Hollywood tried this with iTunes and failed miserably. There is no data to suggest that when consumers can’t use their favorite online media service for specific content that they abandon it altogether and flock to a studio or label branded alternative, what happens is that they simply stop watching or listening that label or studio content and select competing content.
“Netflix fans take note: A correction is looming.”
Content owners and distributors are backed into a corner because they simply don’t have the leverage that they are accustomed to despite continuing to behave as if they do. NBC’s honcho Zucker walked away from iTunes over a pricing dispute only to come back last year despite having a solid success with Hulu.
Any of these content owners playing hardball and pulling content from Netflix is the equivalent of P&G telling Wal-mart that they cannot carry Tide anymore… it hurts P&G more than Wal-mart. Whether it be Netflix or Amazon or iTunes, these are high volume distribution channels and each one is, and should remain, compelled by their underlying business model that remains focused on what is best for the customer, not Hollywood.
At any rate, Hollywood’s dilemma is only more entrenched when you accept that playing hard ball with Netflix only works if they all hold the line, in effect colluding with their competitors to raise prices, which brings a whole different set of problems to Hollywood in the name of the Department of Justice that they really don’t want to have to deal with.