Netflix, the DVD rental service, pretty much single handedly put Blockbuster and Hollywood video out of business. Through the 80s and 90s the brick and mortar movie rental stores were on every corner. Then comes along Netflix which tailored to the American laziness by offering DVDs mailed to you, for as long as you want, no late fees, and offer every movie. End of story.
So now that Netflix is pretty much the only movie rental king right now with Redbox a distant second, Netflix is in a unique position to make or break itself. With the expansion of cloud services, PCs being replaced by powerful mobile devices (laptops, netbooks to cell phones), Netflix started to offer movies streamed online once again removing the need for something physical and time to wait for discs to arrive then have to mail them back.
Personally, once I heard and saw Netflix was experimenting on this a while back and then started to offer streams in HD, I stopped focusing on Blu Ray technology and re-building my library of owned discs at $30 a movie. Why? Because I have said it before, this is the future. This model is where things are going, there will be no more discs after Blu Ray. There won't be a need for it. Today, online streaming has over taken rentals and 20% of US broadband consumption is Netflix. That proves the shift is happening.
Movie studios and disc makers are trying to combat piracy by getting Blu Ray discs larger and larger to make it near impractical to download a 100GB file for a movie, the masses don't have the storage. Figuring out online streaming can cut that out. However, I am worried about the services and business model around Netflix and what they could do that will allow other companies to come in a compete and take my business to them.
Netflix sees the future and is working toward making the online streaming better. Since they started to offer streaming, the offering are B movies, 30 year old non-classics, old TV shows, and stuff that really was not appealing. Then they started offering Starz movies. Getting better, personally I have Starz on my cable so same movies I have already but allows me to start to rethinking my cable service and reducing that. Netflix is starting to make deals with movie companies, Warner Brothers is the first big one, to get more current content.
The other major leap Netflix did to ensure their place in the world is offer their services built into home devices. Blu Ray, Xbox, Wii, now TVs, iPhone, and so on. This is absolutely a genius move. I am a computer freak, but I have yet to build a media center that is PC based. So the Netflix streaming was a cool thing when it first came out, but now it's a staple when I can stream from my devices. With a 2 year old, streaming a flood of kids shows and movies is fabulous. When I was searching for my first Blu Ray, I waited until the first models came out with Netflix on it.
Movie studios are big, corrupt, money grubbing bloats. They demand these ridiculous license fees and as the customers and Netflix demand more and more current content, Netflix is going to have to find a way to pay for the extortion rates. They can only do this is 3 ways. 1 - Raise monthly rates, 2 - Cut into their revenues, 3 - Find other ways to get that money from the customers.
Right now Netflix has several membership options that range from $5 a month up to over $20 a month. I have the top subscription which allows me full streaming and 3 dvds out at once. Thats a lot, I dont watch the DVDs as much as I do the streaming and will probably drop it down to 1 dvd out at once. I think if Netflix looks at their approach and if they message it right, attack cable service rates, the costs of BluRay, etc... you could bump rates up to $30 - $40 a month and keep the members but only if the content is there. I know I would pay it if I could get all new releases from the major studios within a month of DVD release date, TV shows that were aired recently (this season), and as much HD as possible. That will be well worth the costs to me because it will still be cheaper than all the other sources I have today.
Go one step further, which will never happen, but I would pay $30 - $40 for a one time stream for movies the day they come out in theaters. That's right! I would be more than willing to throw out $40 to watch the new Harry Potter movie when it comes out in theaters. I have a great 65 inch HD TV, great audio... and small kids and dont get to the movies as much as I want to. Also, $40 for the movie is a heck of a lot cheaper than going to the theater after the dinner before, tickets, drinks, and the pain to deal with other theater goers who have no respect as they watch. I love going out, I love movies, we just don't have the time or flexibility to do it as much as we would like... but I can get 2 hours at 10pm to get a movie in. This will work!!! Movie theater owners will hate it, but the $12 ticket price isn't dragging me to their establishments more often either. Why do you think it's all 3D and IMAX now... a gimmick you can't get elsewhere... BFD.
Here's my worry and my spidey sense is telling me it's coming....
As a revenue option I fear Netflix will take the XM/Sirius radio approach to getting their service. That is to start charging beyond the monthly service fee and ding us for each device you use to consume the service or have a set limit and charge beyond that. Today I have 2 iPhones, Blu Ray Player, Wii, Xbox, 3 computers all setup to stream and use them all at some point in the month. 8 devices. I dumped XM when they wanted an extra $6 a month to stream their service from the PC, when they did not when I started. This is my biggest fear on what Netflix could do or get forced into doing. Which will be sad if you think about their strategy on their applications being put everywhere.
I am a Netflix fan. They are on the edge of revolutionizing entertainment and could force the studios to change their ways to and see the light that people will consume more if it's easier and cheaper to do. If they want to gouge for every nickel and dime, then the service will turn into cable TV, just blah.
Here's a note to movie studios: Wake up!!! The quality of the material you are pumping out is not worthy of the money you want. Just come out and say you are going to re-make all moves from 1981-1989. Get new ideas!!! Deal with it.
End of Line.
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