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It's the classic innovation implosion: Prior to video streaming progressing to a viable point, there was no reason for anyone in the industry to have the skill
by jjk166 6y ago
It's the classic innovation implosion:
Prior to video streaming progressing to a viable point, there was no reason for anyone in the industry to have the skills to work with it.
Netflix comes along with a business model of providing these services to the industry by hosting their content on its platform
There is massive success, everyone is making lots of money doing what they are good at
The industry, lacking the skills to recognize the value netflix provided them in technical skill, tries to get a larger cut of the pie because "how hard could it be?"
Very hard. The competition leads to cannibalization of the market and the industry has a lot of catch up to do just to get to Netflix's level. Meanwhile the carpet being pulled out from under netflix allows other, actually technically competent, competitors to pick up real gains.
Where before the industry were the customers of the streaming partners, now they are competitors. Both are out of their comfort zone, but there is a lot more free-floating talent from the long term industry than the new niche technology, so the streaming platforms can become content producers faster than the reverse.
Repeated botched attempts at competition with the streaming services drains the industry of both capital and morale. Acquisitions happen at an accelerated rate as small companies run out of steam and larger ones need to demonstrate something that looks like success to investors. Innovative but risky projects get axed as the call to cut costs grows and the heads of their benefactors roll. Seemingly safe projects repeating what worked in the past are the only ones that survive long enough to produce results, but their failure to make up for the losses continues the downward spiral of morale.
A few players are large enough to shield a division from the worst of it, and they can develop a viable competitor. Others luck out on a convenient merger that actually gets them the resources they need. These become players alongside the newcoming streaming services, but their positions are much reduced in stature. For the bulk of the industry though, there is no recovery - those who can jump ship do, and those who can't re-prioritize to stay afloat just long enough to retire.
It happened with the rail companies, it happened with cameras, its happening with traditional media. It's much easier for a competitor to destroy your empire than it is for you to seize theirs intact.
- dalbasal 6y agoCompetence (IMO) plays a role for a short while. Netflix may have been especially competent early on, but that doesn't matter anymore. Streaming is a commodity. Now they have to compete in other spheres. Hence the exclusive content strategies. I'm sure there was a time when printing newspapers was technically hard. You needed chemistry, mechanical engineering... Some people/companies probably succeeded by being good at it. Eventually though, printing becomes a commodity. Being competent doesn't matter anymore. You buy a machine. The machine is competent. I agree on the competition point. We know the game at this point. The difference between owning 25% and 5% is not 5-to-1. It's 100-to-1. All the returns are tied to centralisation, bottlenecks. It looks like Netflix and the old studios will meet in the middle. A cluster of content generation & platforms. They'll eventually find an equilibrium where the major compete more modestly, focusing mostly on keeping out newcomers.
- jjk166 6y agoThe software competence may be a commodity at this point, but there's a lot more to streaming than that. The botched launch of HBO Max is merely the latest in a string of poor performances by the classic industry. Sure they can get a video to the end user, but that's useless if no one wants to watch it. Netflix has been collecting detailed information on how people select what they want to watch for a decade. Their recommendation algorithms may seem impenetrable, but they obviously work on some level. They are refined enough that they can optimize the content they produce for consumption by streaming - they consistently have a show release every month which no one can really explain why they just have to watch but nevertheless millions of people do. No company has produced a better streaming UI than netflix and most are just straight up copies. There were no technical hurdles preventing Kodak from creating a competitive digital camera, nor for IBM to keep making competitive personal computers. These giants faltered because they thought the technical problems were all they had to deal with, and did not recognize the non-technical changes they would need to make to stay competitive. Some of the old studios will figure out that the streaming content market is neither about the streaming nor the content; they will adapt and even thrive. Most though are making horrible strategic blunders, and by the time they learn what they should have done it will be too late to recover. None will be as successful as if they had just stuck with netflix, made it the one and only must have streaming service, and maintained their oligopoly on content creation while cashing fat licensing checks.
- dalbasal 6y agoMaybe. I don't know that there's an objective way for us to convince each other. Subjectively, I just can't see "streaming media player that is good enough" as a long term differentiator. Seems like too limited a domain. I'm not dismissing "good software is hard," but this isn't iphone vs android. It's more comparable to a single app. Recommendation algorithms... I honestly think this is overemphasized. It's selecting from a pretty shallow content pool. This isn't TikTok/Youtube/Instagram/spotify etc. Discovery just isn't that big a problem when there are circa 2000 options. Online streaming is a content game, ultimately. You can't win on tech, I think.
- 6y ago