Netflix Gets It

October 24, 2010

Here’s one Marc Cuban post that I almost totally agree with. I don’t care for the cable companies’ / studios’ heavy handed game of locking away content and trying to extract dollars at every turn (as with Hulu) – but I can definitely see where the incentive is. Cuban calls it “found money” – as in, video delivered over the Internet is a brand new revenue stream. Netflix pays money to secure rights for its Watch Instantly service.

The cable companies have basically had a “closed” subscription-based business model – pay for play – that’s worked phenomenally well for the past few decades (as Steve Jobs says, “open” doesn’t always win). The average citizen is literally, hooked on cable – seeing it as a necessary monthly expense, equivalent to electricity or water. And the cable companies / studios will naturally explore other paid business models before the open ones.┬áLucky for the cable companies / studios, Netflix has done a lot of the groundwork for them. Customers pay a monthly fee for video on demand.

In retrospect, Netflix has done some really smart things over the years:

Netflix is basically doing a lot of the work the cable companies / studios should have done. They are increasingly, best positioned to bring about my oft-dreamed of “digital video nirvana.”