Netflix (NASDAQ: NFLX) has been a runaway success for the last few years, but its CEO Reed Hastings admitted there is one threat that always loomed over the SVOD service: TV Everywhere. However, the pay-TV industry's inability to capitalize on its technology meant that operators and distributors have failed to be "relevant for the Internet" as over-the-top providers bloom.
Hastings spoke in response to a question from BTIG Research analyst Rich Greenfield at the Dealbook Conference 2015, about how the media and entertainment industry should be strategizing when it comes to selling content to Netflix and its biggest competitor, Amazon.
"I would invest more in TV Everywhere," Hastings said without hesitating. "And Jeff Bewkes pioneered that idea seven, maybe eight years ago and has been trying to drive it. The challenge in the industry [is] it's very fragmented, between the cable networks and distributors, and so it's really tough to work well together to extend the ecosystem."
Regardless of that fragmentation, Netflix has remained wary of TVE, he said.
"And so we've always been most scared of TVE as the fundamental threat -- that is, you get all this incredible content that the ecosystem presents now on demand for your same 80 dollars a month. And yet the inability of that ecosystem to execute on that for a variety of reasons has been troubling," Hasting said.
He added that while independent networks like HBO and Showtime have been able to get out in front with an OTT, direct-to-consumer offering thanks to their more straightforward business models, operators and distributors as a whole needs to get their TV Everywhere act together.
"The big system has to figure out TV Everywhere to get relevant for the Internet," he said.
TV Everywhere was introduced with much fanfare just over five years ago. But the technology gained ground at a snail's pace, even as over-the-top services like Netflix and Hulu began overtaking traditional distributors in terms of available content and ease of access.
Why hasn't TV Everywhere taken off? A number of factors have come into play, but as a recent FierceCable feature illustrated, there are clear reasons for why the service has stuttered for most cable and satellite operators. Content creators were slow to come around to TVE's potential, while the fiercely entrenched pay-TV industry refused to talk to each other. The broadcast market, meanwhile, is also fragmented, with hundreds of local stations as well as the major networks all bringing their own complexities to the distribution game. That whole media and entertainment stew made negotiating initial TVE rights something of a nightmare.
Add to that the complexities of delivering TVE content to various end devices -- from in-home set top boxes to mobile devices like smartphones and tablets -- and pay-TV, which moves slowly on tech in the best of times, was perhaps destined to fumble to debut of TV Everywhere.
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