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Netflix or not flicks? How the flix will fall.

Tanner | Jun 15, 2011

NetflixIn May 2011 it was announced that, for the first time in 20 years, TV ownership in the United States had dropped. The Nielson Company reprted that the percentage of American households that own a set dropped from 98.9% to 96.7%. While this is not a huge drop percentage wise, and homes with TV’s still far outnumber homes without, this decrease in television ownership could signal major changes in the home entertainment industry. One reason for the decline in homes with TVs? Online sites and streaming services like Netflix which you can watch from your computer, or tablet. The other reason? Not being able to afford TV providers’ services. At less than the cost of one coffee a day, you can watch entire seasons of cable TV shows and cinema classics any time you want, from anywhere you want with Netflix. That’s a big shift from the standard cable or satellite TV service that averages about $60 every month, not including installation and hardware costs, and the fact that if you want to enjoy it, you pretty much have to be plopped in front of your television. Consumers are happy with not only the lower cost that Netflix is available at, but also the amount and quality of the content they provide. Recently Netflix announced that they now have about 23 million subscribers, making them the largest video service in the country. The massive number of people actively paying Netflix to watch their favorite show or hollywood flick is unprecedented. Netflix is now bordering on overtaking some of the largest hollywood studios and, more importantly, competing TV service providers like Comcast and DISH. With a massive influx of shows and movies, documentaries and indie films, Netflix can’t lose now, right? While some of the most successful entertainment service providers from history have merely been aggregators of content, just like Netflix, what many of us are overlooking is the service’s reliance on studios and other companies to continuously provide the service with content. The battle raging right now, behind the lines, is not between Netflix and other service providers, the battle is between the service providers and the content creators. Studios like J.J. Abrams Bad Robot, Paramount Pictures, and even FOX, all stand to decide where services like Netflix, Hulu or even cable TV stand over the next few years. All they need to do is ask for the right number on a big check and suddenly the competing service loses the valuable content people are paying for. Are you following me on this? Right now it appears that Netflix is on the short end of the stick when it comes to gaining and keeping entertainment for viewers. Showtime, a big studio providing hit series to broadcasting services, is speculatively not going to renew their contract with Netflix this summer. Even bigger, more popular, entertainment studios are cutting the cord as well. A quick Google search on the topic of Netflix losing content demonstrates the fragile nature that the service provider is currently resting in. As a subscriber, my hands are completely tied, and so are yours. Netflix is a great service, but they just don’t have the right backing or infrastructure to keep going when the other service providers start knocking on the door of studios. But maybe I’m off base here. Maybe the future of Netflix rests in their ability to create original series and increase the costs for consumers, so they can continue to write the big checks and stay afloat. What do you think? Is Netflix doomed as it currently stands? What does the future hold for streaming services anyway?


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