Netflix predicts it’s core business will be gone in 5 years
Today the CEO of Netflix, Reed Hastings basically pulled the plug on his own core business saying that the current business model of disc distribution will have peaked in 5 years time. This makes it obvious as to why Netflix is beginning it’s headlong push into digital distribution, and is starting to focus on it’s set-top offerings like its $99 Roku Netflix box. Quoting Mr. Hastings from Reuters:
We think the by-mail business is very strong but will probably peak in the next five years. Our key challenge is growing earnings per share and subscribers while funding streaming which should give us years of subscriber and earnings expansion.
It’s EXTREMELY rare for the CEO of a company to so publicly denounce it’s most lucrative business. And Netflix has hardly taken control of the digital distribution market, so I’m not sure what Mr. Hastings was trying to accomplish with this, though I do absolutely agree with his point.
I’ve been a Netflix subscriber now for quite some time, and I really enjoy their service. However in recent months I’ve found myself renting less discs from them and using the streaming service on my laptop more. Though there’s less in the way of content online, I’ve found that the quality of the rented discs has declined significantly as of late. I’ve had pausing issues caused by scratching in nearly every movie I’ve rented in the past three months. Because of this, I’m seriously considering picking up the Roku box. Though I might wait for something a bit more full featured.
The main issue with Netflix’s current streaming service is a general lack of NEW material. While the number of TV shows on there at the moment is pretty high, including the most recent episodes of popular NBC shows like “Heroes”, the number of popular movies is extremely low. As of the last time I checked, the only two movies on the Netflix top 100 that you could stream were “March of the Penguins” and “Little Miss Sunshine”. Good movies of course, but there are other things that I’d rather watch.
The platform itself also has it’s issues, currently only visible on Windows PCs and the Roku box, there isn’t much in the way of help for Mac users other than to run a Boot Camp partition of Windows to watch Netflix. Running it through virtualization software like Parallels or VMware is an exercise is frustration. The video and audio both stutter regardless of how much RAM or processor power you’re using.
If Netflix wants to dominate this market, they have to get their player on to every possible device it could run on. It needs to be on PCs , Macs, Linux Boxes, Media Center PCs, Xbox 360s, PS3s, AppleTVs, TiVos, iPhones, Windows Mobile Phones, and anywhere else that people like to consume media. Considering that there are tens of millions of Netflix subscribers currently, and that unlimited streaming is included for anyone with a $9.99 plan or over, it certainly gives Netflix a head start.
Once either Netflix support is added to an Xbox360 or PS3, or it’s integrated with a standalone blu-ray player, I’ll be picking up a Netflix box of my very own. And I for one welcome our possible new media streaming overlords!
Hell, it’s better than Apple dominating the market? Right?