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The most dangerous media company in the world

Posted on October 10, 2010 by Ron Piovesan

Apple.

Yes, Apple.

Even Apple is afraid of this company (I think). If they weren’t, then why would they let them come standard on the new AppleTV and offer a service that is essentially a competitor to their iTunes movie rental business?

The company I’m talking about is Netflix. If there is one company that should have everyone from Apple to the cable companies quaking it is Netflix.

The announcement that Netflix is standard on AppleTV solidified the company’s position as the default service to get content over the Internet. Over the past 10 years or so, while content producers, cable companies and others fiddled with Hulu, pay walls, and other ideas, Netflix built  the library and the audience and to take over the steaming content market the same way Apple took over the gizmo market.

Sure, Amazon and HuluPlus also have interesting offerings but they are more a compliment to an existing Netflix account, not a replacement. Yes, Amazon and HuluPlus offer some content you can’t find on Netflix, but there is also a lot of overlap (Why do I need to watch 30 Rock on HuluPlus with commercials when I can watch it commercial-free on Netflix?)

Even the bankers are getting in on deal! The other week CrediteSuisse pretty much called out Netflix as one of the main (among the many) nails in the coffin of cable companies. They estimated that a third of viewers age 25-34 use Netflix to cut their cable. While sadly I’m no longer in that prized demographic, I am among the Netflix-powered cable cutters.

Netflix is more than just a clever movie streaming service, it is defining the new content distribution model. When the history of online content is written Netflix will be lauded as one of the main agents that dismantled the old system and founded the new.

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Posted in Video/Music/Media, Web/Internet | Tags: Apple, apple tv, internet set top box, media streaming, Netflix | 3 Comments
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3 thoughts on “The most dangerous media company in the world”

  1. Ben says:
    October 11, 2010 at 6:13 am

    Dangerous? Not sure about that, but Netflix is best positioned to replace the primary content aggregation services in the US, cable providers. Last year I also canceled cable, instead getting my content via an antenna and discs by mail, but sports drew me back to cable and kept me there (along with my gig at Engadget) and with so many sports fans out there, ESPN3 has a long way to go before it could replace a cable subscription for sports fans.

    Reply
  2. Ron says:
    October 11, 2010 at 11:56 am

    I call them dangerous because I think they have the greatest potential to relegate cable companies to the status of “utility”…a non-differentiated connectivity service. But I agree, the huge question out there is sports, especially NFL whose rights are both expensive and locked up by cable. If Netflix (or anyone else) can solve that problem, they will be a clear-and-present danger to cable. Until that time, Netflix is a dangerous threat. Netflix doesn’t even need to offer the sports itself. If someone else does, Netflix could concede that market and then focus 100% on TV and movie streaming, which would leave cableco’s with next to nothing.

    Reply
  3. Vince says:
    October 12, 2010 at 3:50 pm

    Your title is a bit sensationalistic and your opening “paragraphs” an annoying bait-and-switch, but other than that, you make a fairly good point. I’m currently not paying for cable (except local channels), but every week local college football and Monday Night Football push me to the brink of calling up Comcast and changing that. Like Ben said, sports are a huge draw for cable subscribers, and Netflix isn’t going to “solve that problem” probably ever because it’s incredibly lucrative for both parties.

    Really, this gets at an even more important reason to stick with cable: timeliness. Yeah, so Netflix has (some of) your favorite shows on it available for streaming, but even if there’s a deal in place to let you steam new episodes, they don’t appear until the day after they air. If you like to keep up with your favorite shows and discuss them with your friends the day of/after airing, you’re pretty much stuck with cable, and all of the deals that Netflix has made to this point enforce this type of delay, precisely to keep people watching live TV. Cable has some of the best shows on TV right now, and that’s a trend that’s on the upswing. Granted, the audiences watching those shows live still tend to be fairly small, but they’re growing.

    I think if cable wants to survive in the long run, what it really needs to do is stop compressing channels to hell and back and instead provide a legitimate quality bump over streaming services. Even Netflix’s “HD” streaming is fairly mediocre, and if cable just allocates more bandwidth to their feeds they can really differentiate themselves from other options. But if I’m being honest, that seems too costly and logical to work, so maybe in the end you’re right that Netflix and other content aggregators will eventually win out.

    Reply

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Jeremy Toeman is a seasoned Product leader with over 20 years experience in the convergence of digital media, mobile entertainment, social entertainment, smart TV and consumer technology. Prior ventures and projects include CNET, Viggle/Dijit/Nextguide, Sling Media, VUDU, Clicker, DivX, Rovi, Mediabolic, Boxee, and many other consumer technology companies. This blog represents his personal opinion and outlook on things.

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