It occurs to me, it is somewhat ironic to post this just one day before Netflix publishes Marvel’s latest addition to their cinematic universe, The Defenders. (you may expect a review forthcoming!) But what can I say? I get thoughts, and I write them, and I publish. And, in a strange way, perhaps it’s appropriate or even poetic to time this with the release of such an anticipated title.
In short: I am starting to wonder about the future of Netflix, and of online streaming in general. I see some indicators which make me worry about the medium as a whole and, even more, what our experience with it as consumers will be.
Obviously, I need to back up a bit and cover some ground here, to explain my concerns.
The internet is, at its root, just a medium for exchanging information, of every variety. Anything you can name, you can probably find it on the internet. Part of this is, quite simply, how freely information can flow when distance is no barrier. YouTube, Wikipedia, Facebook, these are international phenomena when it comes to sharing information freely. The success of Amazon is due entirely to how it facilitates an exchange of money for a wide variety of goods. It made all the sense in the world for someone to get the idea of assembling a digital library of movies and television shows, everything from beloved classics to the latest hits, and granting access to the whole of it in exchange for a monthly fee.
I don’t know if Netflix was the first to do that, but they’re certainly the most famous for it. They are to online streaming what Blockbuster was to video rentals not so long ago. Unfortunately for Blockbuster, they failed to adapt at a critical juncture and the company went under. And unfortunately for Netflix, they may well go the same way.
That might be a bold statement, but it was once unbelievable for Blockbuster and a number of other businesses to shut down. Any business, any of them, can go under. In the case of Netflix, I can see a number of troubles they’ve been having, are having, or are soon to have, and they come for two particular reasons: increased competition and some ill-advised business decisions.
Or perhaps it should be just one reason, some ill-advised business decisions right when competition is increasing so much.
Going over the business decisions, with two or three brief examples:
1) Netflix was rather famous when it increased its rates. If memory serves correctly, they basically took their service, which allowed for either streaming or DVD rental of any title in their library, and divided it. They began charging for online streaming or physical rentals separately, each at the same price as before. In effect, to get the same service, customers now had to pay double the price. Though it may have remained less expensive than other options, customers were none too pleased.
It might have made more sense for Netflix to instead offer three options: one for renting, one for streaming, and a third which combined them, not double the price of the first two options. Then customers who only wanted one option or the other could choose, and those who wanted both would have paid more, yes, but would have felt less cheated by it. In this way, Netflix could have raised profits while losing fewer paying customers.
2) Netflix is also bungling their approach to anime distribution. This link here goes into the details of that and how they can address it, but the summary is: they need to adapt their approach.
People may like binging their shows, but they also like watching them while they come out, week after week. Releasing an anime title when its already ended is a sure way to not keep customers’ attention, and thus their continuing support, because, hey, we’ve just barely finished watching it, and now there’s something new to watch, so why would we immediately go back and binge it?
If Netflix really wants to compete in the anime market, and make money at it, they need to do more than just release the titles all at once. They need to cater to what their customers want: to watch it as soon as possible.
3) This, I confess, is more due to the rumor mill than confirmed fact. If anyone has more information to either confirm or deny this, I would be most grateful. According to the rumor, Netflix has some outstanding debts weighing down on it. Call me an alarmist, but twenty billion owed is foreboding enough to make anyone question its future.
Now, one of those examples applies to Netflix internally, but two of those apply to the customers. Thing is, however Netflix has treated its customers, it’s the biggest name in online streaming services. So long as the pros outweigh the cons, they have nothing to worry about.
Which is why they should really be worried about offering a better product than the competition. Perhaps they actually realize this, as they have been trying new things. Anime, for instance. If they just alter their approach slightly, they could satisfy more of their customers. And, another great idea: creating their own exclusive content. Surely, something that phenomenal and revolutionary would guarantee their customers’ continued support, yes?
Except that the competition is doing the same.
And there’s more competition than you might think. This article explains a few options, including some I didn’t think of. Myself, I thought of…
There’s Hulu, of course, probably the second most famous of online streaming websites. Like Netflix, they are a video-on-demand subscription service, with a library of movies and television shows. Basically, they offer a near-identical service, including exclusive content, and at a comparable, perhaps even lesser, cost.
There’s Amazon, which sells ownership of a digital copy of whatever title, that can be watched on their website, on an individual basis. There’s certainly appeal there, not paying for anything you might not be using at the time, but if one makes enough purchases, they might prefer the monthly subscription idea instead.
There’s even YouTube, with their YouTube Red service, creating original content exclusive to them.
Disney and DC are both launching their own streaming services, not only including classic content but also new content they’ll have exclusive rights to. Which, having these two launch their own services, and take titles away from Netflix, not good for Netflix.
Even Netflix’s anime library is threatened by competition with Crunchyroll and Funimation.
Heck, VidAngel, the controversial video filtering service, only fails to compete properly with Netflix just because they’re not in the same weight class as all the rest.
And the list just goes on and on, including iTunes, HBO, Crackle, M-Go, even Google. Everyone’s getting in on this, because there is money to be made.
Which brings me away from the troubles of Netflix specifically and towards my concerns for online streaming itself as a medium, the main thrust of which can be summed up in just one question:
How many competitors did I just mention who are, explicitly, creating their own content?
I think it was Netflix’s idea, or maybe not, but either way, a number of streaming services are creating original movies and television shows which they can exclusively control access to. It’s smart, perhaps, but not quite smart enough. I am the first to promote competition, as much as possible, but I think there’s something all of these studio executives are missing.
Pardon me for a small digression here.
As we’ve been entering the ongoing age of the internet, we’ve been enjoying the benefits of online streaming over raw television, but now we’re starting to experience the real cost.
See, the TV, with cable or satellite or whatever, has offered us, for decades, a library that practically has no limit. We’ve been able to shift between genres, between networks, between sports, cartoons, love stories, nature shows, history networks, cooking programs, and whatever else, all with the press of a button.
That is very much part of how televisions became so prolific in the first place, because of the sheer volume and variety it offered. This is why it was profitable for studios to produce so many shows, and why it was profitable for companies to buy airtime for their commercials. Much as we all hate them, advertisements are how all the shows we know and love were paid for, which saved us having to pay for all of them on our own.
It was the great alignment of all the relevant powers that be that made television succeed, and that is why online streaming has been such a success thus far, because it reaped those benefits to share with us online. Netflix’s success has been due, in no small part, to how it collected diverse content for us to enjoy. It was even easier than changing channels, we could just search for anything we wanted to watch and watch it. It took the experience of watching television and brought it to the computer screen, where we could personalize it.
But now we have all these big names carving pieces of the internet out for themselves. As more and more studios create exclusive content, we can’t just change the channel to enjoy it all. It takes more than the push of a button, it takes an additional charge to our bank account. At a time when the economy, in every corner of the world, is seriously in trouble, that is less and less of a good idea. Force people to choose sides, and they may well side against you. If we have to choose between one studio or the other, eventually every studio will suffer for it, alongside their shrinking customer base.
Success was found on television because a multitude of studios were able to share the medium, instead of tearing it apart. If they mean to succeed in the long term online, I would highly recommend they find some way of duplicating that. If, for whatever reason, they don’t want to continue with Netflix, then they need to find some other way of sharing the medium again.
Myself, just spit-balling, I am imagining a service where the major studios themselves offer their content all in one place. Perhaps they bring in advertisements again, no more than one per interruption, or no more than fifteen seconds long if there are multiple commercials, but either way, they find a compromise which allows them to imitate the benefits of television and offer a lower price that customers are willing to pay for the collective library. Or maybe the provide an option where customers can select what content they are interested in paying for, either a higher price for everything, or a lower price for singular favorites to suit their needs, thus allowing the studios to control access to their exclusive content and keeping competition alive and well, while also avoiding a harmful demand that the customer choose between their content and that of other studios.
Anyway, I’m pretty much just rambling at this point, so I’ll end it here with a question:
What do you think? Am I crazy and worrying over nothing, or am I on to something here?
I think that customers won’t subscribe if they don’t get the content they want…and not even exclusive shows will be enough of a draw because none of those streaming services can produce new content every week.
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Exactly so, good point.
This is such an exciting time in terms of how consumers access content. Lot’s of competitors and models coming out and like most industries, after awhile the successful ones will consume the others and you’ll be left with the ones that either outdid or outlasted the others. The problem being that some of the competition has started with an unfair advantage of having massive funds from other parts of their business and can afford to ignore consumers and still stay profitable until the other, smaller, businesses are forced out of the market.
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