, it has a severe lack of movies. No way to get Robert Altman’s Nashville even on disk. Doesn’t have the Riddick series. It seem to be very much a niche for watching old series. Mrs Cad using it to watch Star Trk TOS or me watching Doctor Who starting at Eccleston.