When Netflix first started streaming movies and TV shows to its members seven years ago, it was a departure from TV as we had come to know it. For a monthly fee, members could choose from about 1,000 titles and watch whenever and wherever they wanted, as long as they had a compatible computer connected to the Internet. There was a lot of rough and few diamonds in Netflix’s selection, and while many contend that’s still the case, there’s no doubt the company has completely reshaped the way we watch video.
Now, there is no shortage of companies fighting to stream video to you. Netflix, Amazon and Hulu have invested in high-quality, original and exclusive content, lesser-known players like Crackle are featuring shows with stars like Jerry Seinfeld, and apps like MLB.TV allow us to catch live games wherever we are. And if we pay for TV — or know someone who does — apps like HBO GO allow us to watch in more places than ever before.
The result? The Internet video world is starting to look a lot like … traditional TV.
Bear with me.
Different channels have for years competed for your time in front of the couch each night. Now, different apps — along with even more of those channels — are fighting for precious screen time.
For most people, it’s unlikely that their entire TV diet is fulfilled by one channel. You watch “Game of Thrones” on HBO, “Mad Men” on AMC, “The Good Wife” on CBS and “American Idol” on Fox. Similarly, most people won’t get everything they want just subscribing to just one streaming service. You go to Netflix to watch “Orange is the New Black,” binge-watch “24” on Amazon Prime Instant Video or cue up Hulu Plus to watch a recent episode of “Community.”
And now that the cable and satellite companies are increasingly offering their content online and on demand, it’s only going to get more crowded.
This is the future that Netflix sees. In its “long term view,” a document for investors, the company writes that “Internet TV is replacing linear TV. Apps are replacing channels.”
The notion that the channel lineup on our TVs will be replaced by apps became ever more apparent last week. Netflix and three small American cable companies announced a deal that will put Netflix on their TiVo cable boxes, effectively making Netflix a channel. For subscribers of Atlantic Broadband, RCN Telecom Services and Grande Communication, the days of switching inputs on their TVs to watch a show on Netflix are numbered.
But it wasn’t just Netflix. Amazon announced a landmark deal with HBO that will put past seasons of hit HBO shows on its Prime service. AT&T also wants in — the telecom behemoth said that along with partner The Chernin Group, it’s investing $500 million to create a Netflix-like video streaming service. Bloomberg broke the news that Dish Network seeks to launch a “full package of live-streaming channels … over the web” by this summer. Verizon is also working on an Internet TV service.
Until recently, it seemed that online content providers would battle to dominate the new world of streaming video. Amazon and Netflix, in this scenario, are bitter rivals that are fighting for viewers in a zero-sum game.
The reality, though, is a bit more nuanced.
Reed Hastings, the co-founder and CEO of Netflix, even tried last week to brush off the notion that Amazon is a Netflix competitor.
“Prime’s a great service,” Hastings said in a conference call with investor, noting that he subscribes to the service, as do many Netflix employees. “People look at them as multiple channels,” he said of the two services.
(Oh how Hastings’ tune has changed since October of 2012, when he called Amazon Prime’s video offering “kind of a confusing mess” in an interview with the Wall Street Journal.)
In a sense, he’s right. As the services’ content becomes increasingly different, there is less overlap, so consumers have less of a reason to choose one over the other, and perhaps more of a reason to dish out money to both of them.
Netflix doesn’t stream any HBO shows. But the flip side of that is that Amazon Prime Instant Video doesn’t stream “House of Cards,” “Orange is the New Black” or “Breaking Bad.” So for many people — fans of both Frances Underwood and Tony Soprano — it may become less of a choice of “which one do I sign up for” and more of a choice of “which one am I going to watch right now.”
But Hastings’ argument is also disingenuous. Different TV channels are fierce competitors for your eyeballs, because the more people who watch, the more money networks can demand from advertisers, and the more money the networks can demand from cable companies.
Netflix and Amazon don’t depend on advertisers, but they do need customers to sign up and pay for their services. That’s why we’ll continue to see these companies investing millions in original and exclusive content.
And that content better be very, very good. Cable packages are sold in bundles, and you can’t just walk away from the basic cable networks. You’re still paying for the Food Network, even if you don’t watch it.
Netflix is a different story. All it takes to quit is three clicks of your mouse.
This article originally appeared in The Huffington Post http://www.huffingtonpost.com/2014/04/29/future-of-tv_n_5215120.html