Netflix: Chicken or Egg to Incumbent VOD?

At this week’s On Demand Summit, Terry Denson (VP of global strategy at Verizon Communications) proclaimed that over-the-top on-demand services like Netflix owe their success to multichannel operators. As quoted in Multichannel News, Denson said:

“The reason they have a meaningful on-demand position is because of what we did among the content providers and distributors who invested in the [on-demand] platform. We accelerated and facilitated consumer behavior so that when it was time for a Netflix, for instance, to make a decision about whether they want to go streaming or not, streaming makes sense because the behavior for customer consumption is now so strongly to on demand.”

Netflix owes its success to changes in consumer behavior brought about by the on-demand efforts of MVPDs? Are you kidding me?

Before Netflix launched its streaming service, on-demand content consumption was virtually non-existent (hell, disc rentals were still dominant). Regardless of what MVPDs may have been doing in the lab or behind closed doors, the reality was that, for consumers at least, on-demand did not exist, making the notion that MVPDs “accelerated and facilitated” on-demand behavior seem downright absurd.

One could just as easily argue that, without Netflix, MVPDs would still be twiddling their thumbs (many contend they still are) and on-demand would have progressed little to none in the last decade. It was Netflix that forced pay-TV operators to focus more resources on building out their own on-demand libraries, not some ahead-of-the-curve effort of incumbents.

Then again, maybe in some distorted way Denson is right: if it was not for the fact that MVPDs botched their early on-demand efforts, there may have never been an opportunity for Netflix to move into the streaming market in the first place, much less to dominate the entire on-demand space.