Remember a few months ago when media companies were prepared to go to war with Netflix (NASDAQ: NFLX) on the grounds that the online video service was destroying their business?
Now, according to an interesting piece in the Wall Street Journal, "Media chiefs are shifting their public stance toward Netflix Inc. and are now trying to convince investors that the video streaming service will expand their business rather than destroy it."
Yet just last December Time Warner complained that Netflix's evolving business model -- away from mailing DVDs to streaming programs to monthly paid subscribers -- jeopardized the revenue growth of media companies.
Why the sudden change of heart? The WSJ gets to the point:
Media executives say Netflix's willingness to open up its wallet has altered their views. Last year, the company grabbed the industry's attention when it cut a four-year domestic deal with Time Warner's Warner Bros. for streaming rights to all 100 episodes of "Nip/Tuck" for roughly $200,000 per episode over the life of the deal.
Netflix has paid for licensing programming in the past, but many industry observers felt its $25 million annual deal with pay-per-view channel Starz was one-sided in the online company's favor. Should consumers get used to that kind of subscription pricing for content Starz normally charges for on a per-view basis, it could threaten the stability of multimedia content revenue.
On the other hand, if Netflix is willing to write big checks for movies and television programming, major media companies such as Time Warner CBS will see Netflix as a valuable business partner. That's what's happening now.
The new acceptance of Netflix also is based in part on the realization among many in the media industry that resistance to new content-delivery technology is futile, as the record companies have found out over the past 15 years. Here's hoping the visual media industry has a shorter learning curve.