Netflix: The Future of Online Video?

netflix10.09.08.jpgSaul Hansell over at The New York Times‘ Bits blog offers up an interesting take on Netflix’s foray into online video and how the company might become an unlikely leader in the field.

Hansell argues that since the movie provider has access to such a huge volume of films and, more importantly, have been one of the only companies to successfully convince customers to pay a monthly subscription fee, Netflix has an advantage over the type of small start-up that usually win out in these situations:

One of the biggest blocks to moving some of the best programming from cable networks to the Web is that the only viable model so far has been advertising; cable programmers are used to earning money both from ads and from a cut of the subscription fees collected by cable systems.

Netflix is already using some of its subscription revenue to acquire rights to cable programming, such as a recent deal with the Disney Channel to let customers watch shows like Hannah Montana. Over time, it could add more content, exploring whether customers find value in paying for a bundle of programs delivered online.