Where Netflix streaming is thin, YouTube could rule

The holes in Netflix's streaming library are getting harder to ignore as subscribers peruse the indies and the dated catalog titles. If Netflix won't offer choice, rivals seem more than willing.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
4 min read
YouTube's video rental service is easy to use, offers high quality video and the quality of content in some categories is superior to Netflix. The rub is the films are available for rent only on a per-film basis. Screen shot by Greg Sandoval/CNET

Having overdosed recently on the supply of documentaries and foreign films within Netflix's streaming library, I was hankering for something that went "boom." But as far as interesting action titles were concerned, Netflix's cupboards were bare.

Meanwhile, over at YouTube's relatively new and much-ignored movie rental service, the streaming shelves overflowed with full-length titles that, while not new, were a couple of grades higher than the dregs found at Netflix that day. At YouTube, there was "Gran Torino," "The Bourne Supremacy," and "Sucker Punch." I went with "Bourne." At $2.99, the price was right and the transaction process was a breeze. Within seconds, Google was streaming to my PC. Sure, the cost of the movie was the equivalent of 30 percent of my monthly Netflix fee, but what it came down to was that Netflix didn't have what I wanted.

Web video services have become an alternative to traditional cable and broadcast TV, and Netflix is at the forefront of this shift. What is becoming painfully obvious, though, is that the streaming content Netflix currently offers just isn't enough. Managers there are beating the bushes in Hollywood to obtain as many TV shows and movies as they can get their hands on. Just today, Netflix announced it had obtained streaming rights from Open Road Films, an indie film studio. Netflix will be the only place online that offers "Killer Elite," starring Robert DeNiro and Clive Owen and scheduled for theatrical release in September (trailer available below).

The company has struck dozens of similar indie deals, yet too many holes still exist. Netflix can't get all the streaming movies and TV shows it wants because it can't afford them. To offer unlimited viewing for the low price of $8, Netflix is stuck with back catalog titles, independent films, and the occasional one-time blockbuster. The big studios aren't going to give up streaming rights to blockbusters and new releases cheap. Some just don't like Netflix's model and believe it hurts other distribution outlets.

This presents opportunities for companies such as Amazon, Hulu, Apple, Google's YouTube, and Wal-Mart's Vudu. They have a chance to find a way to help sate consumers' ever growing appetite for online video.

For now though, these Netflix challengers haven't figured it out. YouTube, acquired by Google in 2006, is the No. 1 video destination on the Web. The video-sharing service saw 111 million unique viewers in May. Many people visit to watch the scores of film trailers available on the site to decide on whether to rent or buy a movie. A check of the trailers for "The Adjustment Bureau," "Sucker Punch," and "Bourne" don't include any notice that a viewer can rent the movies there.

YouTube managers also still can't match Netflix when it comes to offering multiple ways of watching streams on TV sets. Neither can Apple, Amazon or Hulu. Netflix is available on hundreds of different Web-connected TV sets, set-top boxes, and software platforms, including Xbox, Wii, and the Roku box. This is one of the reasons why Netflix has accumulated more than 23 million viewers and the company's share price is trading at $265, more than double the year-ago price of $117.

Still, Netflix's weakness is the limited choice the company offers with regards to content as well as the ways I'm allowed to acquire that content. In addition to streaming, Netflix mails DVD discs to customers' home but who wants to wait anymore? Isn't it amazing how clunky that process seems now?

Netflix could help fill the gap in its content offering by opening up the rental options. If a new release isn't available for streaming, let me have a chance to pay the $3 or whatever it is to rent. Netflix could offer customers a chance of paying $10 to buy a movie that I'm particularly fond of and could also allow me to store on the company's servers. Amazon gives me these choices.

Related links
YouTube expands its movie rentals
Netflix subscribers now equal Comcast's
Analyst to Netflix: Beware of desperate competitors

Netflix has always said that subscribers favor the clarity of the all-you-can-eat rental model. The company has also said it isn't interested in renting on a per-title basis or in film sales. That's logical. Most people will argue that they want Netflix to keep prices down. But I believe Netflix's content acquisition team is going to have a hard time keeping up with demand. People are moving through the streaming library pretty fast and I predict the clamor for more and better titles is only going to get louder.

For the time being, people seem satisfied to supplement their Web video viewing by using multiple services. Some go with Netflix for movies and Hulu Plus for its depth in TV shows. Others go with a Netflix and then Amazon for its higher-grade films.

How long will consumers be satisfied with this hodge-podge? Who knows, but if Netflix is unwilling to offer consumers more choice, someone else will.