Why video streaming is the most disruptive technology-enabled business model in modern history
By killing disk media, driving people away from cable subscriptions, and letting consumers have a convenient, in-home experience, video streaming has been the most disruptive technology-enabled business model in modern history.
Think back to life before Netflix’s video streaming service. If you wanted to choose and watch a movie in the same evening, you needed to travel to your nearest Blockbuster to rent one. When you were finished, you needed to rewind it and return it before the deadline, or else pay a fee. You could have ordered a DVD from Netflix far enough in advance for it to arrive for movie night… if you had planned ahead. And if all else failed, you had to travel to your local movie theater and choose from what they had to offer, losing your viewing privacy in the process. The year was 2007, and the entertainment menu was meager compared to the modern array of streaming services and the breadth of shows and movies that each contains.
There’s a good reason that video resisted the internet age for so long: it’s data-intensive. Before household bandwidth was sufficient to stream video, the only way to get it was on physical media. Before 2002, you purchased or rented video on VHS tapes. Between 2002 and 2011, the medium changed to optical disks — first DVD, then Bluray — but the rental experience was the same. By 2011, however, only four years after Netflix launched their streaming service, people were streaming movies more often than renting them on physical media. Today, disks are only rented by quality connoisseurs who want resolutions and framerates higher than can be provided by their internet bandwidth. This, too, shall pass, as bandwidth increases.
At the same time that people began streaming their favorite shows and movies, they began to ask themselves, “Why am I paying 50 dollars a month for a cable package containing dozens or hundreds of channels that don’t interest me? And what does interest me I can’t watch, unless I conform my life to the show’s schedule?” The convenience of video streaming cannot be matched. Perhaps the only compliment that can be given to the old cable package model was that it encouraged users to explore content that they were not entirely interested in, simply because they could not watch what they were interested in. Thankfully, we no longer need to make that compromise. It’s no surprise that millions of people are “cutting the cable” each year, in increasingly large numbers. Between 2010 and 2018, approximately 12 million subscriptions were eliminated, at an accelerating pace.
A similar trend can be seen in box office sales. Going to the theater can be a fun social event, but when you want to watch a movie alone or with a partner, there’s no better option than an evening on your own sofa. The upward trend in box-office sales halted in 2002, and has since declined consistently. It used to be that a trip to movie theater was a standard venue for couples on a date. But let’s be honest; going to the theater every weekend adds up, and there are only so many good movies released in a year. Better to stay home and stream your favorite TV series, which will provide many weekends of entertainment and greater privacy. And not only is it less expensive, but it’s also more convenient.
I, personally, have never owned a DVD or Bluray player, and probably never will. I did have a cable subscription for a brief period of time, so that my wife could watch the Superbowl live before it was streamed. And my trips to the movie theater are reserved for major releases that I want to see before they’re available for streaming— perhaps two a year, at most. Meanwhile, my wife and I order takeout and stream comedy TV series at least once a week, and I doubt we’re the only ones. As disruptive as video streaming has been to the entertainment industry, my wife and I agree that it has been for the better.
