Monday, December 05, 2005

Netflix better move on video

If I worked for Netflix, I'd be working on getting some online video out there to my subscribers NOW. I'm starting to feel a sense of urgency about it. I know Netflix CEO Reed Hastings has said that DVDs will last another 5 years, but meanwhile, Netflix could become obsolete. People will associate it with DVDs only, and it will seem like a dinosaur. If Netflix is to be the peoples' video portal, they need to be moving on providing content now, even if they have to go to yard sales and flea markets to find it. Too many providers are jumping on the VOD bandwagon. Somebody like Yahoo or iTunes or Comcast is going to stake out the territory, and then it's going to be Netflix-who?

Do you think I'm right, or am I panicking?

6 comments:

  1. There are two ways of looking at this:

    1. Launch a weak service that will disappoint customers.

    2. Suffer a bit now and launch something that will complement the service and have a decent selection of movies.

    I hate to say it, but I think Netflix is wise to wait a bit. iTunes only has a few titles, and Cinema Now & MovieLink have only a few thousand movies and reportedly a small number of subscribers.

    I know it can't come fast enough, but it will. The biggest bottleneck is the licensing deals, but there are signs that the studios want some of the money that the record companies are seeing from downloads.

    Patience...

    - Mike

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  2. I have to agree. Waiting to put out something of quality is better than trying to jump in now with little content. If Netflix moved now, I would expect the service to be on par with the current business as far as selection is concerned and that is not possible, so why bother? I would find that irritating and not worth my money.

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  3. VOD is the solution to DVD by Mail Rental service costs. Imagine, no "throttling", get a movie when you want it, no "long waits", no lost or broken DVDs in the mail. Also, the Movie Studios don't realize it yet but this technical advancement would probably reduce pirating to practically zero. Why burn a DVD when I can download and watch a movie whenever I want to.

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  4. But Raymond, unless the studios give the movies away for free, there will always be piracy. Even Netflix would have to institute some kinda of throttling policy, maybe you could only watch one movie every two days, because they'd have to pay a royalty on every movie you watched.

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  5. I doubt Netflix could offer VOD using the current subscription model. They could do it like the waterworks, and charge for broadband usage.

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  6. Netflix has already been squeezed out of the VOD market before they even got into it. The cable companies and TIVO type boxes are already in the market place bringing you VOD in a snail mail kind of way. Cable in it's PPV and TIVO in its record now and watch later model. The broadband pipelines are not currently designed for consumer downloads of large file size transfers to accomidate 1020p HDTV quality video (Which will be the demand in a few years). The easy and cheap way to deliver this content to the consumer in a VOD model is the PPV style or the current On Demand feature that many cable companies have for HBO, CineMax, and Starz. The only thing missing in those models is a large subscribable catalogue that the consumer can pick from in the way that NetFlix or any other DVD rental company offers in a large number of titles. If NetFlix wants to get it's foothold in the VOD market, it will have to think not about delivering it to the consumer via PC but rather via Settop Boxes. Then it will have to make deals with the cable companies to set up its own channel type mechanism. Frankly I think the setup of such a model would be too expensive. If you look at the Apple video download as a model, it is poor quality and a cheap and easy fad for a bunch of Apple fanboys who are just looking to have something that they can say "Hey, look at this. I have portable video that justifies me spending all this money on this new toy." Wait til TIVO releases it's new box that will export video out to portable media devices such as the IPod. Then do you think people will be wanting to spend $3 for an episode of Lost when they can just record On Demand and transfer? Again, it takes us back to the Settop boxes as the king of the VOD market. Lastly, the biggest weak link in all this will be the MPAA who like the RIAA will step on it's own feet in thinking in a 20th century model and not in a 21st century model in ways to deliver content to it's CUSTOMERS. The entire way "Hollywood" licences its current and previous content needs to be rethought for the current needs of the digital age and they need to stop focusing on spending millions of dollars on salaries and start factoring in a few million for end users who will be wanting to enjoy the movies for decades to come and not just the few weeks that it is at the theaters. As it stands, the profit margin for DVD's to a studio is about 3 times higher than a theatrical release, now if they can only find a way to deliver it to the consumer in a fast and easy way that the consumer will be able to embrace and afford in large quantity. That will need to be NetFlix's next hurdle.

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