Netflix is dead?

Thanks to Techmeme, I ran into a set of articles about Netflix that I thought were pretty silly. The first was from Robert Scoble, who melodramatically claimed that "Netflix is dead." Or rather, it will be killed by a new P2P service from Verisign, which would basically distribute HD-DVD quality videos. His argument seems to be that if people can just download a video, why bother waiting for it to come in the mail?

The second article came from Hacking Netflix, which basically said that Scoble "is way off," as Netflix apparently is already working on a digital download strategy, which should be coming out some time this month. On top of that, there's a content question, as "existing download services have at most 2,000 movies, and Netflix stocks 70,000 titles."

Both articles have a point. Scoble is right - Netflix's distribution method (i.e. mail) is a liability that's bound to get exploited by a provider with digital distribution. The guy obsessed with Netflix also has a point about lack of content being a problem, particularly with Netflix's long-tail strategy.

I think the best point was made by a guy way down in the Netflix blog's comment section, who said:

"Lets see here I have probably 10k invested in my home theater. Why
would I degrade my home theater by watching a movie on my 21 inch
computer moniter[sic] wearing headphones."

I think that's a great point, particularly as more and more Americans are dropping wads of cash on flatscreen HDTV's. Certainly, there are options out there for piping movies from your computer to your TV (Slingbox?) But really, when I'm sitting at home, I'd much rather flip through whatever movies happen to be on cable than go over to my computer, surf around for a movie and then wait an hour or five for it to download. This is why I'm really big on Movies-on-demand type services from the cable companies, since they let me use my [girlfriend's] giant television to do the movie-watching that I want, when I want (sort of).

This option has drawbacks at the moment. The interface is slow. The selection is drastically smaller than anything you'd find through Netflix, Blockbuster, etc. The on-demand movies are not yet in HD. And on top of that, they're still charging per movie, on top of normal rates for cable subscription. These are all serious problems that need to be dealt with. But, given my limited knowledge situation, the cable companies are already sitting on top of bandwidth needed to send out the signal. All they'd need to do is figure out how to properly license the necessary content from the media companies, fix up the interface some, etc.

I think the key is that consumers will find it simpler to adapt to an addition to their current method of video intake, as opposed to an entirely new means of video acquisition. While P2P is certainly all the rage these days, my take is that that's only relevant to a certain set of technically savvy people. I think it would take some significant work to get my mom to understand how to download and watch a movie. Remote controls, she understands.

So, going back to Scoble's original claim, is Netflix dead? Probably not for a while. I really doubt that the cable companies are going to move fast enough to capitalize on the opportunity here. In the meantime, Netflix will probably just have to grapple with Blockbuster.


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