Wednesday, 22 August 2012

Netflix to take on BSkyB in a bidding war for movie rights. Another massive leap forward for online content streaming.

The growth of Netflix since 1997, the online movie/tv streaming site, has been quite extraordinary with a forecast of 30 million members by year end (Sky has 10 million). But as predicted, they've now ventured into the area of programme buying, competing directly with traditional broadcasters. 

Something we've talked about before here

This is the first move for an online broadcaster into the offline world. In particular, they're going to hurt BSkyB.

BSkyB's stranglehold on premium rights to Hollywood movies is going to be broken as Netflix CEO Reed Hastings (that's his picture on top) has vowed that Netflix is going to heavily bid for those rights - and they have the cash.

He is determined to win. Already earlier in the year, BSkyB had to suffer a 40% increase in UK football rights following a bid war with BT. The Sunday Telegraph has seen BSkyB documents which clearly identify Netflix as a major potential threat

NetFlix has just announced today that already it has 1 million users in Ireland and the UK and with movie rights, it will switch customers away from BSkyB.

The Telegraph quotes Hastings as saying, "The main rival is BSkyB with Sky Movies and Sky Atlantic - they're the ones with the big content". 

The key here too is that Netflix can offer a movie streaming service at a much lower cost than Sky as well as being available on a myriad of devices.

"Sky is terrified of Netflix" a source close to the company has said. And so they should the company turnover increases to 1.8 billion usd in the first half of 2012. Whilst its share price is declining, this is on the back of lower profits driven by the insatiable desire to launch worldwide and therefore, the costs of doing so. Hastings has always said that he's in the long term game.

Netflix is ploughing back its profits into a drive for world domination. Although Hasting's own encashment of 43m usd in shares was viewed poorly by the markets and is being legally challenged. He's also a small investor in Facebook and a Director at Microsoft.

There is no doubt, having dispensed with the retailers of old video rental, Hastings is now going after traditional TV. Online streaming is coming of age and will become the dominant way of the future to watch movies. Especially as devices such as Apple TV, arrive on the market.

And good luck to them.
Online goes from strength to strength.
Do you still doubt it?