Netflix Isn't the Problem
Look, Netflix isn't losing money, and their investors seem quite content. People are voting with their dollars and choosing Netflix, should we really be surprised? When it comes to technology companies, I don't think any company is as universally admired as Netflix. I've never heard a single complaint about them. Ever.
Netflix is largely competing with the premium movie channels, moreso than the cable networks. It's the HBO/Showtime/Starz/Cinemax of the world that are going to need to adjust their pricing models or go to entirely original programming, dropping movies. Why is any rational consumer going to pay more for linear channels with limited offerings, few HD titles (Even World-of-More Comcast systems in MD have just HBO, Starz, Cinemax, Showtime, Encore in HD), and limited on-demand selections? In addition, video enthusiasts will point out that some of these premium channels reject the original aspect ratios, causing picture loss even with HD signals. The response for these companies instead of protecting themselves against Netflix should be to find a better way to compete. That's the free market at work, right? The fall is inevitable. Netflix is acquiring their content legally, and putting up barriers to that is not changing anything for the MPAA. DVD sales are stagnant to declining still, and customers are willing to wait.
Disney, Bravo, MSG among others started as premium channels. Maybe it's time to change the model for the premium networks to survive. Granted, as a fan of many HBO and Showtime shows, I think this could be a problem for the type of show they produce as well as the writing quality, but perhaps that isn't feasible in today's marketplace. The response we're seeing with UBB doesn't do anything but serve to anger consumers.
If the ISP's and the MPAA conspire to kill Netflix, this will not build them goodwill. Customers will revolt and won't come running back to inflated prices for these premium services or to line up to buy the DVD's.