1) Satellite/cable providers receive most of their content via satellite feeds. The programmer covers the cost of the satellite uplink / leasing space on multiple satellites. This is very expensive. Netflix handles the distribution costs over IP.
2) Programmers have cable/satellite providers backed into a corner. They have total control of the content that people want. The providers are at a huge competitive disadvantage if they can't make a deal so the programmers end up getting very favorable terms.
3) Consumers keep paying higher prices for cable/satellite. This whole concept of 'cutting the cord' has only arisen in the last year or two and it's still a small movement. If people are willing to pay the programmers will naturally test the limits. Contrary to popular belief this has not benefited the carriers. Some cable companies actually lose money on their video offerings these days. (that's why they're pushing triple-play so hard)
4) The programmers are hedging their bets. Prices will go up for Netflix in the long run. For now the programmers are smart enough to see the trend moving away from linear video via cable/satellite to IP and they don't want to miss the train. My guess is they want to "educate" customers on how to pay for video online by making deals at sweetheart prices. This won't last. Especially when the competition presented by piracy is massively reduced via ACTA. We already have the domain name seizure legislation. In a few years they'll be free to jack prices up.
1) Satellite/cable providers receive most of their content via satellite feeds. The programmer covers the cost of the satellite uplink / leasing space on multiple satellites. This is very expensive. Netflix handles the distribution costs over IP.
2) Programmers have cable/satellite providers backed into a corner. They have total control of the content that people want. The providers are at a huge competitive disadvantage if they can't make a deal so the programmers end up getting very favorable terms.
3) Consumers keep paying higher prices for cable/satellite. This whole concept of 'cutting the cord' has only arisen in the last year or two and it's still a small movement. If people are willing to pay the programmers will naturally test the limits. Contrary to popular belief this has not benefited the carriers. Some cable companies actually lose money on their video offerings these days. (that's why they're pushing triple-play so hard)
4) The programmers are hedging their bets. Prices will go up for Netflix in the long run. For now the programmers are smart enough to see the trend moving away from linear video via cable/satellite to IP and they don't want to miss the train. My guess is they want to "educate" customers on how to pay for video online by making deals at sweetheart prices. This won't last. Especially when the competition presented by piracy is massively reduced via ACTA. We already have the domain name seizure legislation. In a few years they'll be free to jack prices up.