CNET media columnist Greg Sandoval has a thought-provoking review of different theories being floated in the aftermath of Netflix’s highly contentious monthly subscription price hike.
Blogger Adam Knight points to a recent pull-back of Sony content from the service after online-view thresholds were breached. He says all those Netflix DVD renters who never make use of the streaming aspect of their membership are artificially inflating key measurement triggers, and need to be removed. But the best theory in Sandoval’s article comes from Big Champagne CEO Eric Garland:
Garland is convinced Netflix CEO Reed Hastings is trying to pressure the studios into licensing more streaming content… Forcing streaming fans to pay more will only ratchet up dissatisfaction while raising demand for better streaming content…
“Hastings is deliberately creating dissatisfaction,” Garland said. “He’s creating dissonance precisely because that title availability, those first-run titles, need to be more immediately and widely available… Reed is saying you’re going to have to make all of your content available in a way that your customer has clearly indicated that he or she wants…that dissonance is going to demand remedy.”
It’s a risky move, but when a company’s Hollywood licensing costs are increasing from $180 million in 2010 to possibly around $2 billion in 2012, a CEO has got to get busy.