Opinion: Subscription Video Services Like Netflix Must Evolve to Avoid Irrelevance

Sections: Streaming, Video

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All the major cable companies are creating their own streaming services. Verizon is into Redbox, Comcast has their in-house solution, Dish has Blockbuster, and more are on the way. Once those services have a large — and diverse enough — catalog, jumping ship to another provider, especially once that gets discounted and bundled with your cable, is going to look mighty appealing for a lot more customers.

Attempting to ward off this looming shadow is Netflix, who is trying to become a premium cable network that exists online by snagging first-run Disney movies, commissioning new episodes of cancelled shows, and buying new ones before HBO can. But what if you think Arrested Development is horribly unfunny? Or you’re just not into the latest dark political thriller? Aside from those exclusives, there are fewer and fewer reasons to let Netflix keep auto-billing you each month. The biggest problem all streaming services have is that they don’t own the content they show — think about how many times a movie you’ve been wanting to watch suddenly disappeared from your Netflix queue — and it’s going to be a long time before the company can amass the kind of rock-solid catalog of exclusives to enable it to stand on its own two feet.

The biggest complaint about Netflix streaming is that they don’t have enough new releases, but what do you honestly expect for $7.99 a month? Sure, they’re going to score Avengers and Hunger Games through their Epix deal — a few months after they hit cable –but in order to remain independent  and not get eaten up by the likes of Microsoft or Amazon, Netflix has to evolve, which may necessitate a move to tiered pricing models.

I’m less confident about Hulu, whose ties to Fox, Disney, and Universal are probably going to choke it in the long run as their TV focus and continued insistence on ads are going to continue to limit their opportunities for expansion.

What about online rental? Why isn’t Netflix saying, “You can’t stream the latest blockbuster video release right now, but you can rent it for $4.95″? The streaming rental model is one that works well for Amazon Instant Video, and certainly for iTunes, and it’s one that Netflix desperately needs to tap into.

Or maybe the company needs to consider adding even more expensive subscription tiers that would allow customers to purchase more expensive content? $12.95 a month would probably pay for a lot of newer independent films, and they could even offer VOD rentals cheaper the higher you go. Why isn’t Netflix plugging into UltraViolet, which would let them sell movies as much as a month early?

HBO infamously said that Netflix would have to charge $19.99 a month (with the $12 going to them) to get access to its catalog of shows, and I’m sure that’s right. But while Netflix is probably never going to be able to get access to The Sopranos, why give up on HBO altogether? What about weekly shows like Real Time, which lose their worth to HBO the Monday after first broadcast, in exchange for picking up a piece of the production cost?

I’m sure that the bigwigs are have looked at many of these ideas, and maybe even considered them, but it’s pretty obvious that they’re pouring all their efforts into developing content they own. I’m worried that by the time they realize how hard it’s going to be to amass a mountain of compelling exclusives, it’s going to be too late. Just as in nature, diversity is what leads to strength, and the bigger genetic pool of content Netflix can get its hands, the better for competition and innovation.

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