Netflix under the Microscope

With deals secure with six Hollywood majors why would any company want to take on Sky? But new delivery mechanisms, not least smart TVs and connected games consoles, are giving new entrants such as Netflix a new platform.

Slowly but surely opportunities have opened up, not just through the VOD services provided by Virgin Media and BT Vision, but also the over-the-top providers Apple TV and Amazon’s Lovefilm

The arrival of Netflix in the UK and Ireland, however, has brought on a period of self-examination. CEO Reed Hastings, in an interview with the Daily Telegraph, claimed: “We offer a much better user experience than Lovefilm with HD video streams available. We are on more platforms, such as Nintendo Wii and we have a broader content offering.” Hastings went on to add, dismissively, “I don’t think of Lovefilm as a threat at all. The main rival is BSkyB, with Sky Movies and Sky Atlantic – they’re the ones with big content.”

So, at £5.99 per month for unlimited streaming, Netflix is talking the talk but, for film lovers, does it walk the walk too?

One area in which Netflix looks set to shake up the market is technology. And here it may just have the edge over Lovefilm, supporting Nintendo Wii, iPhone, iPod touch, Apple TV and Android devices. It also offers improved personalisation and integration with Facebook, sharing your and your friends’ viewing preferences by default. Although you can – and doubtless will sometimes want to – turn this off.

Ultimately, however, slight differences in cost or technology won’t tip the balance. For most consumers, content remains king. And, as Netflix is unlikely to challenge Sky’s control of the first pay window any time soon, it’s in competition with Lovefilm’s content that it’ll stand or fall. It’s here that Lovefilm’s exclusive deals with Studiocanal, Entertainment One, Sony Pictures and Warner Brothers pay off, as a quick survey of online comment reveals:

“Netflix’s range of ‘new releases’ is anything but new”

“You’re more likely to stumble across some straight-to-DVD or weird Asian title”

“We did the free trial month and at the end of it nixed the thing. The selection on offer is dismal and in many cases there were items that wouldn’t be worth a first go-see let alone a second try.”

It’s true that Netflix does have better access to TV content (it has deals with BBC Worldwide, ITV and Channel 4) and a better choice of HD content, but generally its claim to offer ‘broader content’ doesn’t stand up. Particularly as some of the deals are replicated by its slightly more established competitor. It’s a weakness, however, that underneath the bullish comments it recognises and is working hard to improve, with film deals with Lionsgate UK, Momentum and MGM amongst others.

Currently, though, it has nothing to rival Lovefilm’s Box Office option. Although Ted Sarandos, Netflix’s chief content officer, attempts to spin this as a strength – ‘we only offer one package and one price point. Lovefilm offers too many options’ – I’m not sure many subscribers would agree. I found Netflix’s catalogue, and indeed genres, a bit hit and miss, more cobbled together than assembled by a genuine film-lover. It counters Lovefilm’s ‘world cinema’ section, for example, with the slightly blimpish-sounding ‘foreign films’ and the ‘British films’ genre feels frankly odd. If it was tacked on for the UK and Irish launch, then why not ‘Irish films’, too?

At the moment, the feeling among early adopters seems to be to wait and see if content improves, or base their decision on whether TV or films are their priority or whether they’re HD addicts. There’s no doubt that Netflix will have some disruptor value – Lovefilm quickly reduced its own streaming-only package from £5.99 to £4.99 – but sadly it’s unlikely to benefit consumers in the long-term. Any battle over studio rights will inevitably lead to content being split, and subscribers will either have to sign up to both, or accept some glaring holes in their library.

Netflix studio deals

BBC Worldwide,
Disney UK & Ireland,
Lionsgate UK,
Momentum Pictures,
NBC Universal,
Sony Pictures Entertainment,
Twentieth Century Fox
Viacom International Media Networks.

Source: Netflix