The picture I have is Starz did deals with Disney and other content providers allowing Starz to offer unlimited movies on demand through cable companies.
But the deal language was general enough that they were able to fit Netflix in as a distribution partner - http://bit.ly/Tnbpb .
When the Starz deals are up, for instance the Disney deal is up in 2012, it seems likely that the studios will up the ante.
For instance, Netflix's deal with a group of studios including MGM was reportedly worth $1b over 5 years - if you divided that by 16 million subscribers it would be something like $12.50 a year per subscriber (ballpark, you would have to know the details, make assumptions on growth, discount rates etc.)
For now, it's a great deal for consumers, bring your high-speed Internet plus $8 and get unlimited streaming movies. But it seems likely that the $8 might go up to get better content, or get tiered for earlier access to more and better films. And ISPs might cry that it crushes their bandwidth and raise prices (especially the cable ISPs whose $100/month cable TV bills are getting canceled in favor of Internet and over-the-top video).
I suspect cable companies will not suffer too much, unless cutthroat competition unexpectedly breaks out for high-speed Internet subscribers. The big losers will be cable networks that depend on being bundled in basic cable. Why should I pay $30/month for 150 channels I don't watch? (see for instance http://bit.ly/9LTiYk )
The Golf Network and Food Channel can stick it as far as my own bill is concerned, and unless networks can find people to pay a la carte they will have a hard time staying in business.
The interesting thing about your link is how Netflix has been able to mine more value from their data than Hollywood. The thing is that Hollywood is not standing still, they have very smart companies like Rentrak working constantly to analyze up-to-the minute trends.
It seems this is an area where algorithm-fu really shines.
But the deal language was general enough that they were able to fit Netflix in as a distribution partner - http://bit.ly/Tnbpb .
When the Starz deals are up, for instance the Disney deal is up in 2012, it seems likely that the studios will up the ante.
For instance, Netflix's deal with a group of studios including MGM was reportedly worth $1b over 5 years - if you divided that by 16 million subscribers it would be something like $12.50 a year per subscriber (ballpark, you would have to know the details, make assumptions on growth, discount rates etc.)
For now, it's a great deal for consumers, bring your high-speed Internet plus $8 and get unlimited streaming movies. But it seems likely that the $8 might go up to get better content, or get tiered for earlier access to more and better films. And ISPs might cry that it crushes their bandwidth and raise prices (especially the cable ISPs whose $100/month cable TV bills are getting canceled in favor of Internet and over-the-top video).
I suspect cable companies will not suffer too much, unless cutthroat competition unexpectedly breaks out for high-speed Internet subscribers. The big losers will be cable networks that depend on being bundled in basic cable. Why should I pay $30/month for 150 channels I don't watch? (see for instance http://bit.ly/9LTiYk )
The Golf Network and Food Channel can stick it as far as my own bill is concerned, and unless networks can find people to pay a la carte they will have a hard time staying in business.