Tuesday, November 22, 2011
Is Netflix headed for disaster? Maybe, but not for the reasons you think.
No one reads anymore, apparently. Recent articles about problems at Netflix are met with a chorus of ignorant comments from readers, who say things like, "Well, management got greedy!"
The reason Netflix is having troubles has nothing to do with "Greedy Management".
Simply stated, they had a sweetheart licensing deal because no one thought that streaming movies online would take off. It did, and now the studios and STARZ all want their share of the pie.
The STARZ license was a giveaway. STARZ had a pay-per-view contract with the studios that was not really being worked very well. For $180 Million - a pittance in the movie business - they gave Netflix a license to their entire portfolio. That license expired in September and the movies will stop streaming from STARZ in January.
The studios themselves are rethinking their licensing terms, as on-line streaming goes from a niche market to mainstream, nearly overnight. The party is over, because people are realizing there is a "there" there.
This is not the fault of Netflix, but of the content providers, who think that watching re-runs of old movies is worth billions of dollars.
I'll go back to DVD rentals before I pay that much, though. Watching movies or old TV shows is not like oxygen - I don't need this to live or breath. I can do without media content - and do better as a result.
Netflix was fun while it lasted! So was Vonage.
I wish Netflix the best, but I suspect that they will get elbowed out by the big boys, now that they see meat on the bone.