Frankly Netflix scares me and I am scared more by the proliferation of the Netflix model to video games.
What I saw happen with television is that it went from a ratings based model (they had to make stuff people wanted to watch) to a model where the "cable bundle" was determined by cigar-chompers in a dark room somewhere. I can say I want this group of 20 channels, but I can't say I want CNBC but not CNN, Fox and MSNBC.
They get paid anyway so now there is no connection between "what I want as a consumer" and "what I get". So of course you get slow decline like we've seen with the cable industry -- the only meaningful conversation you can have through the market is "exit".
Netflix has only "exit" and "not-exit", it doesn't have market signals that say you can do 1% better and make 1% profits. So ultimately it gets a dull edge.
So many firms are falling over each other to offer you all the Madden NFL and Assassin's Creed you could possibly play and I am frustrated that people don't perceive that this has happened to MTV and most of the other cable channels since the 1980s: when I was a teen we watched music videos, but a 70-year old man bought the network and decided that he didn't want us to watch music videos. Once Youtube let people chose what to watch we found that people still love watching music videos: does anyone watch MTV? I'm sure there is somebody long past youth in Hollywood who thinks they can stay in touch with "youth culture" by watching MTV. I suspect there is a TV set in a Nielsen home that blasts away 24 hours a day with nobody watching. Other than that I don't know.
>when I was a teen we watched music videos, but a 70-year old man bought the network and decided that he didn't want us to watch music videos.
That's funny, but empirically that's not what happened. A quant working at MTV realized that reality TV like Real World, Jackass, and The Osbournes were way more lucrative and way more popular. At the same time music exploded in access (Napster). People voted with their eyeballs.
To make sense of the decisions that the TV industry makes you should also consider what their moat is and how they tried to protect it from the internet.
Studios still made content people wanted to watch, monetizing it became a lot harder which is why (strictly) ratings became less important. Bundling came around because it was easier for Disney to force Comcast to swallow channels like Lifetime and Toon Disney if they needed that to get access to ESPN. ESPN (live sports) has no digital compliment and for many people is the only reason they pay for Cable. The name of the game then became "How much money can we extract out of the remaining ESPN subscribers".
I think the last part is right. In reality it is slow motion suicide to lose engagement with your customer.
That is, the industry would have transitioned to a "harvesting" model with increasing cable bills and fleeing subscribers no matter what the competitive threat (internet, netflix, ...) is. The competitive threat determines where the crisis happens, but the crisis is built into the product.
I don't believe it about MTV. I don't think anybody watches the Real World, Jackass, or the Osbournes. They read in the newspaper that somebody got killed acting out a scene from Jackass or they watch the highlight reel for the Osbournes on Entertainment Tonight. The meaning of that kind of television is not in the watching, but in being a subject for the rest of the media.
Music royalties and professional VJ's (read, unionized) eat into those profit margins. That 70 year old man figured out he could cut costs by hiring unprofessional "reality" actors and running his network on the sweat of young perma-lancers.[0]
You’re not wrong, but it’s more complicated than that.
TV networks initially embraced reality television because of the Hollywood writers strike. The writers stopped writing, so the networks turned to content that didn’t require writers. Then they discovered that reality television is cheaper, too. The rest is history.
What I saw happen with television is that it went from a ratings based model (they had to make stuff people wanted to watch) to a model where the "cable bundle" was determined by cigar-chompers in a dark room somewhere. I can say I want this group of 20 channels, but I can't say I want CNBC but not CNN, Fox and MSNBC.
They get paid anyway so now there is no connection between "what I want as a consumer" and "what I get". So of course you get slow decline like we've seen with the cable industry -- the only meaningful conversation you can have through the market is "exit".
Netflix has only "exit" and "not-exit", it doesn't have market signals that say you can do 1% better and make 1% profits. So ultimately it gets a dull edge.
So many firms are falling over each other to offer you all the Madden NFL and Assassin's Creed you could possibly play and I am frustrated that people don't perceive that this has happened to MTV and most of the other cable channels since the 1980s: when I was a teen we watched music videos, but a 70-year old man bought the network and decided that he didn't want us to watch music videos. Once Youtube let people chose what to watch we found that people still love watching music videos: does anyone watch MTV? I'm sure there is somebody long past youth in Hollywood who thinks they can stay in touch with "youth culture" by watching MTV. I suspect there is a TV set in a Nielsen home that blasts away 24 hours a day with nobody watching. Other than that I don't know.