FL Digital

Netflix, the premier streaming video service that has changed the way we watch movies at home seems, now appears to be primed for a major tumble off the top of the home video mountain.  This is both unfortunate, and inevitable, since all good things must come to an end.  (Well, actually, no they mustn’t, but dangerous and poor choices can lead a company in that direction quickly enough.  Netflix right now is a prime example.)

Remember less than 10 years ago when, if you wanted to watch a movie at home, you either had to buy a copy or pick one up at a rental store like Blockbuster Video?  Blockbuster is still going strong, but many of the smaller mom and pop video rental stores have closed their doors for good, thanks in no small part to Netflix.  When Netflix came along, people found an inexpensive way to rend unlimited DVDs per month via mail.  Later, they could opt for a streaming and disc combo deal that allowed 1 DVD and unlimited streaming for a competitive price (not that there was any competition back then.  At all.)  Those days seem long ago to us now, but this week seems to have brought years of progress to a shuttering halt.

What, exactly, is all the controversy about? For starters, Netflix customers are changing from the  disc shipping services to  all digital streaming options in massive numbers. You would think that this would create a situation where Netflix’s costs would take a dive.  With mostly streaming-only subscribers, they should be raking in a lot of profits at high margins, right?

Not necessarily.

Netflix had signed contracts with a lot of content providers that are now 4 years old and due for renewal, and the prices they will have to pay are now wildly higher than they were.  And the Netflix libary isn’t that impressive, especially when compared with rapidly growing competitors like Amazon and Apple TV.

No wonder so many people are upset with Netflix right now.  Charging more for a service that has always cost a lot less isn’t good PR.  Not when there are so many rising competitors for the first time in the streaming content industry.