With the recent news that Netflix now controls more than 61% of the digital video distribution market, we noted that it seemed likely that there would be a more concerted effort by both ISPs (with one foot in the traditional TV business) and broadcasters to rein in Netflix's market power. On the ISP side caps and overages are used to slowly strangle the service, while on the broadcaster side restrictive licensing terms (like prohibiting Netflix from getting new releases) are the bludgeon du jour.

One broadcaster goal appears to be to make Netflix a depository for less popular content, in part by driving up costs more than ten fold in upcoming negotiations:

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When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold. "The content owners realize they can't give Netflix all the leverage," he says. "Netflix had the power when they were the only bidder. But you don't have as much leverage when you suddenly have competition."

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Negotiations have already resulted in some content being blocked (like when Sony films disappeared last week), and upcoming renewals of integral deals (like Netflix's deal with Starz) are absolutely essentially to maintaining Netflix's status as a illegitimate competitive threat. More expensive licensing means higher prices for subscribers, and the slow erosion of Netflix's primary benefit versus cable, VOD and studio-backed services: lower costs.