Netflix, once the sleepy little DVD service, is now competing with Apple’s iTunes Store, Amazon and Cable and Satellite companies. Forget the DVD’s. Netflix is winning the streaming video business with 20 million subscribers–52% higher today than September, 2009. Meanwhile, Amazon is feverishly partnering with Microsoft and Sony to stream videos to game consoles.
Why the Cable and Satellite TV Model is Dying
Think about it. Why would TV viewers pay Comcast, Time Warner, Directv and Dish Network $80-$100 per month to deliver 300 simultaneous video channels when they’re only watching one channel at a time? O.k., the kids are watching their stuff in the next room; so that’s 2-3 channels.
Why would anyone commit to a two-year contract for a DVR to record programs on a hard disk when they are easily streamed over the Internet? The Netflix/Roku Video Player provides on-demand content. And why should subscribers pay for electricity to keep DVR hard disks spinning 24 hours a day to record a show at 3 a.m.?
Cable and Satellite companies have two counter-arguments: local television channel availability and mucho channels, including HBO and other premium content. Yet HBO subscriptions have dropped dramatically in the past year. And most television stations stream their programming on the Internet already. With an Apple TV and computer, viewers can watch television programs on their HD TV’s streamed from a home network computer.
Meanwhile my Roku Video Player delivers hundreds of online channels, including network television news programs. Plus Netflix and Amazon offer hundreds of free and paid channels.
Why Internet TV Programs are Like Smartphone Apps
After thinking about smartphone app stores and cable/satellite television, I’m convinced the app store model is better. Smartphone apps are free or low cost from the iTunes store Android Market or BlackBerry App Store. You buy desired content and services for considerably less than cable or satellite program packages.
The Inevitability of Metered Broadband Internet
You probably don’t want to read this, but it’s clear from FCC statements, the Comcast/L3/Netflix case and wireless carriers with limited bandwidth that metered broadband plans–wired and wireless–are coming. And when you consider that by 2015 90% of all Internet traffic will be streaming video, paying for bandwidth is reasonable.
Rather than rationing broadband, which conflicts with Net Neutrality, charging more for Internet and mobile Web usage makes sense. After all, if you’re a video junkie, gobbling up 10 gigs of bandwidth per month, you should pay more, just as others who use less than 1 gig should pay less. It’s similar to utility companies: you pay for the amount of electricity, gas and water used.
The Future of Streaming Video
If you’re worried that video content will become unaffordable, don’t. Just as creme rises to the top of milk, quality video channels and services will win viewers at reasonable charges. Competition in the rapidly expanding Internet content world will keep prices competitive.
I envision a new age of democratized media on the Internet. The wheat will separate from the chaff. You’ll have competitive pricing and bundled content choices. And traditional media will adapt to emerging new media.