oadjofpa difopasji ogfapsniod gfvnapoidvn daokvndjsaknvoasdnlkadnvoinvionovnsoadnoadnvoasdnvoinonanvdoandoa
When J.K. Rowling started scripting the first draft of Harry Potter, little did she know that she was about to create history. A savant in genre of children’s fantasy, the adventures of Harry Potter has made her the one of the richest woman of Britain.
J.K. Rowling created wonderful, colorful characters. Of all the characters (young, old, alive, dead, man, woman or beast) in the Harry Potter series, if you were lucky enough to live at Hogwarts, which would you imagine to be your best friend and why?
Some of them told me over the past week that they have every intention to continue to distribute films and TV shows over the Web and at attractive prices to boot. They plan to provide viewers with a multitude of ways to access Internet content: on Web-connected handhelds and TVs, video game consoles, and iPads.
Only, don't ask them to do all this at the expense of the long-term health of their business. The general feeling with the studio executives I spoke with is that they cannot and will not throw in with Netflix and imperil other more lucrative revenue streams, such as pay TV or traditional broadcast services. They don't believe it is a forgone conclusion the Internet will become the dominant means of video distribution or that Netflix has already conquered the category.
The winds have once again changed direction in Hollywood. At a time when Netflix, the Web's top video-rental service, continues to report big growth in the number of subscribers and revenue, more and more studio decision makers are concluding that Netflix represents a serious threat if not kept in check.
On previous trips to Hollywood over the past two years, most of the studio executives I spoke with seemed to have a love-hate attitude towards Netflix. Many said they wanted to wait and see how Netflix's streaming service fared. Some were skeptical that the service could ever draw a large audience without hit films and shows, which they doubted Netflix could afford. At the same time, even Netflix's biggest critics at the studios were glad to have the company help bid up prices for content.
But since then, Netflix has proven it can acquire both sought-after content as well as a large audience. Netflix's rapid rise stunned many at the studios and now even former supporters there are wary of Netflix's growing influence. To make matters worse, Netflix is having some unanticipated impacts on the studio's businesses. Here are a few of the reasons why some film-industry execs said Netflix is raising red flags:
• Netflix siphons off sales from other important areas, such as the airlines. Since more airlines are offering in-flight Internet access, a Netflix account means fewer people may be tempted to purchase movies offered by the carrier.
• There is evidence that Netflix's streaming service discourages users from purchasing newly released DVDs. The studios see indications that for even hit films, which likely won't appear on Netflix's streaming service for years, some Netflix subscribers are satisfied to wait until they do.
• Films offered on Netflix lose value rapidly. Some cable and traditional broadcasters won't go near a title once Netflix begins streaming it. Netflix takes the scarcity out of the equation, one film industry insider said. People can watch any of the service's commercial-free films and shows anytime they want.
The prevailing feeling among the studio managers I spoke with is that Netflix's streaming service will be a good outlet for the least-valuable material. If they have their way, Netflix will be the Internet equivalent of a swap meet, where only the most dated and least popular titles are available. The studios are betting that eventually people will get bored with the service.
Netflix as disruptor
The service is also out to a big lead when it comes to building an online distribution network. Netflix is available on more than 200 Internet-enabled devices and platforms, including Xbox , PlayStation 3 and iTunes.
The studios don't want to see any service running away with Internet distribution and accumulating the kind of power that could enable it to one day dictate terms. That's how iTunes dominated the music industry during the past decade.
The Hollywood executives I spoke with said they have nothing but the highest regard for the abilities of Netflix CEO Reed Hastings and his management team. Indeed, perhaps Hastings should be flattered by the roadblocks Hollywood is building for his company. The film studios and TV networks have already watched his management team grind other distribution powerhouses into dust. In the past two years, rental chains Blockbuster and Movie Gallery have each filed for bankruptcy protection.
The studios don't want to help a discounter like Netflix do the same to cable.
But at this point, you might be saying to yourself, "Too late." Consumers want to watch what they want when they want and they want it all cheap. Web services like Netflix provide that. What could big media companies possibly come up with that matches the value Netflix offers?