Imagine the kind of world that would exist if Netflix had all TV or movie content.
From a consumer standpoint, the value of Netflix subscriptions would be great. The cord-cutting the cable industry has been dreading would finally occur. The value of TV advertising would be absolutely obliterated. That’s scary to the people who get their paychecks from TV advertising. Now, TV ads don’t really affect me, because I don’t watch cable TV. I do have a Netflix streaming subscription though.
To me the TV consumer, the economics of a Netflix streaming subscriptions look like this:
Consumer loves TV shows and movies! –> Pays Netflix as a middleman to the content creators to access content, knowing that some money is flowing back to the content creators.
Netflix wants as much content as possible to attract the most customers. There’s a huge inflection point that Netflix hasn’t hit yet that will occur when Netflix has a certain percentage of “everything” that will make a $9/mo subscription too good an offer to refuse. That threshold percentage of “everything” is pretty darn high, and the studios are working to extract the highest amount of rent from their content collections as possible, playing buyers against each other with offers for exclusives. When the consumer wants to get one subscription for “everything,” whether that money flows through Netflix or Hulu, exclusives are a weapon used to break the business model that the industry is looking for. Just as copyright itself is a monopoly (you only have one place to go to beg for a license for TV show X), exclusive deals to one streaming service or another prolongs the monopolistic nature of content. You can’t just pay one subscription to get everything whenever you want it, because it’s split up piecemeal between several middlemen or left out completely.
The studios and broadcasters fight Netflix, frustratingly not realizing that Netflix is a big money middleman for a lot of people whose main desire is to pay money every month to have reliable access to these content collections. The customer doesn’t really care which company it is exactly that they’re paying, so long as they get broad enough access. People typically don’t subscribe to multiple services. Additionally, in the world that is developing, it is becoming a frustrating experience when you hear about a cool TV show or movie and it’s not available to watch instantly as soon as you get back to your computer or TV through the content service you pay for, whether that is cable, satellite, Amazon Prime, Hulu Plus, or Netflix. Other people watching and talking about something you can’t legally watch when you already are paying somebody to legally watch all-you-can-eat entertainment is annoying, and it makes you feel like you’re being cheated.
The thing that made me think about the fragmentation of the big streaming content silos is that I’ve been watching Netflix’s new original show House of Cards. Unlike some people, I didn’t finish it all in one major binge; I’m still less than halfway through the first 13-episode block. I’m a little disappointed that Netflix’s answer to the fragmentation of the “all content” their subscribers want is to make more content that will only be available through one subscription service, but I understand the motivation behind that decision. The show is good, and it adds value to my Netflix subscription, but I’m pretty sure I wouldn’t be happy about it if I had chosen to subscribe to Hulu Plus instead of Netflix.
There has been a lot of discussion floating around about Netflix’s strategy of releasing a whole season of their exclusive original content at once as opposed to once-a-week on a schedule (which allows more social anticipation and watercooler discussions, building buzz). The all-at once method definitely produces a different dynamic in the talk about the show. I have to actively avoid all discussions for another couple weeks until I’m done watching, and then maybe I’ll skip back and read some of the blog posts and discussions where people reviewed the whole season the same weekend it came out. It’s an interesting model, and it can make for some extra long addictive evenings in front of the screen. Especially because you only have 13 seconds to find your pause button before the next episode starts.
The all-at-once method is a good experiment to offer, but there’s probably a lot of room for a more traditional weekly schedule as well. Just as album “listening parties” before a release have taken the form of a simultaneous streaming webcast at a predetermined time, a TV show producer would have a lot of fun running simultaneous broadcasts (with an immediately following on-demand option available). Truly simultaneous across the whole country*, not split up by time zone either. Few TV channels have experimented with simultaneous release on both coasts to synchronize as much of the Twitter chatter as possible, but it’s an obvious evolution of TV, especially now that Twitter is turning to focus on the medium so attentively.
The truly bold thing about Netflix releasing the show all at once is that a whole season of brand new streaming tv is available free with a 30 day trial. They’re that confident about the utility of their service, that you’re likely to give them 9 bucks next month. By that time, you’ll probably have a bunch of other shows in your queue, waiting for you to have time for them. But the decision would be a no-brainer if Netflix had passed that special threshold approaching “all content.” Compare that to HBO’s strategy with Game of Thrones (as depicted in the Oatmeal comic above). It’s nice somebody’s being brave.
Broadcast and Cable TV, not to mention the movie studios, are tenaciously resisting the disruption that got to music first. Does that make it any more risky to resist “all content, in one place” for every year that passes, as more technology and cultural practice builds up demanding it? Netflix’s experimentation could help convince some more of the old school executives to be a bit braver, but if they resist what technology makes possible and consumers desire, they will weaken their businesses’ foundations and make it easier for the eventual disruption to get them.
*We won’t talk global release this time.