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Netflix has a big problem.
As it gradually shifts its operations towards more instant, on-demand video streaming of movies and TV shows subscribers want, some well-connected studios and distributors have a vested interest in stopping Netflix in its tracks.
Among the most threatened is Time Warner’s HBO, which has watched premium movie channel subscriptions erode for years as consumers dump pay-TV for lower cable bills and Netflix subscriptions. For up to five dollars less than what cable systems charge for HBO, Netflix customers get access to unlimited video streaming and can still check out one movie at a time on traditional DVDs.
Netflix is slowly evolving their business towards streaming and away from costly and labor-intensive DVD rentals-by-mail. Customers enjoy the instant access to programming — no waiting for the mail or getting on a waiting list for popular titles. Netflix does not have to pay ever-increasing postage rates either, or replace lost or damaged DVDs.
But for Netflix streaming to succeed, the company needs agreements with content producers — Hollywood studios and distributors — for so-called “streaming rights.”
One contract wins the right to obtain and rent out the physical DVD’s, which Netflix has had no problem in obtaining… eventually. But another, separate agreement is needed win the rights to stream movies or TV show over the Internet.
So far, most of Netflix’s streaming agreements cover older movies and TV shows that have already found their way to Hulu or have been run to death on premium movie channels. Anyone for Big, Fast Times at Ridgemont High, or Class Action? These are all listed by Netflix as “new releases.”
Now Netflix wants to expand their library to include additional titles and they’ve run into a roadblock – HBO.
The premium movie channel controls streaming rights not just for its own programming, but also for Warner Bros., 20th Century Fox, and Universal. Those three movie studios produce an enormous amount of movies and television shows, and without being able to contract streaming licenses, Netflix may be in big trouble.
HBO's Go service streams HBO movies, specials, and series to "authenticated" HBO subscribers
HBO intends to keep those shows, as well as its own, exclusively for itself and its cable and telco-TV partners. As part of the TV Everywhere concept, HBO will dramatically expand its own streaming movie service — HBO Go, currently only available to authenticated Comcast and Verizon FiOS HBO subscribers. Everyone else can forget about it.
The pay television industry — cable, satellite, and telco-TV, is more than happy to accommodate HBO sticking it to Netflix. HBO Go could help sustain the premium movie channel and sell more subscriptions.
The video war means that Netflix will be in the DVD rental-by-mail service for years to come, if only to serve up movies and TV shows from those three studios. More likely, however, is that Netflix will find a partner to help return fire — denying HBO access to movies controlled by Netflix.
Ultimately, consumers are likely to follow the content. If Netflix controls it, consumers will sign up for that service. If the cable industry controls it, they’ll be forced to keep their cable subscriptions. It’s a high stakes game either way.
Other stories of interest:
- Netflix to Launch Unlimited Streaming for Canadians Stuck With Limited Broadband
- Reviewing HBO Go – Bored to Death: Restrictions Limit Experience to Watching Shows You’ve Probably Already Seen
- Netflix Starts Wii Video Streaming, Prepares for Potential Reality of Five-Day Mail Delivery
- TV Everywhere Not Even Free to Cable Subscribers?
- One in Eight Americans Will Drop Cable/Pay Television by 2011: It’s Too Expensive
And they wonder why people download TV shows and movies illegally. This kind of thinking by HBO and others, really disturbs me. Ohh well, here’s to hoping they get screwed because of crap like this.
Way to continue and limit your customer base, HBO. Why would I subscribe to a service if I can’t watch the shows?
Dodo bird media
Hmmm… News like this only encourages me to download HBO content via illegal means. I’m a subscriber now, but may have to change. My friends and I talk about how we like HBO, but that they charge too much. I would gladly pat $5 for their main channel. Yet I’m forced to pay $12 a month for all 9 channels. I don’t need all those HBO channels!
Also keep in mind usage caps is another method of attacking Netflix. That certainly is one of the things Time Warner had in mind when trying to force usage caps last year in select markets.
More and more I’m being turned off by your partisan views. I’m all for the fight against abusive corporations, but HBO makes money thru subscriptions, and I don’t really see a problem with them preventing people that don’t pay for their service to have their product. HBO is just a division of Time Warner, and in corporate America, if a division doesn’t make money, it’s shut down.
A great example is Sirius satellite radio. I’m prevented from hearing any of their exclusive programming unless I purchase a radio unit and a subscription. That seems fair, doesn’t it? Nobody is complaining that they don’t offer a free simulcast online.
If I want to see an HBO series, I can always watch them when they’re released on physical DVD thru other means besides Netflix. I don’t fault HBO for protecting their business model, even how antiquated it might be.
I’m not a fan of paying the high prices of cable just to receive the 10 or so channels that I normally watch, but it seems like a campaign to get Verizon FIOS or another similar service to expand into Rochester will be the only real way for Time Warner to change their track record of horrible customer service and unfriendly business practices.
You make it sound like all of these corporations are out of line when they prevent their customers from accessing features unless they pay, that’s a huge stretch from fighting against usage caps and bringing awareness to net neutrality.
For the record CJ, I don’t object to the concept of TV Everywhere or even the HBO Go service. I am an HBO subscriber and if/when Time Warner Cable introduces it, I will be able to access it myself.
Here is what I object to:
1) ISPs complaining about network congestion from all of the online videos people are watching when they, themselves, are contributing to the “problem.”
2) ISPs using online video traffic as a justification for Internet Overcharging schemes like usage caps or consumption billing to protect their business model for cable TV.
I don’t have a problem with HBO Go being available exclusively to HBO subscribers, as long as users can access the content without having a usage cap slapped on them.
As you may have seen towards the end of my piece, I predict Netflix will find a deep pocketed partner and return fire with their own exclusivity arrangements, locking out HBO and the cable industry. That’s the price one pays for declaring war on competitors — they can return fire. Since I have both HBO and Netflix, I’m probably covered either way.
As long as the competition is on a level playing field, let the best company win.
For one, HBO does make money off of Netflix. Netflix doesn’t just stream their shows for free. Netflix buys the DVD’s and such so HBO does get something. So this argument that they have to make money is bull because they are.
Two, HBO and Movie Corporations are penalizing Netflix because they don’t like Netflix’s business model. But consumer’s want this business model. Blockbuster is nearly bankrupt so hope for brick and mortar stores is quickly fading. People want cheaper rentals so they are going to Redboxes or similar kiosks and Netflix either for physical rentals or for streaming, whichever suits them.
Rob don’t do it lower yourself to their level. Im sure you have a high moral
compass. I know your mad as hell most are but we can not get anybody
that can do anything about it. Your chances of getting caught are very small
but if they do your life is shot for ever. Not to mention all the bugs that come
from these places. Not every protection programs can catch everything.
Each gives you yet another option on what is safe and what is not. Hang
in there bud! They are starting to fight each other and that tells me they
are breaking up. Anybody could have seen that. You have to read the tea
leaves every day what is going on. If you are going to do it DON”T tell
anybody on a public web site just do it. FYI I made a few mistakes
in some of my postings and I will point out what I said and how I would
change the wording. Kind of tough when your fighting cancer and have
no idea if im going to win or loose that battle and morphine can get
your insides all messed up. I can take 8 a day but usually take 2 to 3 so
im not on a trip but it sure ruins my mood. So stay cool and have hope.
UK
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I called TWC and dropped all my premium channels yesterday… my PLG was up and it was just too expensive for the amount of time we watch those channels anyway… I asked if they had some kind of rebate or promo I could get and I was told NO.. Only thing the rep said that he would not want me to not have all the programing I had before… too bad.. drop the channels = $35.00 I can put to good use somewhere else… My new bill is $160 which includes RR with Turbo crap.. phone and hd cable with 1 hd dvr and 3 additional converter boxes… (old bill was 210 with taxes
)
I am still planning on dropping most of my Time Warner Cable package as well, including HBO and Cinemax. It’s not that I am watching everything online — I am spending most of my free time right here writing new content so I don’t have time for a lot of television.
The only show I watched on HBO was Bill Maher and the last movie I saw on a premium channel was last weekend — Harry Potter and the Chamber of Commerce (err… Half-Blooded Prince — I was envisioning Hogwarts being turned into an astroturf think tank for Big Telecom rate wizardry.). That shows how far behind I am with movies, and after 2 1/2 hours of teenage wizard angst, I wondered why I bothered.
Your other option, BTW, is to walk into the cable office with cable boxes in hand and say you want to cancel and see if they won’t then cough up a retention deal. If not, if you spent a week without, you may find they’ll give you a “welcome back” price. You might also find you don’t miss it as much as you thought.
[...] let’s keep our fingers crossed that HBO will have a change of heart about the proposed agreement. With Netflix on our iPhones, and not just our iPads anymore, that’s the last thing separating us [...]
[...] 3G blanket. Now let’s keep our fingers crossed that HBO will have a change of heart about the proposed agreement. With Netflix on our iPhones, and not just our iPads anymore, that’s the last thing separating us [...]
It sounds like congress needs to step in and require providers to sell rights to anyone that wants them.
We already have such laws for cable, satellite & radio. We need them to apply to the Internet.
This is clear restraint of trade problem that congress needs to fix!
HBO has no right to create a monopoly.
While its at it congress needs to give the sames rights to internet radio that over the air radio has for songs. The fees should be the same not higher.
HBO and other channels are a service, just like most other things in our world, you can choose to use them or not, its up to you. When you go to a movie theater do you tell the theater what you are going to pay or who else they have to let use thier theater or watch their movies, no, you pay your money go in a watch, it is pretty much the same when it comes to viewing shows in your home. Part of the reason HBO does what it does is because, 1 they have to be able to make money to run the bussiness, and 2 its their bussiness and they can do what they want. I like the fact that there are no commericals on channels like HBO and I love many of thier shows, the only thing I wish is that I could get HBOGO in canada, but until I can I dont care, I will simply wait, just like I would have to on many other non preimum channels. If you want to go ahead and drive HBO out of bussiness because they wont work with netflix, which btw, mostly has 2nd rate or old crap on it then go ahead and try, I would gladly keep paying them, even if they increased thier rates, if not for anything else but to piss people like several of you off, and as for writing so much content on websit comment areas that you cant watch tv, well lets just say that, that is more sad than if you didn’t have a socail life because you watch tv, or wait maybe its worse that you think that the entire world gives a crap about every thought you have.