Rich Fiscus
4 Jan 2012 15:17
While many people point to the missteps Netflix made in 2011 as signs of the company's demise, their Watch Instantly service remains far and away the most popular online video platform around.
According to Netflix, they streamed more than 2 billion hours of video to more than 20 million subscribers worldwide in the fourth quarter of 2011. Of course, all that success doesn't come without a price. As Netflix streaming grows, the price of content is rising with it.
Thanks in no small part to concerns Netflix is cannibalizing viewers from traditional broadcast, cable, and satellite channels, Netflix faces higher licensing fees as existing contracts come up for renewal and less content in the near future with the looming end of their deal with Starz.
Meanwhile, Dish Network represents a serious threat to Netflix thanks to their acquisition of Blockbuster. Blockbuster's streaming and online rental services were recently bundled with Dish Network satellite TV service in Blockbuster Movie Pass.
Blockbuster Movie Pass lacks anything approaching the Netflix customer base, but they have an advantage with some content providers based on their decision to require pay TV subscriptions to use the service. While Dish Network's strategy seems less than convincing as a long term model for success, that doesn't mean it won't cause problems for Netflix in the short term.
Thanks to their decision to raise prices last year, Netflix has already alienated millions of customers. Meanwhile, US cable broadband providers who serve many of those customers see Netflix as a competitor for their own services and premium services like HBO have decided to compete, rather than partner with Netflix.
On top of all that, Amazon will no doubt make more moves to compete with Netflix via their own streaming service and a rumored TV coming from Apple in 2012 could also represent a significant threat. As wild as 2011 was for Netflix, 2012 could see more of the same.