This morning I received a rather sad sounding email from my buddy Reed Hastings. I haven’t mentioned him before, but he’s the co-founder and current CEO of Netflix, a movie service that’s near and dear to my heart. Over the past few months he’s had some issues with his business, with pricing changes and contract negotiations irritating a lot of people. I just wanted to take some time right now and write a few things in defense of Reed, and a few worries I have as well.
First off, splitting off the DVD service into its own company isn’t a huge surprise if you’ve been following Netflix in the news. Buying all those DVDs, storing, and shipping them eats a huge amount into Netflix’s profits, way more than hosting a server farm does. So eventually getting streaming rights to new releases and doing away with the DVDs was a long term goal of Netflix. I used that phrase long-term though, and as we can see now, long term for Netflix is kind of a rushed decision for the rest of us. My only qualms with this change happening now are the name and the amount of separation. Qwikster is kind of a silly name, and the fact that it rhymes with Friendster doesn’t inspire a huge amount of confidence. And having it be its own website, so I’ll have to go to Netflix and Qwikster to manage each queue, is going to be pretty annoying starting out. Who knows, maybe they’ll have some synergy between them where you can jump back and forth, but at this point we really don’t know.
In regards to the price increase, it makes sense as well. When Netflix first started, no one at the movie or TV studios understood how valuable streaming would become. Now that all those initially cheap contracts are expiring, Netflix’s costs are rising dramatically for streaming as they sign more expensive contracts to keep rights to the shows and movies we’ve all been watching. And that’s when the studios even permit them to pay more to keep the rights. Starz straight up said “tough shit” and cancelled their contract, so all those nice Starz Play movies are going to be gone pretty shortly. This seems rather rude since Netflix likely would have given them a ton of money to keep them, but maybe they want to try their hand at their own streaming service.
That’s the nightmare scenario we’re looking at right now, which video games are already dealing with with Nintendo, Sony, and Microsoft. Someday soon we may have to have a Netflix account, and Hulu Plus account, and accounts to all the different networks to watch all the shows we love, and that’s if we don’t decide to just pirate them. And if we can’t afford all the different streaming services? Then you have to pick and choose what you want to watch. The best we can hope for is stratified contracts, where Hulu or Netflix gets a show first, and the other service gets it on a delay. At least then we can have the show on both services. In the dream scenario, however, Netflix will just pay to get streaming rights to everything as the movie studios and television studios realize DVDs are going the way of VHS, and we’ll have to pay $15 or so a month to stream everything. We can’t know if that will work out though since there are currently too many players, but all I can recommend is an old adage from a popular work of fiction: “Don’t Panic.”
John Hackert is a columnist who isn’t too busy to visit multiple websites.
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