[opendtv] Re: Netflix was the great disruptor. Will it now be disrupted?
- From: "Craig Birkmaier" <dmarc-noreply@xxxxxxxxxxxxx> (Redacted sender "brewmastercraig" for DMARC)
- To: opendtv@xxxxxxxxxxxxx
- Date: Thu, 19 Jul 2018 09:00:03 -0400
On Jul 18, 2018, at 9:11 PM, Manfredi (US), Albert E
<albert.e.manfredi@xxxxxxxxxx> wrote:
This was always predictable. First, because every growth curve ends up being
an S curve. And, because the TV content distribution model was bound to go to
the Internet, once the bandwidth issues were resolved. After all, let's not
forget that Netflix itself evolved its distribution model. It was shipping
out DVDs for many years, before it very cleverly decided to evolve into a
streaming company.
Yes, it was predictable that Netflix would hit a wall as it evolved into the
next HBO. And yes, it was predictable that content distribution would evolve to
embrace the anywhere, anytime model, enabled by Internet video streaming.
What was not predictable was the massive investments made to enable the
transformation of the early Internet from a simple message based IP based
service into the versatile network of networks that exist today. This
transformation was possible because of competition and the “hands-off” approach
to government regulation.
Netflix grew rapidly by providing access to the massive libraries of legacy
content that were being used to fill hundreds of MVPD channels with massive
numbers of commercials. It may be fair to say that the big content owners did
not understand what Netflix was doing - that they were more than happy to sell
this content to another customer.
But the content owners quickly came to realize that they finally had the
ability to bypass traditional distribution channels and sell direct to
consumers. To their credit, Netflix was able to leverage legacy content to
generate the ongoing revenue stream that is funding the original content that
will allow them to survive in the highly competitive market for high value
content.
The beauty of having this ubiquitous common carrier is exactly why Netflix
could pull off that evolution, and why many others can now follow suit. It's
called competition. Competition possible because this particular industry can
depend on Internet services to do *all* the heavy lifting. Not just for
sales, promotion, or as a store front, but for the whole business. **And**
competition possible only because the Internet has been a common carrier
service.
The internet has evolved from its early roots as a “common carrier service.” It
is now a network of diverse networks that service a range of devices that
leverage both fixed and wireless access to the servers that provide the
services. It is wrong to separate the network from the massive server farms
that deliver all forms of content to these devices.
It is also wrong to assume that “many others can now follow suit,” and leverage
the network to compete with Netflix, Google, Facebook, Amazon, Apple, et al. To
compete with these massive industry leaders will require massive investment in
infrastructure.
The server farms and edge servers needed to support a competitive video
streaming service will cost billions. Likewise, the high quality content needed
to attract subscribers to a streaming service will cost billions.
This is why we are seeing the companies with the resources to survive in the
highly competitive environment of the Internet moving to leverage existing
infrastructures and acquiring content to leverage.
The wireless telcos, who currently have the upper hand with wireless broadband,
are acquiring TV customers and content. AT&T is using the DirecTV acquisition,
and now Time Warner to support the critical mass needed to survive in the
streaming content business. Verizon is less aggressive, but has similar
aspirations.
The legacy content oligopoly is pulling back on licensing content to Netflix
and Amazon, and building the server infrastructure needed to compete with them.
And companies like Apple are starting to produce high quality content to
leverage their customers and infrastructure.
I don't think they are alone. I'd say for sure, what applies to Netflix also
applies to Sling TV, Hulu, ESPN, CBS All Access, the new portals Disney and
others have talked about, or any web portals used by companies whose business
is just TV/movie content distribution, supplemented by some amount of their
own original content. It should be possible for many such portals to coexist,
based on the exact mix of content that they offer.
“MANY” is the operative word here...
As in HOW MANY?
In the real world of competition, the marketplace tends to limit the number of
competitors. This may be especially important to an industry that is moving
away from advertising supported content to subscriptions. How many
subscriptions will the typical consumer support?
The logical answer is to evolve to an affordable pay-per-view model for
content. But the big competitors are not likely to embrace logic - they will
continue to promote bundling as a more cost effective alternative.
Of course, the clueless or corrupt crook we have as FCC Chairman would be
perfectly okay with your ISP deciding which of these portals your household
would have access to. He calls that "new business models." He thinks it would
be just dandy for the Internet to turn back the clock, and go to the same
gatekeeper model of legacy MVPDs. And he even has the brass to call that
"innovative."
Give it up Bert. Nobody is going to limit access to any other Internet service
- neutrality of access is firmly entrenched in Internet culture.
But competition WILL continue to promote the packaging (bundling) of services.
This is why everyone is moving to acquire assets that can be bundled - not just
TV content, but other services that people access via the Internet - music,
news, magazines, books, e-commerce, et al.
By the way...the MVPD business is far from dead...but it too is evolving thanks
to the Internet. I am finding that I am using Internet streaming in my new
truck nearly as often as the radio...
Sometimes to “listen to” MVPD programming; sometimes to listen to streaming
music; and sometimes to access streaming radio programming reliably when
traveling.
THe Internet is SO MUCH MORE than a common carrier...
For that you can thank the FCC for correcting the Obama Net Neutrality power
grab...
Regards
Craig
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts:
