Why NetFlix and HuluPlus Will Win…

In business there are several ways you can win. You can be head and shoulders above everyone else. Your competition can be total screw ups. You can gain a defacto monopoly by political legerdemain. Or some mix of all of them. Case in point –

In just over two weeks, Emmy-winning AMC drama Mad Men is slated to begin its fourth season on the basic cable channel. But with negotiations between its parent company and AT&T U-Verse over carriage fees, the cable and internet provider might force subscribers to relocate their premiere parties to the apartment of someone with Comcast.

It’s not just AMC that faces being dropped by U-Verse. Female-oriented channel WE tv and the Independent Film Channel could also face the firing squad if AT&T can’t reach an agreement with parent company Rainbow Media before July 25.

This is similar to the situation faced by Cablevision last March when its pricing squabble with ABC resulted in customers missing a bit of the live Oscars telecast.

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It is crazy that a channel customer should be losing any access to the entertainment over some internal provider-carrier squabble. That is fighting over who washes the dishes kind of silliness. And the customer be damned thank you very much.

The better model is the carrier is paid by the subscription of the consumer not by the channel provider. No squabbles occur. In fact under that scheme the two parties work in concert to maximize subscription rates. The whole effort become customer focused rather than channel focused as it is now on cable.

And that is why the likes of Netflix and Hulu will be winners in the space.