Netflix Shoots Back

Netflix and Hulu in a screen grab Aug. 16. J.D. Powers says that, even with the ability to watch shows and movies on a computer, not many people are willing to cut the cord. (Source: Hulu/Netflix via Bloomberg)

Netfllix has been taking fire from subscribers, the media and rivals. Now it's shooting back. 

The turmoil started last summer, when Netflix unbundled its' streaming and mailed disc-on-demand services. Almost one million (of 24 million) subscribers cancelled and the stock dropped.

Then word started spreading about internet service providers (pretty much everyone but Verizon) putting data caps on heavy users - Netflix customers the most prominent.

Video gamers got annoyed when Netflix cancelled plans to add a game-disc-by-mail enhancement to its' offerings. 

Then new rivals emerged on the scene. DISH and recently Comcast/Xfinity added free or low-cost (Netflix-lite) movie streaming options, in an effort to retain customers. Google/You Tube,  Facebook and Apple are now angling to move into this space, where Amazon and (Wal-Mart owned) Vudu are also big players. 

And this past week, much hue-and-cry has been heard over the end of Netflix's four year deal with the pay TV movie service Starz, through which Netflix customers gained access to some especially hot titles from the Disney and Sony studio libraries.

But Netflix now sees positives in all this. Speaking at a Morgan Stanley investors conference this week, Netflix CEO Reed Hastings said the end of the Starz deal will now legally allow cable companies to offer Netflix as a pay channel. Why would they? To keep customers from switching the input of their TV to other devices that can nab Netflix and other streaming content (we're talking Roku, Boxee and Apple TV receivers, Blu-ray players, video game consoles and the internet apps built into new TV sets). In the process, these signal switchers might come to conclude they don't even need the cable box anymore. 

Then yesterday, Netflix spokesman Steve Swasey was downplaying the Starz content loss, noting that it had accounted for "only about 2% of Netflix viewing." Meanwhile, new deals Netflix has made directly with studios (including Epix, Film District, Open Road, Relativity and The Weinstein Company) will provide "an increasing flow" of hot titles in 'the next few months."

Most prominent among them - this week's Oscar winners "The Artist," "Hugo" and "Rango," with "The Artist" actually set for its pay TV debut via Netflix. Also among the coming attractions: "The Adventures of Tin Tin" (not even out on videodisc for another week), "Thor," "Transformers: Dark of the Moon," "Super 8," "The Immortals" and "Captain America."

Netflix also is acting more like a pay channel by investing big in original content - another reason it would like working/funding relationships  with cable companies (New York giant Cablevision has expressed interest.)

And it's trying to be a good citizen, doing right for hearing-impaired customers. "More than 80% of the hours" streamed by Netflix in December was content which had available captions or subtitles  - some added in-house, reported a Netflix blog post yesterday.