Netflix, bundling, and the future of video

2013-05-05 2 min read

    Something that’s been stuck in my head is the relationship between Netflix and bundling. On one hand, we’ve been wishing that cable came unbundled so we’d be able to just pay for the shows we want to watch. On the other hand, we have Netflix which is striving to let us stream every TV show and movie whenever and wherever we want. Why don’t we care that Netflix is actually a bundled product?

    I’m sure the major reason is that it’s just not worth worrying about since Netflix is only $7.99 a month; especially when cable TV bills can easily go past $100. Maybe we like the new shows that are exclusive to Netflix (House of Cards, Hemlock Grove, and Arrested Development) and are happy to pay for them; the rest of the content available on Netflix is just an added benefit. Maybe we just don’t view Netflix as being a bundled service at all: the reason I have Netflix is to be able to watch anything I want when I want.

    I wonder about the reasons because it helps me think about the future:

    • Does Netflix want to be the central repository of all video content that can be accessed at any time? What happens when the existing content producers keep raising licensing fees to extract as much as they can?
    • Does Netflix want to focus on producing its own content? Is it just a TV channel with a unique distribution channel and monetization approach? Does this mean that we’ll start seeing competing TV show/movie producers creating their own Netflix like service? How easy will it be for consumers to find this content if it’s heavily fragmented?
    • Will the future consist of niche shows and movies? Kickstarter has been used to raise money for the Veronica Mars movie as well as Zach Braff’s “Wish I was here.” Will we just have thousands of shows that are just supported by small groups of passionate fans?

    I suspect we’ll see a combined approach. Mass market won’t be going away since we all want to stand around the water cooler and chat about the latest episodes but we will start having more and more shows and movies that are catered to our interests and passions. This specialization has been happening throughout the 20th century to our physical products and it’s going to extend to the emotional ones. I don’t know whether it’ll be Netflix, Kickstarter, or some unknown company that’ll make it happen but I do believe it’s inevitable.

    Disclosure: I own Netflix stock.