Posted in Marketing
6/12 2011

Why Netflix is an Incumbent Ready to be Disrupted

20111205-201558.jpgWhat’s not to love about Netflix – films and TV on-demand without ads, all for a low monthly rate? It’s the future of TV! So what if it doesn’t have the latest and greatest shows, it has enough to keep you entertained.

Moreover, how many people do you know who would be happy to pay double their Netflix subscription rate, especially for better content? Yep, I know a lot of people, especially up here in Canada where we’ve never had the DVD service. We get a lot of value from Netflix, and anecdotally a lot of my peer group of young, highly educated professionals, have cut their cable service.

So why would such a great product be disrupted? Well, they’re clearly market leaders and they’ve proved the model of offering shows by streaming. But if you’re a content producer would you prefer to sell your shows via Netflix, or would you prefer to offer them directly?

We’ve already seen this with CBC not offering new shows on Netflix, but directly from their iPad app; and the BBC offering shows via subscription through the iPlayer*. Here’s the thing, if content is offered directly by the producer, the producer has a lot more information on the audience. And that information and control is golden.

If you have a strong brand and strong content, you don’t need Netflix to distribute your content. After all, with today’s technology it’s easier and cheaper than ever to become a TV station. Compared with producing compelling content, distribution is easy.

So expect to see more providers trying to build a relationship with you (and bill you) directly; and see Netflix commission more and more of its own content in the medium-term future.

* The BBC’s iPlayer subscription is $8.99 a month. Compared with Netflix, that’s way too much. I think $4.99 would be more appropriate and at that price point, I wouldn’t hesitate.