Reading “The Long Tail,” I was reminded of the current conversation around Netflix’s Watch Instantly service and HBO’s new HBO Go streaming service.
The problem in Netflix’s use of the Long Tail is that it’s dependent upon content providers working with the company. Some content providers give access to older titles, but not new releases, which, going on Anderson’s argument, could lead to Netflix having problems keeping consumers if studios have their own streaming services that do offer access to those titles. Consumers have gotten used to the availability of everything all the time, first with the ubiquity of Amazon and Netflix’s mail delivery service, and then with online music and TV services. Being able to access everything without ever leaving your house is becoming something that people expect.
The problem is that you have to work with a lot of people to offer everything, and you have to continually lay out a large amount of money to license everything.
It makes me wonder what the actual cost of distributing movies and TV shows through streaming services is, and if people would actually pay more for it than they do now. Netflix doesn’t charge extra for its streaming service and it is commercial free, which raises the question of how they are paying for it and if that could possibly continue even if they didn’t have to eventually renegotiate streaming rights with studios. If Netflix had another revenue stream to support the service, I could see them negotiating with studios to pay more for content and still operating Watch Instantly at a loss (like lala.com will hopefully continue to do now that it has been acquired by Apple), and there is the advantage of having the widest variety of content in one place, which studio-specific streaming services like HBO Go wouldn’t be able to offer. But it still feels like, where Amazon and iTunes have found a way to make money using a Long Tail approach, streaming video services will have a harder time finding a way to make a profit while offering the hits people want.