Blockchain is quickly becoming a buzzword in daily conversation, largely due to the popularity of cryptocurrencies like bitcoin, but also because of the innovations being built with the technology. As entrepreneurs and developers move to adopt the blockchain, its potential to disrupt businesses far and wide becomes increasingly obvious. Blockchain technology uses the power of an encrypted, organized network of computers to run all kinds of processes. Industries like data storage, banking, cybersecurity, supply chain management and crowdfunding are some of the first to be affected, but these may just be the first dominoes to wobble.
Is blockchain technology a threat to Netflix and other streaming competitors like Hulu? The answer first requires a look at Netflix, and then how the blockchain might interrupt the company’s wildly successful model. (See also: Is a Netflix Debt Bubble Coming?)
The Multifaceted Netflix
Many don’t realize that Netflix Inc. (NFLX) is much more than a streaming platform. Besides providing on-demand video to millions of customers daily, the company also reinvests a large portion of their revenues into producing their own shows, cutting-edge storage solutions and market research. This formula has worked well for them so far, and in 20 years Netflix has gone from a humble service that sent DVDs via the post office to a market capitalization of $80 billion.
This level of success did not happen overnight. Netflix is skillful at adopting innovative technologies and pivoting into new business models, keeping their services relevant and closely following their market. On this note, blockchain technology is more likely to help Netflix than hurt it. One can be almost certain that the company has already studied blockchain technology closely, and is simply watching for competitors (or potential acquisitions) to emerge and prove themselves in the market. (See also: Global Food Leaders Team With IBM on Blockchain)
Starry-eyed bitcoin fanatics may say that blockchain is the definite future, but it will may be stalled without a lot of arduous work. Blockchain is powerful, but it is by no means a turnkey solution. Companies are still figuring out how to use the tech to support their own business flows, but those who are successful learn that blockchain-based processes are sustainable, safe, and inexpensive.
Blockchain is a new way of building software, and no single system can stand beside the complex creature that is Netflix. If anything, a company dedicated to using blockchain to unseat Netflix would have to incorporate multiple chains, each responsible for a different aspect of business. Today, there are few projects with ambitions of this height, but there are many who could disrupt some functions of the Netflix machine.
Dethroning the King?
There are still few companies who deign to compete with the likes of Netflix, or at least at their scale. The closest would surely be StreamSpace, a platform that plans to build a decentralized video streaming marketplace on the blockchain. StreamSpace’s system will be responsible for storing media and delivering content, but also crowdfunding, letting creators fund their next project directly from fans. StreamSpace plans their initial coin offering (ICO) for later this Autumn.
“Our goal is to become the world’s leading destination for innovative film content, with a deep catalog that will enable personalized viewing experiences and that will be rewarding for our core customers: creative, independent filmmakers and film aficionados,” said Robert Binning, the company’s CEO.
While this is an example of how production fundraising might change in the future, there exist other blockchain projects that may also alter the landscape. While Netflix may store all its data on cloud servers, one of the applications of the blockchain with the most potential is peer-to-peer storage.
Companies like Golem are working to create an amorphous storage solution using the extra space on peoples’ computers, a technology that Netflix could use in many ways. Envision a Netflix like today, but instead of paying $7.99 per month, a customer could instead watch for free, and agree to let Netflix use their computer’s disk space to power other streamers in the area.
Even Comcast Corp. (CMCSA) has decided to enter the fray. With plans to build a blockchain video advertising platform, the company is poised to quickly usher change into the industry. The “Blockchain Insights Platform” can be used to efficiently identify audiences and trends, making for better targeting and more relevant ads. That Comcast, a company with little to gain from changing the status quo, is exploring blockchain makes for a significant development.
Security, storage, content delivery and even fundraising are possible through blockchain, but only time will tell if they can pose a threat to the old ways. For now, these types of projects are still in their earliest stages, and still have an enormous obstacle to overcome: gaining users. (See also: Oil-Rich Gulf Countries Move to Adopt Blockchain)
Power to the People
Blockchain’s strength comes from its network. When individuals participate in a blockchain service, they’re essentially “voting” for that product with their computer. With bitcoin, these people are caller “miners” and are rewarded for processing transactions. A non-currency model, like any Netflix competitor might be, is another story.
If a service doesn’t have enough users, the blockchain is naturally weaker. After all, how successful would the security of a peer-to-peer system be with only three participants? This gives companies like Netflix, which have great brand recognition, an advantage. The company could simply require users to download a small app, and immediately have a decentralized system 100 million strong.
In the end, while there are some great ideas floating around out there, it’s easier for Netflix to wait on the sidelines. Blockchain startups are born each day, and while some may have a unique idea, the reality is that the young technology will require significant time and investment before becoming a true “Netflix killer”.