4GM: Consoles, consoles, consoles & Netflix

A little scattered as I'm, you know, running a goddam television show. But the major points are in here for you to criticize and argue over:

British satellite TV network BSkyB is cutting a deal with Microsoft to have their content available on the XBox 360:

Rapid TV News understands that the long-awaited link up between BSkyB and Microsoft’s X-Box is at last going to happen. Full details will be announced tomorrow (Friday, May 29). The unveiling "Experience the Vision' press event will explain more..

... However, providing some sort of BSkyB functionality for Microsoft X-Box/360 users could potentially deliver millions more users in the UK and Ireland to BSkyB.

Do I get a Nikki Finke "Toldja" here? Four years ago I started discussing the idea that American's have an "entertainment space." For too many Americans, the computer is a box in that room over there, and the TV is where I play my games and watch my shows -- and the console got into that "entertainment space" first. Apple had an early lead with its iTunes/studio integration, but bobbled it badly by selling a crippled box. Turns out that while we require our music players to do very little but play music, we demand our video box do a bunch o'stuff. Like play games. And any format of entertainment we might care to toss at it. And bring us shiny new free shows that are, in fact, legally free, on another data stream.

Recent surveys -- whee, actual data -- seem to support the idea that "viewing" habits as we understand them are not evolving radically:

In a nationwide survey of 1,250 broadband households and separate sample group of 250 teens aged 12 to 17, Leichtman found that only 8% of respondents watch repurposed TV shows online, compared with 24% who watch news clips, 20% who view user-generated clips on YouTube and 15% who watch sports news or highlights.

"While online video usage is growing, it is shortsighted to think of this primarily as an alternative venue for watching TV shows," Leichtman said in research notes. "In fact, consumer use of video online remains much more about short-form video."

This in no way contradicts my previous argument about broadcasters creating artificial monopolies by switching 100% to Hulu. The numbers you're seeing here are the results of the failure to embrace that decision. The number cited above is a little useless actually -- a better thing to know is what percentage of teens who watch TV shows watch repurposed TV on computers. But that would emean somebody actually savvy about the emerging business model would have do this research.

There is a parallel in the States to the above BSKyB development -- customer surveys and rumors indicating that Netflix may begin streaming HBO and other quality cable content for an additional monthly fee. This is a bastardized version of cable a la carte ...

... and one of the reasons that I stated, in my last post on the matter, that Netflix will wind up the winner of the future content wars. Netflix has cunningly positioned itself as a pure content company. It will deliver content on a dedicated player, on your XBox, on your Tivo, through the goddam 3000 year old delivery medium of snail mail.

Netflix will give you a movie, or TV show, whatever's available on DVD and now streaming. It does not care, its jobs do not depend on dominating any marketplaces or shares. It's job is to Get You Stuff from People Who Make Stuff. It is catering to strong brands. Better or worse, if I pay for HBO, I know what I'm paying for. I pay for Showtime, I know what I'm paying for. I pay for NBC ... what am I paying for? Kings or My Name is Earl? Dateline or 30 Rock? I like Southland, why am I paying for Last Call with Carson Daly?


If you don't have a brand, get out of the business. Netflix is going to be doing your job better than you in five years.

Netflix is in the prison yard, strolling up to the Mainstream Networks with a sharpened toothbrush clenched in one whitened fist while the Mainstream Networks chat dreamily about how they're gonna go straight and get good jobs when they Get Out. Ain't gonna happen.

Certainly, right now, Netflix is dependent on material produced on other monetized media for it's content. Some people state this fact as a criticism. These people are chimps. That's not a problem. That's smart. In capitalism, letting some other dude pay the bills is a smart play. That border is going to blur as more and more private money moves into production. I would remind you -- Leverage has no major studio. It is coming back for a second season on TNT, a legitimate, well-thought of network. I don't think we're quite at plausible premise yet, but we're getting there.

Network humans vary in quality (we have some very fine ones at TNT) but end of day they are devices through which one transforms monetized eyeballs into financing for content, making their living off the skim. These first attempts at alternate monetization will more often than not fail, but the experiments are getting closer and closer to viability. That need for an intermediary will falter, and that skim will become smaller and smaller. It will never be zero; but it will drop to the point that is the bare minimum to do their job, rather than "subsidizing-giant-useless-buildings-in-the-Valley" levels.

EDIT 5/29/09: And rumors heat up that the XBox/Hulu connection is finally happening. Let me be perfectly clear here -- I've been a longtime optimist on the speed of the transition to digital content delivery, and even I am stunned at how fast things are changing and going to change.

When I say "Netflix" is going to win, I mean (whatever Netflix becomes) or (whoever finally buys/co-opts Netflix).