Just as Netflix is poised for aggressive international expansion, leveraging a business built the old-fashioned way — delivering DVD’s via snail mail — into a digitally diverse, button-clicking, multi-screen future, the true 800 lb. gorilla, Time Warner, is out to knock it off its perch.
Netflix has nearly leapfrogged to dominance in the online video subscription streaming service, finally besting Blockbuster, and partnering with any and all manufacturers making it virtually platform agnostic.
But can Netflix prevail against the 800 lb. gorilla incarnate, Time Warner? "It's a little bit like, is the Albanian army going to take over the world?" Bewkes commented to the New York Times. "I don’t think so."
Ted Sarandos, Netflix chief content officer and negotiator of all Hollywood deals, coolly responded, “I don’t think they [content companies] feel threatened. They are not very sure of the outcome of what appears to be a very major shift in consumer behavior…on-demand, instant gratification video. Netflix is the leader in that space so we become the center of the rhetoric.”
So is content King (Kong) and technology a wily chimp trying to steal the remote control — or vice versa? Bewkes, clearly on the King Kong side of that equation, swats away the notion as he tries to stem cord-cutting consumers (ditching wired TV for mobile and web video), and dismisses Netflix in the battle as, "a 200-pound chimp."
Well that upstart chimp has successfully reinvented its business through serial deals with content providers and is challenging the old world order. Hulu is following suit, and fast coming up is Internet-enabled television, Boxee, Google and Apple TV.
Bewkes’ strategy so far is to (naturally) stand tough and fiercely protect his content and business models; hype HBO GO, the web version of the premium TV programmer; and embrace the US cable industry's TV Everywhere push to give subscribers access to TV network programming online, even though Time Warner Cable is now a separate entity.
In a visit to CES in Las Vegas this week, Bewkes pitched TV Everywhere to the crowd: "We have every distribution network and content company trying to create a uniform approach for this. Let's try to keep it simple. This is the best room in the world to develop the innovation to make this happen."
Meanwhile, back at the chimp ranch, Netflix’s pre-CES deal with major manufacturers to embed branded "Netflix" buttons on Blu-ray players, Internet TVs, and other devices, marked a major show of confidence by the hardware industry in Netflix’s future.
Netflix CEO Reed Hastings says he’s taking his business to Asia, Europe and Latin America as soon as his recently launched Canadian operation is running smoothly.
Apple, watching the battle play out, has remained in the Netflix corner with its recent refresh of Apple TV hardware and recently announced the sale of the millionth Apple TV, and shared that iTunes customers were "renting and purchasing over 400,000 TV episodes and over 150,000 movies per day."
Apple isn't at CES, nor will it add a rival's (read: Netflix) button to any of its devices. Has Steve Jobs forfeited category leadership by remaining dedicated to a single platform, while Netflix ports its brand (and video content) across 250 devices in the US?
Netflix and Apple also have a formidable contender in BitTorrent, whose just released stats at CES claim 100 million monthly active users. By delivering terabytes of data on a P2P sharing platform, BitTorrent now claims more customers than Hulu and Netflix combined - 30 million and 16.9 million users, respectively.
BitTorrent CEO Eric Klinker calls his P2P platform a "massive digital audience.” That said, it’s not Apples to apples, as "free downloads" is a different business model than streamed subscription services.
And don't rule out other players, including Boxee, which today announced its first content deal, with CBS, at CES.
While the debate rages in the US, audiences overseas are eagerly awaiting access to Hollywood movies and US television – and Netflix, for the moment, is leading that chimp charge.