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The State of Media and Entertainment Video 2012

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While the company seems to be back on track, ending the year with expansions into new countries and major studio partnerships, Hulu Plus and Amazon Prime are ready to grab its lead. Not everyone sees a healthy new year for Netflix. "Long-term, Netflix is going to face some serious problems, some of which we are already starting to see," wrote Rayburn in a November 2011 online column. "Netflix's continued need to increase their content library, and have exclusivity, has a lot of upfront costs that could increase monthly fees in the near-term and slow subscriber growth rates. And while Netflix content might be a bit better than the competition, competitors services will become good enough and make Netflix's cost of customer acquisition and churn increase. 2012 is going to be a very tough year for Netflix."

Listen Up: Spotify Arrives

Streaming entertainment in 2011 wasn't only about video: Streaming audio came on strong. Listeners found fewer reasons to turn on their AM/FM radios, thanks to free music services that put millions of songs within reach for no or low cost. The biggest audio news of the year was Spotify, which finally reached American shores in July. Music fans were thrilled with the ad-supported free option, which let them listen to any song they wanted, any time they wanted. But do they like it enough to pay for it? In January 2012, those fans got the wake-up call that the unlimited free option was a 6-month-long promotion, and they're now limited to 10 hours per month. Will they pay $4.99 per month for the Unlimited plan, or will personalized streaming radio services Pandora and Slacker Radio see an increase in usage this year?

As Americans continue to grow comfortable with streaming entertainment, expect to see more ease in accessing content from the living room and mobile devices, as well as a blurring of the line between broadcast and online entertainment. Content is content now, no matter where it comes from. Americans have shown that all they want in streaming entertainment is everything, everyplace, any time. In 2012, they're going to get it.

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