Some parting thoughts on Netflix

From great debate to the beginning of the end

Last week, I had the chance to go head to head with ZDNet's SJVN on the subject of Netflix and whether it could recover from its seemingly endless series of marketing and sales gaffes. Could it recover, we were asked, or was this the beginning of the end? I didn't hesitate to say that Netflix had a lot more pain ahead and would ultimately be overwhelmed by its competitors, both large and small.

As I take a few moments to squeeze in a bit of writing on this much needed holiday (and much deserved for our men and women in uniform), I reflected back on the debate and found a few important takeaways. The most important? SJVN is right on one thing: the subscription model is Netflix' primary killer feature. I have the streaming only plan (RedBox meets my DVD rental needs, although they're increasingly limited). Subscription services need to move beyond the Amazon Prime model (or Prime needs to drastically increase its content) and we need to see some far more innovative content deals combined with video subscriptions. When that happens, the final nail will be hammered into Netflix' coffin.

The other key takeaway? We need to figure out mobile data, and fast. The new Droid Razr in my pocket right now streams video to me faster when I'm in a 4G area than my home cable and office DSL do. It has an HDMI output so whether I want to watch on the exceptional screen on my phone or the TV or projector of my choice, it doesn't matter. This phone is fairly cutting edge, but within a year, even low-end smartphones will run 4G and be able to push out HD video. Mobile data usage will skyrocket and all of those data caps aren't just going to affect us power users. They're going to affect everybody and, perhaps more significantly, it's not clear if our existing infrastructure will be able to cope with millions of people streaming video to their phones, regardless of whether we're using iTunes, Netflix, Amazon, or anything in between.

I have an app that I'm testing right now - it's under embargo, so I can't say much about it, but essentially it does some amazing cloud-based processing of video. All of that video gets to fly across the mobile networks. So will the Skype video calls I can make so handily on this fancy new phone. As will the video clips shot in full HD that I push to YouTube and Facebook. You get the idea.

Whatever happens to Netflix, data charges, caps, throttling, and a lack of 4G penetration will be the banes of our existence. Frankly, I don't think it will be Netflix using up our data allowances in a couple of years, but it's clear that there will be a myriad of other services that will be. Protesters won't be occupying Wall Street then...they'll be occupying Verizon.