Behind The Curve On Streaming Video: Netflix and The Streaming Video Debacle

October 14th, 2011 Posted by joshuasinason in Business, Digital Advertising, Findings, Marketing

Remember TiVo? When it first came out in 1999 TiVo was the biggest thing going. TiVo was going to be the next Microsoft or Apple. Judging from those first few years TiVo has got to be in every home in the country right? Well a funny thing happened, when TiVo got popular companies took their business model and applied to a much larger infrastructure and improved upon the technology. In the end TiVo was left with nothing but a mostly forgotten brand name. Because, as social media has shown, being the first one in on new media means the moment you’re successful everyone is going to take your model and run with it in directions you can’t control.

Netflix had the opportunity to learn from both TiVo and MySpace mistakes. They could have been prepared for the likes of Blockbuster/Dish Network and Hulu. They chose to go another way and in the span of a few months they’re in danger of falling behind Hulu and other streaming video sites. The problem is they’re unveiling products and add-ons like they’re Apple or Microsoft. What they don’t realize is that at 5 years into their runs those companies were still branding one or two products. Netflix needs to narrow its focus away from video games and such and focus on streaming video and mail order. One reason Hulu made great strides in the last few years even though they raised prices is because they made a lucrative deal with X-Box. (Actually they raised prices from zero which some saw as the kiss of death, making their success even more remarkable.) Netflix missed a golden opportunity to make a deal with Playstation and get some great press and strengthen their streaming video division.

The problem with TiVo, and the problem that Netflix is facing, is that, in the end, they really don’t own anything. They rely entirely on the contacts they’ve made with their content suppliers. The moment they start creating their own stuff the content suppliers will turn on them and the moment they find a way to squeeze more money out of streaming video they’ll move their support elsewhere. Hulu is looking like a more attractive place every day. Then again, something could come up that draws there attention and Hulu and Netflix could be on their way out.

Streaming video needs to be stable for lots of big things to happen. Social Media was a very unstable market when Facebook started blowing up and it caused a lot of big advertisers to sit out a while. If streaming video is going to be a viable place for you to put your advertising dollars there needs to be an industry leader that you know is going to be there a year or two from now and there just doesn’t seem to be one yet.

There are a lot of major things on the horizon that can’t really happen until we get a viable marketing model for streaming video. We are on the verge of 24/7 connectivity, where everything from your phone, your computer, and your TV is connected to the internet and accessing the same user data (what Apple calls “iCloud”). With both Cable and Network losing viewers to things like streaming video, and still struggling to monetize and stabilize in a realistic way, they are bleeding viewers and losing money at a time when they should be introducing new and exciting technology. Your TV and your digital video streaming are going to be merging in the next few years. Instead of getting HBO and watching things as they air you’ll be able to get the HBO app for your TV and things will become available to view at a certain time. But none of that can happen till they find a way to stabilize the streaming video service market and make it an inviting place for major advertisers.

Ultimately, like social media, streaming video will turn into a place for smaller business to bust out of there regions and hit it big on a national level. Just like social media it will also become more regionally targeted. If you want to start a national viral campaign streaming video is a good place to put your advertising dollars but someday it will be a place to put big bucks into.

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