Trouble Ahead for Netflix

Things are starting to look worse and worse for Netflix. First, they’re fighting the battle for net  going up against the likes of Comcast and Cox. Second, bandwidth-capped Internet has already begun to roll out in Canada, forcing Netflix to release a new Great-White-North-tier video quality setting that uses a third of the bandwidth but also greatly reduces the picture quality. And, just this past week, Showtime and Starz have announced that they will be limiting the availability of their TV series on Netflix’s streaming service.

From now on, subscribers won’t be able to access old seasons of “Dexter” or “Californication,” both very good Showtime series, and will have to wait an entire three months before being able to watch “Camelot,” Starz’ newest historical-fantasy drama.

Who does this hurt the most? Netflix? No, I doubt anyone had a Netflix subscription just to watch “Dexter” and “Californication,” no matter how good they are. Netflix can and will do just fine in the mean time, resting on their still-very-strong catalogue of streaming media and DVDs. They’re even fighting back quite well, announcing the development of their own exclusive series, “House of Cards,” directed by David Fincher (“The Social Network,” “The Curious Case of Benjamin Button”) and starring Kevin Spacey. Netflix doesn’t seem to be backing down in the content creation battle.

But, when Netflix can’t even get its content to its subscribers, content doesn’t matter. There’s a looming spectre on the horizon of Internet media: the Comcast-NBC merger and what that means for the Internet as we know it.

It’s no secret that old media was put on tilt by the unexpected success of the Internet and their reaction to that success has been the opposite of what it’s needed to be. Rather than embracing new technology and attempting to compete with the new distribution companies on a level playing ground, old media has attempted to win through stonewalling and strangulation. The merger gives Comcast control of an astounding amount of content and, more importantly, the means to distribute it.

Means of distribution that, unluckily for consumers, Comcast’s competitors also need to use. Comcast has already made some questionable strategic moves regarding the control of its network, from interfering with its subscribers’ Internet usage to making it impossible for subscribers to use file-sharing programs such as Bittorrent. They even demanded a recurring fee from Internet middle company Level 3 just for transferring data specifically from Netflix. Now with its own content, Comcast is able to slow down its competitors, give preference to its own services and not have to worry about any real backlash.

As a condition for passage of the merger, Comcast had to agree to several conditions put forward by the FCC. These conditions include licensing of big name NBC properties such as “30 Rock” and “Community” to its competitors, keeping Comcast from restricting NBC’s hits for its own use, as well as not outright blocking services such as Netflix, iTunes or Amazon, keeping these services available to Comcast customers.

There are never regulations without loopholes however, and these conditions are full of them. While Comcast is required to offer licensing to its competitors, there’s nothing keeping them from over-pricing certain shows. The new FCC rule requires Comcast to offer Internet services the same packages as it offers its rival media companies, but even Netflix with over 10 million subscribers cannot afford the $1.5 billion dollars DirectTV pays for all of Comcast’s content. And, since Comcast did not actively license single shows until now, there is no precedent on price, allowing Comcast to gouge Internet providers for more money.

The no-blocking rule is also imperfect. Though Comcast cannot block its subscribers, there’s very little stopping them from drastically slowing down its competitors in the name of improving the quality of other services.

A few premium cable channels pulling their content from Netflix aren’t going to kill the service; there already is a contingency plan for large players withdrawing from Netflix. Rather these actions point to the leverage companies have when they control both distribution and creation channels – this is what Netflix has to worry about. Now that online services such as Netflix are finally coming into their own, they are they truly being attacked. Whether they can survive on an Internet full of bandwidth caps and service throttling is not an idea I want to think about too much. While our government has tried to step in to ensure that a basic level of competition exists, their efforts, though eager, have so far been lackluster.

I hope Netflix is going to be OK. The Internet is finally growing up, and it looks like such a nice place. I just hope it stays that way.

Charles Lam is a fourth-year women’s studies major. He can be reached at cnlam@uci.edu.