You should read this CNET story about how Hollywood is beginning to conspire against Netflix.

Hollywood film executives want you to know that they are not at war with Netflix or the Internet.
Some of them told me over the past week that they have every intention to continue to distribute films and TV shows over the Web and at attractive prices to boot. They plan to provide viewers with a multitude of ways to access Internet content: on Web-connected handhelds and TVs, video game consoles, and iPads.
Only, don’t ask them to do all this at the expense of the long-term health of their business. The general feeling with the studio executives I spoke with is that they cannot and will not throw in with Netflix and imperil other more lucrative revenue streams, such as pay TV or traditional broadcast services. They don’t believe it is a forgone conclusion the Internet will become the dominant means of video distribution or that Netflix has already conquered the category.

Another of Hollywood’s digital revenue streams was announced today, as Warner Brothers made it possible to rent The Dark Knight on Facebook for 30 Facebook credits, which is $3 in adult money.

The music industry nearly died of piracy until iTunes came along and proved it was possible to sell digital music cheaply and easily to people. Will Hollywood kill Netflix and other middlemen, as Gizmodo is theorizing, just so they can try to bilk viewers out of $3 a pop for rentals on a variety of different platforms? People are paying to use Netflix. It’s easy and simple. Nobody is going to want to track down one of the myriad ways to legitimately rent a movie on an a la carte basis (especially if the first step involves finding out which movie studio owns the movie so you can rent it directly from them). People will turn to piracy instead, and then we’re back to square one.

7 replies on “Hollywood Really Wants to Figure Out How That Goose Is Laying Those Eggs”

  1. Yep. When monopolies exist so do black markets. They fucked up by fighting with Napster and killing it rather than co-opting it and creating iTunes before Apple. Same short-sightedness here. The old industry is dead. Time to change. It’s not a question of maintaining profits vs reducing profits. Its’ a question of reducing profits vs not making profits.

  2. A while back, I would have said, “you online types grossly overestimate the average person’s willingness/ability to pirate movies, so I disagree that people will ‘turn to piracy.'”

    Lately, I’m seeing a lot of people I wouldn’t have expected being as breezy about pirating and sharing pirated copies of movies as people of my exact generation were 12 years or so with music and Napster.

    Hollywood will go to where the money is, and as Netflix grows and grows, their negotiating position just gets stronger and stronger, and their revenues will allow them to bite off bigger and bigger chunks of desired content. If they aren’t already, it is simply a matter of time before Netflix does for video what iTunes did for audio.

    Prediction: if Netlfix finds a way to livestream HD sports flawlessly, that will be beginning of the endgame with cable TV.

  3. Does anyone know what the revenue model is for studios licensing content to Netflix? Is it sustainable in the long-run (ignoring, for the moment, other factors…like shuttering smaller divisions in favor of pumping money into franchises)?

    iTunes is currently too expensive (I think it’s $3.99 for 24-hours), but I see no reason why that model of pay-per-view isn’t the best option for studios. I use (and love) Netflix, but I don’t see why the two models can’t co-exist. I go to Netflix Watch-Instantly for documentaries, newer foreign films, older TV show (Larry Sanders!), and classics, but I don’t expect to find new, popular movies.

    If a service like iTunes, or Facebook, or Mubi can offer fast, high-quality, streaming for about what we were paying for video rentals–and can make paying quick and efficient–that doesn’t seem so bad to me. I guess I’m just asking: What is preventing iTunes from becoming the iTunes of video?

    Of course I’d rather pay my $15 to Netflix and be able to watch everything that’s ever been made, but that doesn’t seem very realistic.

    @CC, Agreed wholeheartedly about livestreaming HD sports. It’s the only reason cable is even a consideration for me.

  5. What I find interesting is that they’re not even acknowledging that the internet itself is a competitive entity at this point. 15 years ago people “consumed” most at home entertainment through television. Now, streaming video for news and other entertainment are readily and freely available through the internet itself. In 1995 I would get home and turn on the TV, now I get home and turn on my computer. Netflix doesn’t even factor in until 9 PM or so.

    But I agree with the SLOGtownie, people will turn to piracy before going to more expensive models. I mean, “Oh boy. How ya gonna keep ’em down on the farm once they’ve seen Karl Hungus?” Failing piracy, through some massive effort on the parts of government/corporations to truly criminalize, I think current/future generations are more likely to just abandon the content traditional cable/movies provide altogether. It’s not like much of it is any good anymore.

    What I’d like to see is independent networks turning to the internet for subscription fees. I fantasize about choosing between channels I actually enjoy and directly negotiating with them on price. Cable companies are middle men – the internet can meet their purpose without having to do retrofits to city infrastructure to lay cable (other than internet cable upgrades, until we all get wireless). I would like nothing more than to completely cut out cable providers and only subscribe to “channels” I wish to patronize for on-demand TV.

    Sorry. I typed too much. OCD on this topic.

  7. @tk, exactly. Suddenly I want one. That just made the AppleTV totally relevant. They just need to add MLS and I’m good.

    The ESPN service available on the X-Box looks cool, but I haven’t tried it since I don’t have one. Hoping it comes to the PS3.

Comments are closed.