No Longer Tiny, Netflix Gets Respect- And Creates Fear

After years as a bit player in entertainment, Netflix Inc. is being eyed for a new role by Hollywood: industry hulk.

The Silicon Valley company has successfully expanded its mail-order DVD rental service to delivering video online. Meantime, the rise of Internet-connected TVs and disc players means that Netflix's electronically streamed movies and TV shows are reaching living rooms, not just computers.All that poses a potential threat to the traditional way consumers watch movies and TV: cable, phone and satellite systems.

Netflix had 16.9 million subscribers at the end of September, up 52% from a year earlier. Meantime, over the past two quarters, the number of U.S. households that subscribe to cable and other paid TV services fell for the first time since the dawn of cable—by about 335,000 households out of about 100 million, according to data provider SNL Kagan.

Netflix's growth surge—at a time of weak DVD sales and increasingly fragmented TV audiences—prompts concern among movie and TV studios as well as other technology companies. One big worry is that the company could end up dominating the electronic distribution of movies and TV the way Apple Inc.'s iTunes Store dominates music.

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Viacom joins Google TV boycott

Viacom has confirmed that it is blocking all of its content on Google TV devices from Sony and Logitech. This includes programming from Viacom networks Comedy Central, MTV, VH1, Spike TV, BET, Nickelodeon and others.

So, Google TV may want its MTV, but finds the doors closed. Last Sunday, Google TV users first reported being unable to access the Viacom channels. With the move, Viacom joins the four major US networks ABC, CBS, NBC and Fox, as well as the Hulu Plus premium service, in the boycott of Google TV.

Last September, Google TV announced its first official content partners. Broadcasters such as Time Warner’s HBO and Turner Broadcasting and even CNBC, part of NBC Universal, were named as parties who made their programming available to the service.

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Best Buy Offers Free Google TV Setup Through Holidays

Hoping to make Google's TV-wrapped-in-the-Web technology less intimidating, Best Buy is offering free installation and setup through the holiday-shopping season to customers who purchase a Sony Internet TV or Blu-ray player powered by Google TV.

Google TV's proposition is to combine conventional TV with Web content, YouTube clips and other video, games and applications into "a single, seamless entertainment experience." The Internet search giant is working with media companies to let their content be access via Google TV -- including Turner Broadcasting System, HBO, CNBC, Netflix, Amazon.com and the National Basketball Association -- and also is in talks with broadcasters about enabling their content on the platform as well.

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Verizon expands its TV Everywhere offering to include Cinemax

Verizon FiOS TV customers are getting another piece of the TV Everywhere pie, with the company and HBO today announcing the launch of MAXGO.com, Internet access to Cinemax online video. The website gives FiOS subscribers unlimited access to Cinemax offerings from any Internet-connected computer at no additional charge.

Time for Starz and Netflix to shine

Digitization of media is rapidly changing the interaction between media companies and consumers. As recently as 2006, ABC was accused of being a heretic when it started to release full episodes of its primetime TV shows online for free. Today, the practice is ALMOST mainstream.

Media companies realize (some just a little bit faster than others) that digitization and prevalence of inexpensive broadband (at least in the US, and I do use term "inexpensive" loosely) has given consumers options. Media companies have also realized that consumers with options can’t be easily herded to a specific time (such as primetime) or medium (such as a TV channel or a destination site). Today, consumers no longer have to chase the media. It is the media that has to chase the consumers and present itself to them wherever, whenever and however CONSUMERS want it.

The latest testament to this trend is the deal that Starz announced with Netflix. Starz would make its Starz Play service available as part of the Netflix’ “Watch Instantly” feature. This deal makes the service available to Netflix’ 8.4 million users (as of Q2 2008). It is a bold move for Starz and jives well its overall goal: to make its content available to any consumer on any device. By comparison, the other major premium content player – HBO – has been dragging its feet. Its HBO on Demand service is only available to current HBO TV subscribers, only available in one market (in Wisconsin) and is only available on PC.

It is understandable that HBO is trying to protect its valuable user base, but in terms of next generation of distribution strategy, Starz is designing a new concept car while HBO is pimping its horse and buggy.

The move is also a shot-in-the-arm for Netflix. Securing rights to digital distribution of premium content is a single biggest roadblock to Netflix’ success. With the Starz deal in place, Netflix can now add 1,000 more titles to its 12,000-title “Watch Now” library with another 1,500 titles that would be added by the end of the year. Netflix also bundles Starz content into its all-inclusive, $8.99-per-month service tier**, creating potential to upsell existing customers and augmenting allure for new ones.

**STARZ-only service tier is also available through Netflix for $7.99/month