Netflix has certainly proven itself to be quite the versatile and progressive business in its mere decade of existence. Not only has it all but completely shut down the brick and mortar video rental chains Blockbuster Video and Hollywood Video, but it has firmly entrenched itself among the most popular streaming video content providers online. It seems the company has recently become a threat to cable television and television networks because of its offering easy access to video content.
This New York Times article discusses Netflix’ deal with the Starz network, which many suggest was damaging to the latter company because they believe the company made far less through streaming than they would have otherwise received. Of course, this is going on the assumption that the people who streamed the content through Netflix were not people who also had cable television. It is hard to tell, but maybe the truth is that maybe Netflix will have to pay the network far more when the deal is up for renewal.
Jeffrey Bewkes of Time Warner appears to be starting a small rally cry for cable content providers against Netflix. He says that Netflix is providing the content providers with less than they would otherwise receive from cable providers. For the time being, this is true. Netflix does not have the same financial clout that a company like Time Warner has. Or, to qualify that last statement, Netflix does not currently have the same financial clout that a company like Time Warner has. Netflix has grown quickly in 11 years, and it can be assumed that it will grow by leaps and bounds in the next 11.
Executives at cable companies like Time Warner and Comcast probably sweat every time someone discusses the growth of Netflix. Until recently they had all of the power in deciding the availability of content. The tiered content packaging sales practiced by the cable companies have left people frustrated for years. To watch one or two niche channels or even acquire a premium/movie channel, one has to upgrade to a cable package that includes 100+ more channels and cost $240+ more annually. It does not sound reasonable when an individual just wants to see a few more things one TV.
Because of those practices, lately there has been a consumer movement referred to as cord cutting. The ready availability of content both on DVD and online means people will not hurt much when detached from the cable companies. Local stations can still be picked up over the air even in the digital age, so the news is still available for those who want it. Cable companies are currently bleeding subscribers because they are not offering content in the form that viewers desire. It must be admitted, though, that including DVRs has been a step in the right direction because viewers want to time shift their content rather than be slaves to TV schedules.
What Netflix offers, especially when it streams content offered by a cable network, is something that has long been desired by cable subscribers – a la carte television. Being able to conveniently pick and view content on a whim is what any major consumer wants. The big cable companies have always opposed this because there is money to be made in fluff. Not everyone wants it, but there is money to be made in the Golf Channel’s (or insert the name of any channel you find far from interesting) being included in a cable package. Netflix potentially offers the shows and movies viewers want without feeling like they are paying for the needless content – although technically they are. At least the prices are more reasonable.
And this is where it all comes together. In Bewkes’ urging cable companies to avoid Netflix and pointing out the deal with Starz, he is attempting to draw attention to the wallets of all those involved. Netflix may be able to sign another deal with Starz as well as a host of other networks, but each will ask for more money than was exchanged in the original Starz deal. This affects the consumer because either the content will not be made available or it will force another hike in Netflix’ prices. Ultimately consumers may have to pick their poison. If it were up to the cord cutters, Netflix and anything similar would receive full support.
How would you like to see your content delivered? Would you prefer a la carte video content, or do you prefer the variety offered by various cable packages?