Netflix Continues to Surprise

Not long ago, perhaps a little over a year, it seemed like Netflix was a bit lost, disconnected from consumers and beaten up by major content providers like WB and HBO. It was tough times for the best-known name in streaming video. (Read about it here and here.) But that was then. This is now. And Netflix is back…and stronger than ever. Netflix has made some interesting headlines this week, opening negotiations with cable providers to deliver the service through their set-top boxes and signing a deal with Sony for development of a new series. The first move is a savvy one for both Netflix and for cable providers. It potentially bringing Netflix closer to the mainstream and lowers the barrier to entry for the nearly 75M households in the US that still DON’T get Netflix for one reason or another. Hoping to add to the 25M subscribers who are already on board, bringing Netflix to cable company boxes provides greater access to these uncommitted viewers. At the same time, as the WSJ points out,

…broadband, not video, is the source of cable’s future growth. Netflix is one of the top sources of U.S. Internet traffic and a primary reason that consumers pay up for faster speeds. An app on the cable box will make it easier for existing pay-TV customers, many of whom already subscribe to Netflix, to watch while keeping them on cable.

Kind of a “if you can’t beat ’em” strategy which actually is a move to counter cord cutting. Perhaps those relentless courtroom victories by Aereo have something to do with this new flexibility by the cable overlords? The development deal with Sony moves the Netflix original programming team from the “annoying upstart” category to the “savvy player who know how Hollywood really works”. Hollywood is a clubby place and a deal like this signals to agents, talent and producers that Netflix is not out to blow up the foundations of the entertainment industry, just redecorate a little (or maybe a lot, depending on your POV). As noted before, I’ve been a fan of Netflix and their “never have to darken the door of another crappy video store again” business model. I couldn’t be happier to see that they’re innovating and building new business models all the way to the bank. What does this mean for other streaming brands? It definitely raises the bar of what it means to be in the streaming video business. It keeps Netflix’s competitors busy catching up, rather than moving ahead. I suspect you’ll see similar moves by Hulu, Vudu, Redbox and others within the year. I’m making a note to check in.