“I drink your milk shake. I drink it up!” -
Daniel Plainview
In the famous conclusion of the movie There Will Be Blood, an enraged Daniel Plainview explains to a quivering Eli Sunday that his oil well had been drained dry by Plainview's neighboring wells. Even though Plainview was not a leaseholder on Sunday's once-bountiful land, he was nonetheless able to reach out and leach away Sunday's precious resource. To, in those memorable words, "drink his milkshake."
Competition in the pay TV market typically doesn't end as it did in There Will Be Blood (with a bowling pin to the head) but that doesn't mean that competitors aren't energetically trying to drink each other's milkshakes. But until now, that competition was geographically bounded and limited to another competitor (or two). A Cablevision might find itself fending off Verizon FiOS, DirecTV and Dish - but they never had to worry about Time Warner, Comcast or an AT&T reaching out with their straws and sucking up their customers.
Even as broadband Internet access has allowed video services like Hulu, Netflix and Amazon to spring up with a catalog of video and TV shows available nationally, incumbent TV service providers avoided the temptation of using the Web to poach away customers from providers outside of their service footprint.
That, however, appears to be changing. In the UK, satellite broadcaster Sky announced that it would be bringing some of its content and "most popular programming" to anyone with an Internet connection and ability to pay. In the U.S., Verizon said it would team up with Redbox to offer a streaming video service to non-Verizon FiOS subscribers.
Two services does not a trend make and it remains to be seen if content rights holders like HBO and Starz will bless such a move by allowing premium content to be included in any "off-net" offering. Such streaming services will ultimately rise and fall on the ability to secure attractive content (or cut-rate pricing). But rights holders, which have been engaged in increasingly contentious (and costly) retransmissions battles with their service provider partners, are no longer in an unassailable position themselves. Last week, Netflix rolled out its first original program, Lillyhammer, and both Google and Amazon are reportedly ponying up millions to produce their own original shows for their own streaming services.
If this keeps up, consumers may actually get a workable a-la carte video menu, albeit via a series of low cost, Web-streamed services and not from a single service provider. As for the incumbents, maybe it's time to reach for that bowling pin.
