Netflix-style distribution is better for content producers, and far better for consumers.
The only parties it's not better for are the existing content distributors. I, for one, will not weep at their inevitable death. The only reason they aren't dead already is that they're deeply in bed with the content producers (if not the same entities). But in the long term, they can't compete.
I am not so sure about the better for content producer part. How much money would a content producer get per viewing of a movie or how much does Netflix pay for the rights? Is it economical if DVD / non-streaming channels dry up?
Per-item, it's probably less. But overall, they're drastically increasing the size of their potential market.
Real life example: say I have a friend who says "dude, you should totally check out Dexter. Great show!"
In the old content model, I go to Best Buy, see the DVD set for the first season on sale for 39.99, and unless my friend is godlike in his predictions, my response is "hell no."
In the new content model, I log on to my Netflix account and watch the first episode. Not bad. I watch another. Pretty good, and now I'm invested in the story. Whoever produces Dexter is now making free money off of me that they definitely would not have otherwise.
And that's only the first-order effects... by allowing the market to be more responsive to the actual viewing habits of consumers (rather than being mediated by network decisions on what shows to air), consumers will eventually get more of what they want, particularly niche audiences who aren't a fan of standard TV fare. This increases the entire market size, and allows producers of individual shows to expand the market on a per-show basis, something that was previously impossible. Experimental indie shows were simply not on the table, before. Now, they at least have a chance of finding a market.
I am still a little troubled by the economics. Could Dexter be made with Netflix / streaming as it's only distribution model? There is no "free money". Either the compensation is good enough or it doesn't get made. If the streaming model can't support itself then I expect Netflix to stop getting new content until it can be profitable for content providers.
> Could Dexter be made with Netflix / streaming as it's only distribution model?
I don't see why not, once execs are comfortable with it. Of course, it would still air on broadcast TV, which won't go away entirely, and you'd have to run promotional/marketing materials to make people aware of its presence on the streaming sites (the sites themselves would probably do a lot of that for free, since they benefit too).
There's no inherent reason this can't pull in at least as much money as the current model.
The only parties it's not better for are the existing content distributors. I, for one, will not weep at their inevitable death. The only reason they aren't dead already is that they're deeply in bed with the content producers (if not the same entities). But in the long term, they can't compete.