Netflix Ups the Ante on Streaming Video

If you’re looking for an online growth market, there are plenty of them – but one of the hottest these days seems to be digital streaming. With Facebook and Amazon both foraying into the space, the battle for over the transition of the traditional film and television audience to digital is just heating up. And the company with a lion’s share of traction, perhaps unsurprisingly, is Netflix.

Still known for the ubiquitous red envelope that transports a kazillion DVDs via traditional mail Netflix, unlike its ailing former arch rival Blockbuster, has done a remarkable job of re-engineering its business model to meet the new trend in digital technology. In an almost inconceivable piece of recent news reported by the website and then picked up by both the New York Times and the Wall Street Journal, Netflix is said to be bidding on an original television series called “House of Cards” which would star Kevin Spacey and be directed by David Fincher. Reports suggest the deal would be on the order of $100 million, but that figure is debatable.

But here’s the kicker. If Netflix does indeed acquire the show, part of the deal includes the right for Netflix to “distribute the series online before any other outlet carried it,” according to the Wall Street Journal. As the newspaper points out, this could be a game changer, because the streaming that Netflix currently provides is for the most part limited to “older studio movies and TV shows” rather than newer or original content. But, as the Journal says, “Increasingly though, the company has begun to boost its spending in deals with entertainment companies to secure Internet rights for films and television shows.” One such deal – about $1 billion over five years – gives Netflix access to Epix, a pay-TV channel.

At the end of 2010, Netflix had about 20 million subscribers and it is growing at a blistering pace. In fact, it is growing faster than TV pay channels HBO, Showtime, and Starz, reports the Journal.

Peter Kafka writes in his “MediaMemo” on All Things Digital that Netflix owns 61 percent of the digital movie market already. He says one third of new Netflix subscribers are signing up for the company’s digital-only option. Kafka adds,

“Meanwhile, Apple’s iTunes movie store, which sells and rents films on an a la carte basis, has yet to catch on as well as Steve Jobs would like. And if you’re going to rent a movie from the cable guys, it seems much more likely that you’ll rent a movie via cable, directly to your TV.”

Add to this the fact that Netflix streams over a variety of devices, including DVRs, game consoles, HDTV, streaming players and even Apple TV.

Admittedly, Netflix isn’t the only company making noise in this space. Another interesting development is the recent announcement by Warner Brothers that it would test renting the film “The Dark Knight” on Facebook, using Credits, Facebook’s virtual currency, for payment. Is this the beginning of a new phase for Facebook, already a destination for online videos, but now perhaps an emerging channel for movie rentals?

And consider YouTube’s recent experiment – launching the online-only feature film, “Girl Walks Into a Bar,” available for free viewing but surely a sign of paid things to come.  YouTube, in fact, which itself is owned by Google, acquired NextNewNetworks, which could make YouTube a player in the original content game. Google’s interest in streaming movies is already a given, as proven by the potential Google-Miramax deal I wrote about last November. And let’s not forget about Amazon, Hulu, and a host of other players – even new ones, like Fandor, an online movie service that just launched, ostensibly to compete with Netflix, but focusing on independent films typically not carried by Netflix.

A constant flow of new devices – more powerful smartphones and tablets in particular – just adds fuel to the fire. If ever there was a market that’s sizzling right now, it’s digital streaming.




About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

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