updated 12:00 pm EST, Mon December 13, 2010
Time Warner chief claims Netflix insignificant
Time Warner chief Jeff Bewkes in an interview published Sunday tried to downplay the significance of Netflix. He insisted the streaming video provider was far less than it was made out to be in the media. Netflix was much smaller than Time Warner, he argued, and had no chance of disrupting the larger company, likening it for the New York Times to the Albanian military's relative insignificance.
"Itís a little bit like, is the Albanian army going to take over the world?" he asked. "I donít think so."
He nonetheless characterized Netflix as having betrayed the video industry. Time Warner and others embraced Netflix at the end of the 1990s as a supplement to their DVD businesses but didn't expect its Internet-based business, with a much larger catalog and lower prices than retail stores, to undermine DVD sales. The service is widely credited for leading to Blockbuster's bankruptcy as the retailer's inherently small stock and high prices made it difficult to compete.
Bewkes further suggested that Time Warner may not renew an instrumental deal with its TV channel Starz, which helped get Netflix much of its content, unless the service paid significantly more. "At $8 to $10 [per month], it doesn't have the economics to support high-value programming," he said.
He called the current period just a temporary one of "experimentation" and that it would return to a more traditional model soon.
The remarks nonetheless contradicted some of Time Warner's recent behavior, much of which is believed to have been tailored to actively curbing the rise of Internet video. It recently launched a barebones cable package that was ostensibly tailored to those hit by economic factors but is widely believed to have been to stem cord-cutting users going to Internet video. It also made an abortive attempt to trial low bandwidth caps that were supposed to recoup costs from frequent users but were simultaneously low enough to make it difficult or impossible to use Internet video as a substitute for Time Warner's cable packages.
Netflix is now believed to be one of if not the most popular digital video service in the US and could represent a fifth of peak US Internet traffic. It has near-ubiquity on computers, game consoles and home theater equipment, even leading to a placement on the new Apple TV despite Apple's interest in safeguarding iTunes.