Netflix is shaking up the television industry by offering a streaming service of unique programming to subscribers that rivals cable TVs offerings. For many consumers, this is heralding the future of Internet TV and visions of being able to stream Netflix into the living room are filling people’s heads. The price for the subscription and the quality of the offerings are already outstripping much of what is on cable. For industry insiders, there is much alarm at the turn of events.
What ever happened to Net Neutrality?
Perhaps the most shocking thing about the Netflix jump into subscription Internet TV is that it goes against what they stood for, and stood up for in their beginning years. IT companies like Netflix are a staunch advocate of preserving Net Neutrality. This refers to standards that prohibit sites from creating custom streaming content as it was considered to begin a privatization of bandwidth and ISPs that were meant to be openly available to all on a first come, first served basis. With the launch of their Internet TV subscriber service, Netflix has become the embodiment of the very approach to using Internet resources that they once stood so firmly against.
How big a threat is Internet TV to the Cable Industry?
The Netflix Internet TV offerings pose a great threat to the sustainability of Cable TV and a significant threat to the movie industry as well. For starters, Netflix has a far lesser operating cost than Cable TV in producing and broadcasting these shows. There is not special equipment that Netflix must contract with to be made, or users have to purchase. Everything you need to watch Netflix Internet TV is available through your computer, tablet or smart phone. Developing programs for Netflix Internet TV also puts the cost solely on the independent programmer, who can then apply to have the Netflix brand placed on their show and for distribution. This cuts production costs significantly as well. The movie industry is also threatened by streaming Internet TV because it introduces Cable quality shows on a regular basis with a far lesser cost to produce and distribute as well.
What about that bandwidth?
What has alarmed most industry watchdogs about the popularity, and promise, of Netflix Internet TV is the demands it places on a public infrastructure of bandwidth. While already reporting that it has more subscribers than all the Cable TV networks combined, should they all start to watch at the same time – it could very realistically bring the Internet down. Streaming any kind of audio and video places huge demands on the ISP servers. For the consumer, there may be a hidden shock cost at the increase in data rates that ISP and data service providers may have to put in place to deal with the increased usage of bandwidth as well.