With Netflix slated to launch in Canada today, it is worth reflecting on my Rogers On Demand Online service.
I have been playing around with a Beta of movie rentals from the Rogers On Demand Online website and it is pretty convenient. At the cottage through the summer, we were exposed to Apple TV and the benefits of on-line movie rentals.
The trial runs through September and RODO Rentals should be available to the general public in about a week and a half.
It got me thinking about the value of content for BDUs. When Rogers negotiates for content, they do so as an enormous BDU, Canada’s biggest mobile wireless service provider, one of the biggest ISPs, one of the largest video rental distributors and as a broadcaster.
Think about negotiating leverage for other companies who may be trying to acquire distribution rights. some are similarly situated, others will clearly have a more difficult time.
Some deals will be exclusive for internet distribution; others may be more restricted. Will vertical integration lead to reduced distribution channels for creators?
Will over the top companies have a chance to acquire Canadian rights for all of the content they seek to distibute?
When Netflix launches in Canada, how many programs will be tied up by another rights holder?
And isn’t this exactly the situation where Net Neutrality enters the discussion?
Rogers likely makes significantly higher margins renting you the movie than they do providing the bits to deliver the movie. How will they react if Netflix starts to make significant inroads in this market? Netflix makes the margin on the rental, Rogers makes the low margin ISP data delivery revenue…
Suddenly Rogers needs to slow down all those Netflix packets on their system to “protect the integrity of their network”. Netflix suddenly has not-so-great service, but I can watch the same movie with no problems at all via RODO.
But Rogers would never do that; it would be morally reprehensible.
@Ned Quite right. Nor would Rogers, by sheer coincidence of course, drop the download caps on their premium broadband plans the same week Netflix announced they were coming to Canada.
In reality, it’s up to (the remaining independent) rights holders to choose how they want to license/distribute their content. Right now many still see exclusive rights to traditional broadcasters as the best/only way to monetize their content.
However, it’s only a matter of time and tipping points but internet distribution WILL eventually explode that model.
@Mark_Goldberg Even distributing through Rogers “huge” scale is not so huge when they only have a third of the wireless market, when they only have a small variety of web portals, interfaces, billing models for distributing content. Meanwhile there is no way cablecos can keep up with the level of content portal/distribution innovation being driven by the likes of boxees, itunes, netflix, google etc.
Both the cableco’s and traditional Big Content rights holders really really want/need over-the top vertical integration to be the true model. But really they are the only ones that need it to be so true. They need it to be true because the alternative is too horrible to contemplate. So far the industry has done a fine job of staving off the tsunami of potential disruption (aka open internet-driven innovation over dumb pipes) but for how many more years?