Netflix's (Nasdaq: NFLX) decision to concentrate on content streaming has some of its legion of fans worried.
They see the Internet as an unreliable pipeline and then toss in an overblown but never paranoid fear that large carriers will somehow create find disruptive ways to thwart competition.
The whole debate on the worthiness of the Internet to carry Netflix's movies is silly. Hands down, today's Internet is reliable enough to carry whatever Netflix throws in its direction. The pipe is fatter than a sumo wrestler in training and more reliable than a Roy Halladay postseason appearance.
Worrying about the Internet as a transportation mode is nothing new. Many worried that the Internet wouldn't be able to handle voice traffic but today you can't tell the difference between voice-over-IP and constant bit rate. The Internet, as transport, is safe. For the most part the large carriers, too, are safe. They'd be committing their own version of suicide if they disrupted content coming from the competition over their pipes.
That doesn't mean Netflix is home free as a competitive service provider with a streamed product. If you really like Netflix and you really want to see it succeed, you should pay attention to its content sources. Yes, it has the cable operators worried that it might slice into their business, but that fear is tempered by the knowledge that Netflix holds a weak hand.
Content ... belongs to people who really appreciate what it's worth.
Content--let's call it by its real name, programming--belongs to people who really appreciate what it's worth. And while those same people--studios, broadcast networks, cable networks, et al--would not be averse to picking up a little spare change from the likes of Netflix or any of the other over-the-top providers, it's unlikely they'd do so at the risk of offending their cash cow service providers.
Cable, satellite and telco service providers groan a lot, kick and scream, pout like children and then cave in and pay the higher fees that programmers demand more often than skiers demand snow. The service providers are the only ones in the position to pay the demands because they can, in turn, charge them back to consumers who kick and scream and pout like children, then pay to watch American Idol over the local pay system rather than just putting up an antenna and demanding that the local Fox affiliate deliver a quality over-the-air signal.
When and how this unreasonable and unrealistic cycle will end has been the subject of more debate than the national economy. The charge-more-and charge-more-and-pay-more paradigm is running along smoothly with no sight in end.
For Netflix, or anyone else, who wants a piece of that programming but wants to be seen as the under-provider that goes below the price line to deliver only what consumers want at prices right out of the 1950s, something is missing: access to programmers who've been fattening up at the service provider table and are hardly ready to push back, wipe their mouths with the backs of their sleeves and offer Netflix a place at the table for a smaller entry fee.
Netflix can have access to the fastest pipe in the world, the most efficient distribution system ever devised, and the 21st Century business model to be envied by all. But without viable programming--now in the hands of the programmer-service provider duopoly--it's likely to be more of a telecommunications footnote than a whole chapter.
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