The problem with content businesses is that they require content. And that is the reason for some circumspection about prospects for would-be “online,” “mobile” or “over the top” video entertainment services.

Hulu (News - Alert), for example,  will spend roughly $500 million acquiring content, about $80 million more than it made in 2011, acquiring new content for the service in 2012. That means the company is banking on rapid revenue growth in 2012, someplace north of 100 percent growth, unless Hulu has assurances from its owners to keep losing money.

Growing requirements for content acquisition spending are one reason some might be skeptical about Netflix prospects, going forward. Though most of the recent attention has been focused on global expansion plans, or changing retail plans or customer defections caused by price increases, some of us think the shift of business model towards TV programming in general, plus streaming, is more an issue.

Some make the argument that operating and fulfillment costs for streaming content are lower than for mailing DVDs. That might be true, but the licensing costs are higher for streaming.

Sports programming might someday lead to a major change in the way people buy video entertainment, perhaps representing a more significant change than broadband-delivered streaming services. Sports illustrates the problem.

To be sure, we commonly think it will be a technology change that enables some disruption of the video entertainment business, whether that is peer-to-peer, streaming, mobile devices or 4G mobile networks. Those things could help, certainly. But video is a different sort of business than many others.

As the National Football League controls its "programming," so movie studios and TV networks control their content. While there are lots of other sources of sports programming, the NFL is a "unique brand" in the content realm. Unless NFL football becomes far less interesting, the NFL has a "moat" around its business.

But disruption will occur at the weakest link in the entertainment video value chain. And some might argue that sports programming is a weak link, as "premium channels" have been disrupted by Netflix, another "weak link."

Some might argue that Netflix has the potential to disrupt the TV business, but that is a theoretical possibility. What Netflix arguably already has disrupted are "premium video" channels such as HBO. Netflix is not a full substitute for HBO, in part because HBO has original programming, and in part because even when that programming is available to Netflix customers, quite some time has passed.

So why could sports become another weak link? Cost. As sports programming could drive change in the video subscription business, so a shift to more original content on the part of Hulu and Netflix could be a similar problem.

Some think is change is significant that Netflix business model could break. 

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