With HBO’s announcement of an internet only service and Netflix’s earnings report coming in below expectations, I’ve started to think of the possible issue this could raise for Netflix down the road. Now that HBO, CBS, WWE, and Lion’s Gate are going to offer internet only services it will be a more attractive proposition for other networks to offer internet only service as well. What does this mean for Netflix, a lot more competition and more restrictions on content for Netflix.
Of course this is a good thing for we the consumer, increased competition means price wars and constantly trying to put out better content than your competitor. What is so bad about that? Well that could very well price Netflix out of the market leaving the consumers with the network and studio owned distribution networks, who could then do what the cable companies do now and agree to high prices for service since we the consumers have no alternative at that point.
While I’m happy to see more challenges to the traditional cable company, I also see what could happen further down the road, take out Netflix and other 3rd part distributors of your content and then you can start charging what ever you want for your service. For example take a look at the current those of us in the United States face with the cable monopoly, the vast majority of consumers have no real choice when it comes to cable providers and since they are one in the same ISPs. This is a result of the government stepping in and mandating that cable companies have monopolies in their respective markets thereby making the need to provide better service and lower prices nonexistent.
This is the nightmare scenario we could face as consumers is there is no alternative way to consume the content that these networks put out. So yes while I’m happy that more networks and content producers are going to online distribution, I also worry about how they could take over and monopolize the market forcing people to either pay outrageous prices or pirate the content.