Netflix Faces Stiffer VODCompetition

Netflix faces competition in digital video-on-demand and pay-per-view offerings from players like Comcast, Time Warner Cable, DirecTV and Dish Network, according to analysts at Trefis. The reason is a
recent Federal Communications Commission decision allowing new films to be made available on-demand before such films are available on DVDs.

The FCC generally prohibits the use of so-called "selectable output control" technology, which encodes video programming with a signal to remotely disable set-top box output connections. But the FCC granted a waiver from those rules for Motion Picture Association of America members who want to protect copying of content if a new digital release window is created.

Allowing movie studios to temporarily prevent recording from TVs could pave the way for movies to be released to homes sooner than they are today. The FCC said the waiver is therefore in the public interest, because the studios are unlikely to offer new movies so soon after their theatrical release without such controls.

The FCC decision allows movie studios (like Paramount, 20th Century Fox, Disney Studios) to block analog signals on TVs and video recorders when consumers purchase their latest on-demand movies.

This decision was pushed for by Disney, Time Warner and Viacom to reduce the likelihood of content piracy, especially for new films where instances of piracy tend to be high. While this move gives movie studios more control over their content offering, it also gives a boost to cable providers that compete with Netflix to deliver the latest films to consumers, Trefis argues.