As the hackneyed, but occasionally unavoidable old cliche proclaims, ‘content is king’.
Bosses at connected TV platform YouView have always been keenly aware of this, but deals to sign up content providers and the development work to deliver the technical standards they demand take time.
And so for two years – with the exception of films from Sky – the only way to get paid-for extra content has been to sign up to TalkTalk or BT’s subscription versions of the service.
Netflix’s arrival changes that.
It boosts customer choice and, for the first time, introduces a challenge to the two ISPs who until now have accounted for the biggest share of YouView activations.
With the addition of a single player app, all YouView households now have access to a growing mix of first run programming without having to change broadband provider or enter a lengthy contract.
Smart TV’s include Netflix access, but they’re still only in a minority of homes, many of which only just bought a new TV for digital switchover. They’re not going to be replacing their set anytime soon.
The ability to pick up a YouView box in Argos or John Lewis and watch that House of Cards remake you’ve heard so much about, or to watch Netflix’s exclusive Daredevil TV series from Marvel on your HD TV will significantly boost the attraction of YouView as a subscription-free retail product.
As a result, some people who might have gone to BT or TalkTalk for a bit more TV will now instead opt for the retail option.
But it’s not just potential new sign-ups that the ISPs risk losing.
Both firms face the prospect of subscribers leaving at the end of their minimum terms and enjoying a rival service’s content on a box their shareholders subsidised.
Existing customers might well compare the on demand content they offer with that available from Netflix and conclude that the US streaming service offers more of what they want.
BT recently and quietly suspended sales of its bolt-on. The only official comment has come from online support staff who tell customers the move was to enable improvements to be made.
Well, there’s a lot of room for improvements.
As of Tuesday morning, BT’s on demand TV and film bolt-on was offering just 5 episodes of Doctor Who compared to seven full seasons on Netflix.
When an existing BT customer searches for the series and sees the two episode counts sitting side by side, which service are they going to decide offers the better value?
Yet when the original BT Vision first launched it was entirely based around what we now think of as on demand boxsets.
In many ways it was ahead of its time, and customer reports showed that many found the idea of downloading episodes on a pay per view or unlimited basis confusing.
Deals with pretty much all the major TV & film studios were allowed to wither so that today the service looks limited and poor value for the £5 monthly fee – just 99p less than Netflix’s far larger catalogue, which includes blockbusters such as Skyfall, The Hobbit films and Marvel’s Avengers series.
Speaking to journalists last week, CEO Gavin Patterson admitted the firm had “de-focussed” on its non-sport TV offering.
Part of the remedy is a deal – the world’s first – to allow BT customers to pay for Netflix on their phone and broadband bill.
Yesterday’s YouView press release mentioned “an exclusive BT TV customer offer including Netflix.”
The ISP is going to have to ensure it really is an offer which includes Netflix rather than just being Netflix if it’s to stop existing customers from cancelling at the end of their contract and chasing deals for cheaper broadband while still enjoying Netflix’s content on their existing set top box.
Its slower development process means TalkTalk is spared immediate competition from Netflix – its boxes aren’t due to get the enabling software update until early next year.
When it does, how positively or harshly will users judge the ISP’s new boxset service against Netflix’s content?
It’s not just the ISPs who run the risk of losing out.
Last year Channel 4 took £45m from ads placed in and around content offered via its 4oD catch-up and on demand player. The more people who watch via the platform, the more ad revenue Channel 4 earns.
But anyone subscribing to Netflix can watch The Inbetweeners or Friday Night Dinner ad free. And while Netflix pays Channel 4 for its content, like all retailers and service providers it’s on an endless quest to drive down costs and lower what it pays suppliers.
If Netflix pulls viewers away from the 4oD app, Channel 4’s ad growth plans could take a hit.
So while YouView as a whole gains from the Netflix deal, at least three of its shareholders could suffer.
This neatly demonstrates how the platform’s backers are able – sometimes with persuasion and shepherding – to set aside their own narrow interests to build a platform which is hoped to eventually reach 10m households.
Netflix should get them some way towards that goal but CEO Richard Halton and his team aren’t resting there.
More content providers are already promised and, I’m told, the wide and positive coverage of Netflix’s arrival has sparked interest from yet more.
In the two and a half years since their launch was greeted with cynicism and scepticism by much of the media, Halton and co remained stubbornly confident that they were on to a winner.
That optimism has now been ringingly endorsed by the world’s largest and most successful pay video on demand service, a true giant which has its pick of platforms and doesn’t devote time and cash to supporting those which are, as YouView’s critics once claimed, “dead on arrival”.
No wonder then that there were plenty of smiles on show last night as Team YouView hosted a celebration on the Southbank.