Netflix has always been a vocal company when it comes to competition and the media industry, previously saying Amazon was no match for Netflix’s role in content and never will be.
They have released another document outlining the future of TV, content management and how Netflix will play a powerful role in the future. They also announced a switch from Silverlight to HTML5 media format a week ago.
With the company recently announcing $1 billion in revenue and 33 million active subscribers, they should have good reason to think Netflix will have a role in the future of TV, with more subscribers than HBO.
Netflix’s role
The traditional TV model is outdated in Netflix’s view and the new way to view content is through a curated list of on demand shows and movies.
There are major problems with Netflix’s model currently – this includes the fact no partnership has been made to release new seasons and movies on Netflix until months after the first showing on a cable network or at the cinema.
As we move from the classic cable TV and cinema model for movies and TV content, we expect to start to see bigger deals being made by content owners and Netflix.
Netflix is still bogged down in content deals, paying out almost $2 billion to content owners. This is slimming as Netflix looks to original content as a way of keeping subscribers on the service.
It is very possible Netflix can see their future being entwined with a lot of other content makers, who use Netflix as their primary viewing service.
Imagine instead of an episode every week, a full season is added in a day to the service and you can watch these shows at your leisure.
There is still a long way to go, Netflix could look to make a model secure enough to bring in profits but a content list large enough to surpass some cable services, like HBO.
Internet TV dominance
Internet TV is still in its early stages, content owners still want their movies and seasons premiered and viewed on the TV or at a cinema, not online.
This could be partly due to the idea many Hollywood giants have about the Internet. Piracy and corruption has made the movie and TV industry sink into a hole, but they still manage to make tons of money.
Netflix’s role and other companies are now paving the way for partnerships between the content owners and the Internet. Users want access to the newest movies and TV programs now, the Internet TV model allows users to view the content whenever they want.
Internet TV still has some problems, including the fact streaming needs a fast Internet connection. Internet connections over 20mbps normally suffice for a 480/720p stream, but for people looking for a beautiful movie on their big 1080p TV, it may take faster speeds.
Currently the US and many other countries suffer from lacklustre broadband speeds, with Google Fiber and other ISP’s really paving the way for more innovation in this industry, but it is only slowly coming to different states.
On demand content vs. scheduled content
The real question is what is better, the on demand content currently curated by Netflix for viewers to watch, or the scheduled and dated content on cable TV.
Right now, publishers, rights owners and content makers seem to find the old way to be the more profitable. The audience for a premium cable group like HBO is the same as Netflix now.
However, it is how the program gains money – with Netflix, it is per-stream payment, whereas for the cable TV it is payment from advertisements and subscription.
This means while the content on the cable service will get a big influx of cash, the long term streaming effort may be more successful for the content owners.
In that respect, Netflix may be a little better, although the best content is always new and original. Only certain shows last the test of time.
User demand seems to be favouring Netflix at the moment, but if premium cable services expand into the Internet, it may be fair game.
We cannot see the future of TV being as certain as Netflix predicts, we expect cable companies to mobilize onto the Internet in a larger force as cable becomes less used and Internet connections get faster.
