The Media Equation: TV Foresees Its Future. Netflix Is There.

But Netflix already has.

Netflix knows a little about transformation. It’s worth remembering that it managed to go from the largest user of the Postal Service to the largest source of download traffic on the Web in the span of months, not years. After a big stumble on pricing in 2011, Netflix recovered and then some, using its expertise in technology and algorithms to accrue over 36 million users worldwide, a number that will probably grow when it announces its earnings on Monday. Its stock has already risen more than 200 percent in the last year.

But few would have guessed that Netflix’s software expertise would extend to entertainment produced by top-flight actors, directors and writers. Beginning this year, Netflix streamed four original series — “House of Cards,” “Hemlock Grove,” “Arrested Development” and “Orange Is the New Black.” The shows earned generally good notices, kicked up a great deal of chatter, and, drum roll here, were nominated for 14 Emmys. It was the first time an Internet-only service earned a seat at the big-boy table in television.

The Emmys were the most prominent marker of change, but hardly the only one, in a week full of headlines about what TV is becoming. It’s not their first foray, but if Apple and Google move further into the television space, they are sure to collide with not only traditional players, but Netflix, Amazon, Sony and Intel. And Aereo, which so far is a small but persistent player backed by Barry Diller, won another court victory for its plan to totally upend broadcast networks, by streaming their content without compensating them.

Meanwhile, what were the traditional television players up to? Squabbling yet again over retransmission fees, with a standoff between CBS and Time Warner Cable that could set off a blackout, driving audiences to other ways of viewing. The only constant was steady price hikes on cable bills.

The future of television — a place where cable is not the only answer for average viewers — just drew a little closer.

Netflix has earned its place in that future. It won some victories on the programming side by financing creators and staying out of their hair, an approach invented and perfected by HBO. Given that HBO pulled in 108 Emmy nominations last week, Netflix has a long way to go. But David Bianculli, a professor at Rowan University in New Jersey who blogs at TV Worth Watching, suggests another view.

“It took HBO 25 years to get its first Emmy nomination; it took Netflix six months,” he said. In that sense, Netflix is more like Pixar than Hulu, showing that a Silicon Valley company could produce creative, successful programming.

Ted Sarandos, Netflix’s chief content officer, told The New York Times last week that the Emmy nominations solidified the idea that “television is television, no matter what pipe brings it to the screen.”

He’s right. Television used to come over the air or through the coaxial cable. Now it seems to come from everywhere on all kinds of devices.

Both Google and Apple continue to hover around the honey pot of television. Apple’s rumored effort at making a TV set has been like Godot — much anticipated, never arriving — but in the meantime it is in talks with distributors like Time Warner Cable and programmers like Walt Disney to explore collaboration on apps.

Google has been in talks with program providers, including cable channels, about distribution over the Internet, a more complicated approach — the cable systems that distribute programming would be left out of the mix — with a higher risk in execution.

In both instances, the companies are taking the same wine and putting it in a new bottle, creating a new interface to replace clunky remotes while hoping to gain a lot of valuable data in the process. Figuring out how to put a new skin on the same database can be lucrative — Weather.com, a huge business, is built on existing government data — but it’s one thing to present better navigation, and another to produce better television.

Apple reinvented the music industry on its terms and in doing so cut the legacy music business in half. The TV business, which is still sitting on healthy earnings, if not ratings, saw that movie already and wants no part of it.

But Apple is nothing if not relentless. One of its reported approaches is to enable ad-skipping while making a payment to ad-supported networks. “In essence they were saying that they would cut them a check while destroying their business model,” said Craig Moffett, a telecommunications analyst. “How long do you think that conversation lasted?”

Meanwhile Google is selling its ability to make content more visible and searchable; that sounds like the favor Google did for the newspaper business, which, like music, is half the size it once was.

E-mail:carr@nytimes.com;

Twitter: @carr2n

Article source: http://www.nytimes.com/2013/07/22/business/media/tv-foresees-its-future-netflix-is-there.html?partner=rss&emc=rss