Netflix paper sleeve

Netflix has been busy making big dollar deals this year securing new content for its streaming service that one day may replace its original business model.

The cost of bandwidth is going down every year and servers are getting faster and cheaper all the time, while more and more people subscribe to broadband. Moving away from the DVD-by-mail model that made Netflix a big business is the ultimate end game. No more having to buy DVD discs in bulk from studios that depend on retail DVD sales to prop up one box office flop after another, no more replacing thousands of discs broken by the postal service, or paying millions in pre-paid shipping.

A streaming-only service would mean only having to keep a few digital master copies that can be duplicated an infinite number of times. Nothing ever breaks, gets delayed, nothing for dishonest users to steal, etc.

That day may come within the next decade but with the rather sorry state of broadband deployment in America, it's not coming anytime soon. More than 30 million Americans don't yet have broadband, either because they can't afford it, or because no one is willing to provide it to them because of where they live. And despite Netflix making big gains this year, most of the titles available for rent aren't also available to stream online.

Standing firmly in the way of progress are companies like HBO. Desperate to hold on to their decaying business model, and hoping to restore it to former glory (how is that working so far for the music industry and newspapers?), HBO refuses to make their property available for streaming via Netflix even though you can rent most if not all of it via mail.

HBO and other companies are employing a strategy that fragments the market and eventually ruins it for everyone. Rather than partnering with a central provider like Netflix where revenue is shared, but also substantially increased due to all potential customers being in a single place, HBO and companies like ESPN are trying to stream their content themselves via special deals that only make the content available to customers of specific ISPs or cable/satellite providers. According to Stop the Cap, a broadband advocacy website, HBO's streaming service HBO Go will only "go" for customers of Comcast and Verizon (and then only if you're on their high end fiber-to-the-home service.)

Most people, not being customers of those two regionally limited companies, will have fewer options for viewing HBO's content. In other words, they'll either have to pay twice (once for cable/satellite, and then again for the channel itself) to get the service through regular means, or pirate the content online.

Given such a choice, I imagine most people that might be willing to pay for HBO's content legally via Netflix's streaming service, who are unable to get HBO Go whether they want it or not because they have DirecTV or Roadrunner/Time Warner, will simply opt to redirect themselves to The Pirate Bay or some other site and get everything they want with no DRM, no fixed broadcast schedules, and for no cost whatsoever.

In that sense I do believe that HBO, in saying no to Netflix -- which is their right -- is pushing people towards piracy by making things harder and more expensive than they really need to be.