Ironically, just as we changed our Netflix service from 3-discs-at-a-time to 1-at-a-time, intending to watch more Netflix streaming, the Netflix streaming service collapsed. We’re able to see our instant queue on the Roku box, but pressing the button to start a video running does nothing.
The service has been down a couple of days now, with no word on when it will be back. I called Netflix tech support Monday evening, thinking perhaps the problem was on our end but their automated attendant announced that they were experiencing streaming problems and working to fix them. I’ve no idea how widespread the problem is.
I like that Netflix keeps the cost of their streaming service low, but I think they’re keeping it too low. Hastings says that Netflix isn’t in competition with cable TV, which is a battle he knows he can’t win, at least for now. But people commonly pay $75/month or more for cable TV service, and Netflix charges only $8/month for streaming. I think they could bump that to $20/month or even $30/month without scaring the cable TV companies too badly, and without losing many subscribers. In fact, they’d probably gain subscribers, because that extra revenue would allow them to buy rights to a lot more streaming content.
With about 30 million subscribers, I suspect that at $30/month Netflix could buy streaming rights to nearly everything they now carry on DVD, with the possible exception of current seasons of a few popular TV shows. At close to a billion dollars a month in revenue, Netflix would become an 80o-pound gorilla. They’d have the clout to negotiate streaming rights for just about any content. Just as important, they’d have the clout to buy enough legislators and judges to prevent broadband companies from throttling their customers.
Eventually, Netflix could introduce tiers. For another $30/month, for example, Netflix could offer several channels of live sports, which is the Holy Grail for a streaming service. They’re also in an ideal position to offer pay-per-view events and first-run movies, and they could introduce a purchase option as well. I suspect all of this is on Hastings’ to-do list, and I suspect we’ll see the first signs of these new Netflix offerings by 2012.
I have no doubt that Hastings’ real goal is to become the content provider of choice, turning the cable companies into providers of dumb pipes. Hastings denies this, of course, because he’s still vulnerable to cable companies. But the cable companies are fully aware of the threat, and doing everything they can to nip it in the bud. I’m betting on Hastings.
