As business change continues to swirl around video games and other media properties, Redbox prepares a 20% price increase (albeit one that shouldn’t have a bad impact on or create fallout from their customers), and Netflix keeps making stupid mistakes, you might be wondering where you’re going to get your next movie rental.

There’s a big problem building.

I was discussing the salient part of this with a client earlier this week. He’s about fifteen years younger than I am, and that was enough of a spread in ages that when I explained that in my youth the only time you could see The Wizard of Oz was once each year, on TV, at the hour determined by the TV network that had broadcast rights to tha film, he was flabbergasted.

Yes, my younger friends, before the Internet and DVD players VCRs, you could only see not-currently-in-theaters movies when they were broadcast on TV. And music, distributed on now-hip vinyl record albums, was only available that way, meaning you listened to what you had purchased in your home, and nowhere else. But that stopped being the model for media consumption decades ago. Music became available in many forms, most of them portable, and movies were just a trip to the video rental store away, and the collections available became larger and larger, limited only by the shelf space at your local Blockbuster.

Now, your options are shrinking. When even the super-rich, like Venture Capitalist Fred Wilson, admit to being music pirates, there’s something wrong. Fred can certainly afford to buy whatever he wants to listen to, just as I don’t need to download movies instead of renting them. But increasingly, and absent such behavior, there’s no choice other than to throw our media consumption habits backward about forty years.

Back to Netflix.

In laying out “the Netflix comeback plan“, CEO Reed Hastings says Netflix is no longer in the “show you what you want to see” business, but instead has become what amounts to nothing more than a very well-stocked network. Or, as I pointed out even before Netflix started making their most egregious mistakes a few month back, Netflix has become an old media company. This, even while Netflix has become responsible for almost a third of all United States Internet traffic during peak hours.

Of course you feel like a character in a video games. You can move in any direction, but there’s no clear choice for what’s right.

Do media companies have the right to dictate license terms for their products? Of course. But while (for example) Warner Brothers has every right to put the Harry Potter films back “in the vault”, stopping sales of new copies of the DVDs, Netflix becoming less a repository and more a network means that we’re all going to get our movies wherever we can find them. I mean, seriously, does anyone believe that this horse can be put back in the barn?

Maybe Reed Hastings isn’t as dumb as he’s recently been portrayed. Maybe Netflix’ business model collapsing was a matter of movie studios and other media companies getting smarter. Although, I doubt it, on both points. Netflix was the model for change in the media business, and Mr. Hastings blew it, and the studios may be getting smarter, but in reigning in Netflix they’ve actually encouraged a piracy-based model; they were greedy, and now they’ll make even less money from their collections.

Anyone want to watch the latest episodes of TV, on-line, for free?

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