Thursday, December 2, 2010

Netflix vs Hulu

The battle for online content continues to intrigue us, both for cable companies offering access and those outside the cable cord. The two most mentioned are Hulu and Netflix. Hulu is a partnership of content companies while Netflix works alone. And Netflix is seeing an opportunity through streaming to be more than a DVD provider. In fact, the real play is access to current TV shows not yet on DVD. "The company is in talks with studios about gaining access to current episodes of primetime shows and is willing to pay between $70,000 and $100,000 per episode, according to a person familiar with the matter. Netflix had no comment."

For content creators and distributors, more platforms likely equates to more revenue. Fox and NBC can sell their networks to cable, sell their shows to Hulu through their partnership, and sell again to Netflix. And while some consumers may cut the cord to cable for broadband only, others may actually keep their cable cord and own a Netflix subscription. Dollars are spent and content companies get richer.

Except sometimes new distribution platform upsets an old one. As an example, look at the shortening of the windows from theatrical to DVD to on demand. Fear arises that monies from one platform will simply move over and that additional dollars will not be generated. Or worse, that profits will fall. For the TV market, a similar problem exists. "The studios that supply the networks with shows argue they own the streaming rights to in-season shows. But the broadcast networks that make a profit from repeats -- and stand to lose audiences, ad dollars and syndication revenue if viewers can see those same episodes on Netflix -- argue they control the rights." The rise of streaming can hurt syndication. Still as we have learned from change, the transition is never easy. But if you don't you risk the loss of the entire business model.

Streaming is here and there is nothing to stop it. Syndication has already been hurt by the rise of cable networks, but it still exists. Streaming will coincide with syndication, it will just alter the playing field a bit more.

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