The splintering of television

When cable TV began to appear inside millions of homes, it seemed liked a blessing – dozens of new channels beyond the old broadcast standbys, promising that there would always be something to watch. And there was, but it came with the tradeoff of quantity for quality. Soon enough, we came to accept cable TV as a mixed blessing, an endless quest for something watchable if we just channel surfed a little bit longer.

The rise of on-demand streaming television on the Web was supposed to change that. You could line up your favorite movies in your Netflix queue, or skim through the site’s recommendations. No more desperate thumbing on the channel-forward button. For a while, Netflix seemed like the TV we always wanted cable and satellite to be – an ocean of programs, and an easy way to navigate to the islands of quality we were looking for.

But increasingly, Netflix is looking like another mixed blessing. The costs of licensing movies and TV shows is forcing the company to make hard decisions on which programs to offer its subscribers. Two years ago, the shift first became evident to cinephiles who were disappointed when much of Criterion’s collection of classic films began migrating over to Hulu.

A year later, Starz pulled its catalog of hundreds of movies from Netflix, including hits like “Toy Story 3.” Independent distributors complained that Netflix wasn’t interested in their movies. Recently Netflix said it’s scaling down its content deal with Viacom for programs on channels like MTV, Nickelodeon, and Comedy Central. And this week, 1,794 titles from MGM, Universal, and Warner Bros. vanished from Netflix’s library.

That shift was part of a broader strategy by Netflix to focus less on movies and more on TV shows, in particular its own original programming. Last quarter, on the heels of the launch of “House of Cards,” Netflix said its subscriber base grew by about 2 million to 29.2 million – giving it more subscribers than HBO. It’s since released a horror series “Hemlock Grove,” and will later this month revive “Arrested Development.”

The shift is working well for Netflix. The unexpected rise in subscriber growth helped push the company’s stock up 18 percent in the past three weeks. One bullish analyst said Netflix could still rise more than 50 percent to $325 a share, arguing that Netflix is now more like HBO and Starz. And that as TV network companies go, it’s cheap. Not long ago, a Netflix executive said the company’s goal was to become like HBO faster than HBO became like Netflix, and it seems his wish has come true.

While Netflix’s bold entry into original programming appears to be working for the company, it’s hard not to lament the company’s move toward the cable-TV business model it set out to disrupt. It’s not quite a capitulation since the two models are moving toward each other. But it feels small in comparison to the potential Netflix had of being the go-to place for watching quality video programs online.

Instead, the world of online TV is growing just as splintered as cable TV seemed after the initial thrill of installation wore off. Instead of surfing channels, I find myself surfing video platforms that each offer a smattering of movies and shows I enjoy. I watch Netflix less than I used to, and I hear from my friends that they are as watching less often well. I’m glad Netflix is doing well, and I liked well enough the seven chapters of “House of Cards” I saw before relegating it back to my queue, but I kind of miss the old Netflix, which used to surprise me with interesting recommendations than it does now.

Content owners like TV to be fragmented into different channels or providers because it serves them well. In an 11-page essay released after the company’s strong financial report, CEO Reed Hastings painted the online TV industry as a long-term work in progress. In time, apps would replace channels, leaving a lot of companies offering video content. But Hastings also noted that “content owners always want another bidder, and never want one bidder to become too strong.”

After trying to changes the rules of the digital-TV game, Netflix seems to have settled on a less ambitious approach: In order to stay in that game, Netflix has chosen to play by those rules. It’s the same old fragmented TV landscape we’ve had for decades, only instead of channel surfing we’ll be app surfing. But that model remains waiting for someone to come along and reinvent it. Perhaps Hastings has some secret plan up his sleeve, but right now Netflix is not looking like it’s ready to reinvent online TV.

Kevin Kelleher

Kevin Kelleher is a writer living in the San Francisco Bay Area. He has worked at Bloomberg, Wired News and The Industry Standard magazine and has written for Wired magazine, Reuters, Fortune, GigaOm, Popular Science, Salon, Portfolio as well as many others.