Blender.com listed the music industry’s attempts to quash Napster as the greatest blunder in the recording industry’s history. The music industry found itself in a shifting business landscape that it did not understand and felt it couldn’t control. The knee-jerk reaction was to try to do everything in its power to stop online music distribution, including directly suing it’s customers. Freely available online music was a disruptive innovation and the existing model was no longer viable within a few years.
Online Video Following the Music Industry’s Mistakes?
Innovations in streaming technologies and increased consumer bandwidth have made high-definition streaming video freely available in a mainstream capacity. Many of the main television networks stream their most popular shows online, yet there’s still a lot missing. Netflix streams movies and TV shows, but doesn’t have recently-aired shows available. Hulu offers shows within days of their network TV appearance, but doesn’t allow it’s site to be viewed on the Playstation 3 and makes repeated attempts to block streaming on PVR platforms such as Boxee. Will we see the same sort of issues playing out in the online video market?
It is understandable that viewing the latest TV shows will require some sort of fee. I’m happy to watch the advertisements on Hulu or fox.com if I can watch the latest shows – In fact, it’s preferable to watching on the TV as there’s a countdown to tell you how much time is left in the advertisement. The quality is occasionally crappy, but I also don’t want the hassle of dealing with torrents to download shows or movies. So what’s the answer?
Netflix dominates DVD rental, obliterating the bricks-and-mortar rental stores which are increasingly turning into tanning salons. They also make their streaming movies available on XBox, PS3, and Nintendo Wii. One thing they’re missing is the real-time angle. They have streaming trailers for existing movies on the website, but not on the gaming platforms and not for forthcoming movies. They don’t have the latest TV shows as soon as they air, even though they’re available on the TV network’s own site. Why is this? My guess is iTunes. In-show advertising revenue just can’t compete with thousands of users paying directly for the content, so it’s not in the network’s interest to offer it via Netflix. I would also think that profit margins on new TV shows are far healthier than those on music content.
To remedy this, the networks could demand an extra fee from Netflix. I’d pay more for their service if I could get access to certain shows, but I’m certainly not willing to pay a three dollar per-episode price or anything close to it. I’d love to see figures on the overlap of people who regularly buy TV shows from iTunes who also have a monthly Netflix subscription. What percentage of purchasers pay more for individual shows than they do in Netflix subscription fees?
I can’t imagine Apple wanting to change the situation either, in fact judging by their recent behavior I’d be surprised if they didn’t get more aggressive in the video market. Recently there are allegations that they’re pressuring music labels to ditch Amazon. They’re lawsuit happy this year, also suing HTC for alleged patent infringement on the iPhone.