October 03, 2011

Web Video's Challenge of Inventory, Portability


Last month, Netflix CEO Reed Hastings set off a tech media firestorm with the announcement of a split between the company's streaming business, which would bear the original Netflix name, and its DVD by mail business, now known as Qwikster. Much of the discussion centered around two parts - the first being Netflix's price increases announced this summer, and the second, focus on the name of the new business, which sounded way too much like Amway's sub-brand, Quixtar. But both flareups circumvented the real trajectory of Netflix making a choice to decrease its attention on the physical media world, one I publicly said I walked away from this Spring. With a smart combination of online video properties, including Netflix, YouTube, iTunes and Hulu, you can have your entertainment needs satiated practically any time. However, there remain gaps of content and availability from site to site, thanks to exclusivity deals with entertainment owners, copyright and who knows what else.

Apple's initial foray into renting movies (and later television shows) online, combined with the release of Apple TV units, made it easy for me and my family to select movies on demand, and watch them almost instantly. After some buffering, the selected title would be in our living room and could play that evening. Back in 2007, when Netflix was not streaming, the opportunity was available, in my opinion, for Apple to seize the market, through introducing a subscription service. (See: How Apple Could Crush Netflix Now) But it didn't happen. Apple didn't go the subscription route, Netflix evolved, and no doubt Hollywood studios were afraid of Steve Jobs having as much power over their titles' success as he did in the music business. In time, Netflix figured out streaming, kept the subscription model intact, and presented another choice for online video. Even better, Netflix did something that Apple chose not to do - embracing the Web by allowing for in-browser movie plays, and releasing mobile apps for practically every phone and tablet. (See: Netflix Edges Closer to Making the Perfect Web Video Site)

While Apple did a great job of bringing films and TV into my living room or laptop, Netflix did a better job of making them portable. In addition to box office wins, I've seen full seasons of shows like Dexter and Mad Men through Netflix, available on any laptop and through most connected TV devices, such as Google TV, TiVo and the Nintendo Wii. Netflix gets the Web, and is so simple to use that my 3 year old twins spend a lot of time running the Netflix app on our iPads. I'm often amused to see the recommendations that come my way from Netflix after Matthew or Sarah have spent an hour with Nickelodeon and Sprout shows for toddlers.

Similarly, YouTube's tie-in with the Android Market has also embraced the cloud for streaming video. As I wrote in June, you can rent films on the Android Market, and watch them on YouTube from any computer. That too is very convenient, and there's no entrance fee requiring subscription. Meanwhile, Hulu has access to some shows (like my personal favorite, Peep Show) that you can't get anywhere else - and there's the catch. Much like in the old days of instant messaging, where services were splintered without standards for interoperability, consumers are left to have multiple accounts from multiple places and remember which shows and titles are where. An evening's entertainment can come down to which device you have in which room, which services are supported and which titles are available for which place. It's easier to deal with for the cloud-backed properties, like Netflix and YouTube, but less great for the others. Nobody's yet got it 100% nailed.

Additionally, what all of these services miss is the opportunity to satisfy the home viewer who wants to see movies currently playing in theaters. I've been begging for this for more than three years now. (See: Think Apple Would Dare To Take On the Movie Theaters?) As a parent of three kids three and under, planning for a babysitter to cover the hours when my wife and I would attend a movie is a challenge, one that will no doubt cost much more than the face value of the tickets. So most of the time, the theater experience is unavailable. Meanwhile, most families' home theater systems are getting even better. I would have to bet the availability of in-theater titles to play at home would have real value and I know I would pay a premium for it. I would have seen Moneyball this weekend, if it was available, but being homebound means either we have to wait, or we have to seek out illegal downloading alternatives - which aren't ever a good option.

Spotify delivered the reality of a near-infinite music library on demand. Practically any title in the world (or so it seems) in high quality with no downloads or delays. The movie equivalent is still missing. No doubt this is a harder quest, but it's one worth conquering. Any time you see knowledgeable people debating Netflix's streaming movie inventory online, you hear concerns about its library. The company is closing deals to make that better, but they're quite expensive. Apple hasn't budged on a subscription model. YouTube remains best known for amateur videos, while that's expected to improve. And who knows what's happening with Hulu? Not me.

As broadband becomes more ubiquitous, and traditional entertainment leaders get innovative on their own about reaching customers, partnering with all services, I expect the portable cloud model to win, as it always does. Things are much better now than they were two or three years ago, but there's much more room to go. I hope in two or three more years in the future, we'll be laughing about how hard it was to get the titles we wanted anywhere.

Disclosures: I work at Google, of course, and you can decide if that impacts how I discuss Google TV, Android, YouTube or any of Google's perceived partners or competitors. :)