The Thing People Don't Get: Episode 27
The media gets sucked into The New Thing in technology all the time. This year, it’s internet video delivery.
Technology doesn’t change consumer habits. New ideas that use tech can… but only if the consumer wanted it but didn’t know it or didn’t think it was possible before.
No one – NO ONE – cares how the video is delivered, so long as it looks good and gets there when it’s wanted.
Internet delivery is not a threat to cable/satellite… it is a threat to cable/satellite not having to make much of an effort because in every market they have a monopoly.
The content is the content is the content. When consumers realize, for instance, that they are paying Starz twice to see Disney movies – once through their cable company and once through Netflix – it isn’t HBO that will get turned off, it’s one of the two ways they are paying for Starz. Of course, the wet dream is that people will pay for both. People, once the bloom is off the rose, will not.
The threat to cable/satellite is obstinacy… same as it was/is to Traditional Media. If the financial model changes – and it probably is in the early stages of doing so – it still doesn’t matter to people how they get what they want. They want it where they want it… and they want to pay the least possible amount to have it.
Everyone who keeps pushing VOD seems to forget that PPV has never been a smash hit. Denial is not healthy.
Netflix Streaming and Hulu are new products… which are endangered by trying to be competitive with the old products.
Conversely, old products like cable/satellite, could commit suicide by trying to emulate the new products. Eventually, the right to control streaming will be sold as a separate item in an deals. When that worm turns, cable/satellite could find itself as the low bidder, having changed the value proposition people see in their product. And whoever is the high bidder will be in danger of going bankrupt, overpaying for rights that cannot be monetized at the level of the fees without significant price hikes…. for things people might like, but mostly don’t need.
“No one – NO ONE – cares how the video is delivered, so long as it looks good and gets there when it’s wanted.”
Thats not true in my opinion. Consumers care about two things: how much it costs and how convenient it is to access the content. So I agree with you about turning off netflix rather than paying for Starz and netflix, or vice versa, because its a cost issue, but it is not about how it looks.
And people pushing VOD are pushing it because its growing. I dont see companies out there trying to throw packaged goods away – not even Magnolia or IFC. They still go to Block and Netflix and beg for huge support on titles like Centurion or Killer Inside Me because they cost a ton to acquire and VOD doesnt pay for it all. But VOD is liked because VOD is growing, and everyone wants to play in that sandbox.
My problem with the current state of VOD . . . or at least the VOD that is being offered up by Magnolia and IFC right now . . . is that they’re charging a premium to see films early that are *exactly* the type of films I’m most willing to wait until they come out on DVD.
Why pay $9.99 to stream something like REC2 over VOD when Magnolia has already waited so long to release it? I’ve got to be a prime consumer for this title (love foreign horror, loved the 1st REC) but I’m more than happy to wait another couple months and just rent the DVD from Netflix.
REC 2 is a bad example only because Magnolia doesnt have dvd rights in the US – Sony does. Magnolia just like the film enough to carve out theatrical and VOD rights from Sony who had no interest in exploiting those rights.
I thought Sony had WW rights on all the REC films, but E1 is releasing them in the UK.
But your point is still valid.
Netflix will have something if they start offering 1080p streaming at a low price. The streaming HD now doesn’t look too bad, but it looks nothing like the HD offered by VUDU, though I’ll be damned if I will spend $6 or more to rent a title in HD when I can rent the Bluray from Netflix of a video store at cheaper prices.
Good points here. We’re actually canceling Showtime because we can watch all the shows via Netflix and HBO doesn’t offer squat so, switcheroo. I also LOVE VOD-particularly the IFC/Same Day as Theaters offerings- because we have a 2 year old and getting out to see movies in theaters is a major pain.
DP- you’re also missing the area of illegal downloading and all the new devices (you can DL free) that have DVD burning tools AND ways you can stream films you illegally download to your PS3. A friend told me the quality of DVD ripped movies is crystal clear.
If it wasn’t for Dexter I’d have no interest in Showtime. They air a movie worth watching maybe once a month.
i have noticed among friends of mine in their twenties, a growing abandonment of cable in favor of netflix streaming. i helped a friend set up a wireless network at her house so she could watch Netflix on her Wii.
She sent me a text that said “Thanks. Changed my life”.
There are people like me who have cable, HBO, Showtime, and streaming Netflix. But i’m a media whore. I think slowly you will see people abandoning pricey cable for streaming services as they become more viable.
personally, i find myself getting away from needing to see stuff the moment it comes out. this has become true for movies, video games, and dvd releases. This doesn’t apply as much to movies anymore since second run theaters are all but gone, but prices drop so significantly. Why buy a 59.99 video game when i know in 6 months it will be 29.99 or less. Why buy the Blu Ray when it comes out for 25 bucks. It’s going to be 10 bucks at some point.
I guess what im saying is, streaming content works for some people because they dont care about ‘the new’. i know so many people who watch their content on netflix. even tv shows. they’ve given us so many options, at some point a growing percentage of the market is going to take the lowest priced option with the most content. that is Netflix.
As television ratings plummet, you begin to realize what an impact it has taken on the other forms of media. Imagine a significant portion of the market watching advertisement free content. How does that affect that new kids movie coming out, or the big blockbuster that can’t get eyeballs on their ads because you’ve got a quarter of the market watching ad free streaming movies and television.
It’s kind of funny, because on streaming netflix i pick content based on talent. I’ll watch I’ll Sleep When I’m Dead of Croupier because my wife loves Clive Owen. Or i’ll watch The Following because it’s Christopher Nolan. Hype free content selection.
The danger of streaming is cannibalizing a significant portion of the market with ad free entertainment alternative.
Man, I miss the days of 1st & Ten and Not Necessarily the News…
They’ll all be back soon, Mut. HBO streaming is coming. And only another $10 a month. Disney is also launching their private streaming business.
And that’s the part of this I keep plowing away on and not seeing much anywhere else… We are a year or two away from being ABLE to replace cable… but cable will suddenly be looking like a bargain again as we buy a la carte.
It’s only then that the real correction takes place and serious competition begins. We are just now at the beginning of the streaming honeymoon period.
When Comcast moves to stream STARZ for its customers, along with all the other content, how does that change the value of the deal STARZ has with Netflix? If STARZ bans Comcast from streaming their channel, how does that change the value of their cable relatonship? And if Disney is going to sell exclusive early streams of all of their films, how does this change the financial implications of both of the other plays?
Anything/Anywhere is as significant for the content owner as it is for the consumer… more, really.
I was joking. I don’t watch any TV at all. Haven’t bothered with cable in about 14 years. I rent DVDs/steam movies from Netflix, that’s all.
BTW/ STARZ on Netflix has really shitty picture quality.
That’s stream not steam.
All I can say about this space is look out for Apple.
Talk about timely discussion…
You couldn’t be more wrong about VOD, Poland. As someone pointed out, it’s about convenience and VOD is the single biggest boon to my viewing habits since video recording arrived.
I’m no longer beholden to a viewing schedule that was frequently inconsistent: “Looking for this week’s House? Sorry, we ran it yesterday because tonight is this playoff game you have no interest in.” I also don’t have to program DVD recorders along with cable boxes – and then go read a book when something is being recorded that I’m an episode behind on.
Only problem right now is that the cable companies (Time Warner for us) act as if VOD is some treat they give us and have no responsibility to deliver faithfully. Which is a crock, as they advertise it and in the case of pay networks puts them in the territory of fraud by not delivering it consistently.
Time and time again, episodes fail to show up and I’m stuck waiting for one to finally arrive so I can catch up. Just last night I had to give up on one that aired 3 weeks ago and go find it online (yeah, there’s a habit you want consumers to get into. Ask the music biz how that turned out for them).
And forget trying to complain. You want to know the single biggest thing Netflix and redbox get right? Addressing complaints. I went to get a movie from one of the 4(!) redboxes that are within less than a 1/4 mile of my home and the system was down. I wrote an email letting them know and the next day came the reply with 2 free rentals to make up for my wasted time & gas.
It’s been a week since I asked HBO why their sister company Time Warner keeps dropping the ball and they haven’t even responded to say they are “reviewing your issues.”
It’s been apparent for 15 years that where we would end up is some hybrid of VOD/PPV and ad-sponsored packaging. Right now, they simply charge too much for shows ($3 for “Rubicon” – are you kidding me? I’d like to catch up, but I ain’t giving you $12 to do so).
But once they realize it’s about economies of scale and people will not think twice about paying 50 cent, the cable companies are toast. They’ll exist solely as utility that charges flat rates or by band-width. Apres Apple & Google TVs, le deluge. It’s only the beginning and you’d have to be naive to think that with 2 companies as big as these leading the way that this is going to fizzle out.
Sure that wasn’t a Freudian slip, mutinyco?
Those Netflix envelopes are very visible sticking out of your neighbor’s mail slot. And who’s going to notice an extra day here and there, right?
“But once they realize it’s about economies of scale and people will not think twice about paying 50 cent, the cable companies are toast. They’ll exist solely as utility that charges flat rates or by band-width.”
You’re assuming that the studios will happily kiss their reliable cable revenue goodbye. If the same kind of money isn’t there for VOD, they may not be so eager to distribute their content that way.
“You’re assuming that the studios will happily kiss their reliable cable revenue goodbye.”
No, they seem to be kicking and screaming their way into it, same as with VCRs. But what choice do they have? Either get ahead of the wave or get crushed with it. The biggest economic fuck-up since the Dutch tulip craze was how the music biz’s paranoia about online file sharing kept them from acting until it was too late.
The only way to get ahead of the curve on this is by making VOD so inexpensive that it doesn’t make sense to cheat the system. Why rip and burn a DVD (much less, buy a swap-meet bootleg) when it’s just a buck to get at the 7-11 redbox on your way home (after being able to reserve it online from work)?
But it isn’t one or the other situation. It’s been 60 years since television arrived, but newspapers still exist. Radio is still out there and has made Rush Limbaugh very rich. Somehow, with all the corporate owners I get the feeling they won’t have much trouble sussing out a model that works. Or have it thrust upon them.
Either way, this will happen. How many bodies are left in the aftermath is entirely up to them at this point.
look out for apple? they haven’t really capitalized on streaming video yet.
I haven’t bought cable my entire adult life. I’m with Anghus… unless it’s something I really want to own from Criterion, or a gift for someone else, eventually I can find what I’m looking for at used book/record stores (or even Target) for $10 or less.
I also still frequent a brick-and-mortar video store with outstanding curation/selection and a staff of movie buffs (who totally kicked our ass the one time we threw down with them in a film-trivia drinking game, aargh!), where I’m willing to support their endeavor by renting cable shows when they come out on DVD or anything else I’m interested in but don’t want to buy, or am interested in owning but haven’t seen in years (rule is: must rent first!).
Apple has Time Capsules with storage capacities in Terabytes, and AirTunes via AirPort Express… it’s just a matter of time before my need for cable is obviated completely. When all the Apple Geeks need is just one more $200 peripheral they plug into their HDTV that streams all the vid they want… the deluge, as aptly stated above.