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Search for the Tipping Point for Television
by Andrew McCaskey
When Online Trumps Cable and Satellite
The detailed story in Wired about the rise and strategy of Netflix points out some facts that are easy to misplace. First of all, since the company’s founding in the late 1990′s, there was never a business plan that was tied, exclusively to DVD delivery. In fact, the only reason that the company has survived is the Copyright doctrine of First Purchase rights – that anyone who purchases an item has the right to use or dispose of it as they see fit. And slipping it into red envelopes and the US Mail fits entirely within that rights bundle.
From the beginning, the vision of the company was providing video and entertainment choices to customers before they knew that they wanted the choice. Netflix was able to do this by harvesting the information from millions of transactions, identifying items that could also be recommended to other users.
Now, with some 10 million subscribers and a decision several years ago not to be in the hardware business (spinning off their player to Roku) their software is now embedded in millions of XBox, Tivo, Samsung TV’s and blue-ray players.
Meantime, the cable and satellite “choices” dwindle into more shopping channels, promos and religious infomercials.
When the balance tips, cable and satellite providers are going to have no one to blame – as they run for cover.
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