It’s not often that I disagree with Tim Lee, so let me relish this. I think Netflix is being smart! Or at least not-that-unwise. Tim casts his argument in terms of movie availability, and from that perspective he’s probably right: the DVD-only Qwikster (or however you spell it) might have a bit less leverage in amassing movie libraries than the currently-unified Netflix (then again, it might not; as far as I know Netflix has only committed to splitting its brand and customer base; the two entities might still sit together at the bargaining table).
But I think this fails to recognize the ambition of Netflix’s plans. They’re not competing with Blockbuster, or Redbox, or jeez, who is even in the movie rental business anymore? They’re now competing with DirecTV and Comcast, first by agreeing to sell consumers video content by the ounce instead of the unwieldy, one-size-fits-all sacks of the stuff that the cable companies insist upon. Second, I imagine they’ll begin riding the inevitable logic of a la carte pricing to its conclusion, making more deals with both marquee and low-cost cable channels, allowing customers to add that pre-time-shifted content to their lineups for a couple of bucks a month. Netflix is also pursuing original programming, establishing itself not only as a cheaper, higher-tech and more convenient disintermediating marketplace for television, but as an exclusive provider of certain high-esteem shows (imagine if they do manage to land an exclusive on one Mad Men-style success…).
To Netflix customers who mostly think of the service as a way to get movies, I can understand why today’s move seems dumb. But as someone who mostly thinks of the service as a way to watch television shows, it makes perfect sense. And of course I’m delighted to see a business/tech innovation achieve what the cable/satellite market and federal regulation could not: a la carte programming and the consignment of cable network operators to a bulk-bandwidth-vending fate (I’ve been saying for a while that the natural monopoly implied by the physical realities of cable systems means that they ought to wind up as utilities, every bit as boring and regulated as the water company; I think the net neutrality fight is best understood as the death throes of an industry that, understandably, doesn’t want to be in a commodity business).
I think that this shift means that your Netflix bill will inevitably get more complicated as new option plans are made available. That by itself is a pretty good reason for isolating the DVD-by-mail side of things; those customers want different things, and the situation was already getting confusing. And I think the move really will free the company to concentrate more on the streaming product (I expect that they’ll soon be pushing for more uniformity in the interfaces to the service that various integrated media solutions provide, for instance). The poisonous rage of the network operators that carry those streaming products’ bits remains a real threat, but if Comcast & co. can be successfully coaxed into a gentle senescence, I think the future of a net-only Netflix is bright.
INCIDENTALLY: I think all of this can be understood as a huge indictment of Apple. Not that iTunes hasn’t been a big success, but they’re retreating from the rental/streaming market. They never quite managed to move past thinking of the service as a content-supplier/”we have legal content!” validator for Apple hardware products, nor to meaningfully relax their quality standards (well, except for the iTunes software, of course) in order to compete for the market segment Netflix pursued. It’s ludicrous that new receivers don’t come with big “iTunes-ready!” stickers on it; that stereo equipment manufacturers have to play catch-up, begging Apple to let them provide iPod support. It’s flat-out insane that Airplay is a closed standard, its proprietary nature used to help prop up a consumer router business. A fucking consumer router business! If ever there was a market you wouldn’t want to be in… At any rate, it’s a reminder that even Apple misses occasional opportunities. And note that I say all this as a mostly-satisfied Apple TV owner. They settled for a lucrative niche when entertainment industry world domination was within their grasp.
well, except for the iTunes software, of course
I read that parenthetical as a sort of captcha to prevent me from posting Zune spam
[...] a rare opportunityno, seriously, cable TV is terribleMatt pointed me to this post, by Matt Rognlie, as an argument [...]