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Tuesday, September 20, 2011

In the past few years, the world of content distribution has changed as dramatically as the process of content creation. For readers of HDVP, sites like Vimeo and YouTube have allowed indie filmmakers to distribute their short films to a global audience 24/7 in a high-quality HD presentation, along with an online community that provides helpful (or not so helpful) feedback. But what about your Average Joe who just wants to kick back and watch movies at home? Home-entertainment technology has seen the most dramatic changes, and this is mainly due to one particular company, Netflix. The Los Gatos-based streaming-video and DVD-by-mail company has close to 25 million U.S. subscribers (soon to launch in Europe and Latin America) and has placed its streaming technology in set-top boxes, Blu-ray disc players, gaming consoles and mobile devices. Recently, Netflix caused a big uproar by raising its price of unlimited DVD and web streaming by 60%. This is a strategic move on Netflix’s part to abandon DVDs in the near future, which is a trend we’ve been seeing in software for quite some time led by the mighty Apple. At the time of Netflix’s launch in 1997, streaming movies over the Internet was an impossibility with slowpoke 56K modems.

Before I was the editor of HDVideoPro, I served as editor of ICG (International Cinematographers Guild) Magazine. Around three years ago, I remember having a discussion with a top executive at the Local, who was in the middle of contract negotiations with the studios. The hot-button issue of these negotiations was online movie distribution, which would help generate new residual payments to IATSE members. At the time, Netflix just launched its Watch Instantly program, and Hulu was just starting up. This particular executive, who incidentally didn’t know how to use email, was dumbfounded why anyone would watch a movie on their computer, much less a cell phone.

How things have changed in just a few short years. With the abundance of broadband in the home and 3G/4G wireless standards, studies have shown that streaming video will account for more than half of all Internet traffic by the end of next year. All the heavy hitters of tech and retail are following in Netflix’s footsteps by getting into the streaming-video business, including Apple with Apple TV, Google with Google TV, Wal-Mart with its Vudu service, and Amazon with its Instant Video. Even dead-in-the-water Blockbuster is trying to reinvent itself as a streaming-video service.

Recently, my wife and I “cut the cord” and are receiving our TV shows and movies via streaming video to our HDTV through both a Roku box and Apple TV. So far the transition has had its bumps—I miss watching live sports and local news—but we didn’t see the need to have several packaged services through our cable company. So far, we haven’t been the only “cord-cutters” in the country, with over 4.5 million households following suit by the end of the year. In fact, companies such as Time Warner and Comcast are beginning to view themselves less as TV companies and more as broadband companies. This year, Comcast bought NBC Universal from GE for $13.8 billion, so not only will they broadcast and produce entertainment, but they also will control the pipes in which people will view and/or download their entertainment.

If this wasn’t strange enough, Netflix recently announced plans to acquire first-run original content for its streaming video service. Their first production is a political drama series, House of Cards, which will be directed by David Fincher and star Kevin Spacey. Getting into the production biz is a risky move, but if the show succeeds, it may be more cost-effective than licensing studio programming. We’re likely to see a new player in the crowded world of movie production.

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