Monday, March 28, 2011

Netflix Encourages Cord Shaving

My kids are encouraging me to drop our premium services for Netflix. Maybe because we cycle through the on demand list and find little for them to watch, maybe because there is so much buzz about Netflix. And Netflix continues to aggressively build up its content to effectively compete with HBO, Showtime,and others. "Movie rental company Netflix Inc is close to an agreement with Miramax to stream the studio's library in a deal that would be worth 'well north of' $100 million over five years, according to a source familiar with the deal. Miramax's more than 700 titles include hits such as 'Pulp Fiction' and 'Good Will Hunting.'"

And here is the kicker, it is cheaper to get a Netflix subscription then cable premium networks. So it is actually in the family's best financial interest to make the move. So how can Netflix make such aggressive distribution deals. For one, they don't have to share their revenue with a cable provider. And the more content they acquire, the more value to the customer. That means more subscribers to the service and more revenue coming in.

The premium channels have one ace up their sleeve - original content. Starz has Camelot, Showtime has Dexter, HBO has the upcoming Game of Thrones. For viewers passionate for this content, cord shaving is unlikely. For those willing to wait a year for the shows to move to DVD, Netflix will be there. Oh wait, Netflix has original content, too. So that Ace may only be a deuce.

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