Several changes are underfoot which could be shifting the direction of curation.  Over the last 24 months major content distribution platforms have been steadily moving towards becoming more curation focused. Curation feels like the natural evolution of content. As companies try to move up the value chain they become more focused on curation. As they seek greater margin – they focus more heavily on becoming a curated platform.

Still today there is talk of traditional (linear and paid) TV being killed by disruptive technologies like Internet TV.  But this believe seems rather shortsighted to me.  First, Internet is just a distribution approach and others could certainly adopt it. Both DirecTV and Dish have examined Internet delivery of their services for example – despite the fact one might argue Internet delivery is at odds with their current use of satellite delivery.  Under that scenario, Internet TV hardly seems disruptive to their business in the way most people are thinking about it. Secondly, I’m not want to quickly rule out innovation from incumbents.  Even when the innovation doesn’t originate with incumbents many are still quick to adapt.  Look at DVR technology. While Tivo really introduced the possibility and potential of the technology, traditional MSOs and telecos integrated the technology quickly into their existing business models and one could argue it was these exact MSOs and telcos who took the technology to mass markets.  MSOs and telcos still feel ready to adopt new innovations.

There has long been talk that free content or user-generated content would disrupt existing business models into nonexistence, but this has yet to come to fruition and I doubt it is on the horizon. Clearly we aren’t completely through the cycle of change, but as Jeff Bewkes, Chairman of the Board and CEO of Time Warner recently posited –  TV is taking over the Internet, rather than the Internet taking over TV.  YouTube is reportedly launching paid subscriptions for some of their video channels which only seems to lend support for this premise.  Multiple business models around  entertainment services are coexisting and many are thriving in the face of perceived competition.

Netflix recently laid out their Long-Term View – most of which is completely consistent with what I’ve laid out above. It is also evident, Netflix too is pushing forward to be not just a distribution platform, but also a curator.  As Ted Sarandos, the company’s Chief Content Office recently put it –

if we believe our own theories, most content will eventually be delivered online to most people on the planet. Then we will have to distinguish ourselves from emerging competitors in other ways…You do not want someone looking at two sets of content from different services, then shrugging their shoulders and thinking that they are about the same. We want to avoid that down the line…Our appetite for non-exclusive content is going to near zero. We are willing to pay more for programming on an exclusive basis and for individual programming on a curated basis but we are not taking on a lot of non-exclusive bulk. It gets very confusing for consumers when they see two different products advertising the same content brands.

Some of the key take-aways from Netflix’s Long-Term View:

For most existing networks, this economic transition will occur through TV Everywhere. If a consumer continues to subscribe to linear TV from a multi-channel video program distributor (MVPD), they get a password to use the Internet apps for the networks they subscribe to on linear. The more networks successfully keep their prime-time programming behind this authentication wall, the less “cord cutting” will occur. The same consumer who today finds it worthwhile to pay for a linear TV package will likely pay for a “linear plus apps” package…

We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish…

We are not a generic “video” company that streams all types of video such as news, user-generated, sports, music video, or reality. We are movies and TV shows…

Another area of focus is personalized merchandising, which drives what content we feature on a given member’s initial screen. Google search is an example of a ranking system, where results are automatically computed to show Google’s estimate of the most relevant answer to the query. For Netflix, the user’s home page is the personalized ranking of what we think will be most relevant for that specific user at any given time. By analyzing terabytes of data from every recent click, view, re-view, early abandon, page views and other data, we are able to generate a personalized homepage filled with the content most likely to please. Our aim is to keep inventing and tuning algorithms to generate higher satisfaction, viewing, and retention, for whatever the level of content we can afford in that territory…

All of our algorithm work, like with Google search ranking, is proven or disproven by A/B testing. Only algorithms that lead to an improved experience get rolled out to everyone…

As we’ve gained experience, we’ve realized that the 20th documentary about the financial crisis will mostly just take away viewing from the other 19 such docs, and instead of trying to have everything, we should strive to have the best in each category. As such, we are actively curating our service rather than carrying as many titles as we can..

Over the years, we’ve successfully developed the art of estimating how much our members will watch a given show or movie based upon how it has performed to date in other, earlier channels (theatrical for movie; broadcast and cable first-run for TV) and on how comparable titles have performed on Netflix. This generally enables us to avoid overpaying for content, relative to member enjoyment…

With Originals, we are now extending that concept to estimate the attractiveness of projects that are brought to us by professional producers. There is more judgment required in this process, and more variability due to the art in the production process, but because of the data we have on our members’ viewing habits and our experience in licensing a broad range of content, we think we can do as good or better job than our linear TV peers in choosing projects and setting budgets…

At times we have worried about the strategic motivations of ISPs that are also MVPDs, but the absence of cord-cutting has mitigated this concern. In the USA, MVPDs have remained stable at 100 million subscribers while Netflix has grown to about 30 million members. The stability of the MVPD subscriber base, despite Netflix large membership, suggests that most members consider Netflix complementary to, rather than a substitute for, MVPD video. MVPDs are keeping their subscribers through TV Everywhere authentication. Internet video services like Netflix, MLB.tv, iTunes and YouTube are not currently a material strategic problem for companies that are both an ISP and an MVPD.

In the case of Netflix, HBO or other TimeWarner properties, and even YouTube the great purveyor of “free” content, the move towards margin-rich curation is tangible.  It is increasingly clear that multiple business models will successfully coexist – even over an extended period of time.  Consumers are building suites of entertainment options instead of locking into a single service provider of content. Each business model has their own respective approach and each approach adds value in different ways.  But common denominators do not facilitate differentiation.

If (read: when) all content can easily be delivered via the Internet it will be. In that environment, distribution isn’t a differentiator so companies will increasingly turn to curation in an effort to provide a unique value proposition.  At the same time, consumers will maintain relationships with several “curation providers”.