Netflix, Vudu, Amazon, HBO (and now HBO Go), Starz, Cinemax, Dish Network (with their shiny new acquisition of Blockbuster), Hulu, iTunes and the others who will crop up are all offering some type of video content as you might have guessed. Now when you look at all the studios who own content, tv shows, movies, all of it, that makes for quite the nubmer of outlets.
This is great right? More options, competition and price wars will help drive the price down for users right? The answer could be more complex than meets the eye. As content becomes more attractive to services, the content owners can charge a higher price. Will this make the price of the individual services go up? I say that’s doubtful. There is too much competition and too many alternatives to any single service for that to happen.
However, what does seem to be happening is that as one provider snags a deal with a content provider, another provider is doing the same. For example, Netflix just inked a deal with DreamWorks while Amazon has a freshly minted deal with Fox that they are touting. Now, this is awesome! So many new streaming options…if you own both services. If not, do you purchase both, one, neither and keep cable? What is the best option?
I think this is where things get hairy. This streaming model is still very new. There are a lot of unanswered questions floating around. Now, what would be negative, in my opinion, is for the streaming industry to become so large with so many providers that to gain access to the content that you want, you end up paying the same prices that cable companies are currently charging. How can this be avoided?
There are a few likely scenarios. The most obvious is that people willjust select the content that they want and purchase the services that have the most of that. That’s where cable falls terribly short. You have little to no choice. Second, I believe that eventually traditional premium cable outlets, namely HBO, will start offering their HBO Go service as a standalone item. This will prompt similar moves from other premium content providers. Are there a hundred reasons why this would not happen? Yes. However it is almost impossible to deny that that is where the industry is heading via market demands.
Next, there will be a sifting out of the major players in the industry. Currently DirecTV, Dish Network, Comcast, Time Warner, regional cable companies, Netflix, Hulu, Vudu, iTunes and Amazon are all converging in a way that they are all becoming competitors of each other. We won’t discuss delivery options such as Google TV, Apple TV, Xbox 360, traditional computers etc. and how that could impact the playing field (which it could - significantly). You can already see this happening in Netflix’s recent drastic changes and in Amazon’s sweeping moves into the market. Will Netflix go under? This is unlikely, but some changes must happen.
The end game of this as I see it could be as follows. Each network will go independent. ESPN, Disney, Food Network, USA, National Geographic, AMC, Fox, etc will all begin to offer packages for streaming purchase. You want the “ESPN Package” with everything that ESPN has to offer - it’s yours for $5 a month. You want the Disney package? Same deal. Want both - $7 a month. Oh, now there is an interesting caveat. I think that a significant barrier to this type of a la carte available comes from the fact that lots of the cable networks are owned by parent companies who do not want to see their less lucrative networks left out in the cold. However, with bundled pricing and strict a la carte options available, this could be avoided.
Will cable companies still have a place in this scenario? Of course. Some people want all the options and in that case cable might turn out to be cheaper. It may not, but it could, especially if they restructure their pricing to stay competitive. Also, networks would see subscriber rates jump, I believe, as people who are interested in niche shows or networks can now access that specific content without shelling out $100+ dollars a month. You want the DIY network and USA only? Go for it. That would cost you probably $40 - $60 a month today. I’m not saying that most people only watch two or three channels, but I am suggesting that if you think about the TV that you watch (or really that I watch and the people I have spoken to watch) that you are looking at 5-7 channels regularly (excluding broadcast networks).
Only time will tell how far off base or how close this is to what eventually occurs, but I would like to think that it’s pretty darn close. Whatever is best for the consumer is hopefully what happens, and clearly that does not have to come at the expense of businesses making profits…quite the contrary if you look closely.