So let's get this straight: consumers of movies are going from low-bitrate DVDs to BluRay and even 3-D TV in the future, and this guy is predicting consumers going for lower quality movies because the delivery mechanism is faster?
Hell if I know, but it sure looks like hardware manufacturers are making different bets looking at the same market. Perhaps NetFlix spins off into a low-end video-at-any-quality delivery service and another part of the market goes 3-D?
I'm constantly surprised by how many people can't tell the difference between HD and standard DVD. I even know some people who don't really care if it's VHS or DVD (well, one girl at least).
Maybe their research shows that a big portion of people are fine with DVD quality, and that the others will just rent the blu-rays via mail while waiting for streaming HD?
That's the thing of it -- obviously there is a market for "video at any speed" and a market for hi-fi/prosumers.
For instance, research has shown that more people actually like hacked-up, low-bandwidth mp3s over higher-quality ones. So perhaps this guy is thinking the video market goes the same direction? That the price for bits will always trend towards zero?
If so, this will be a major shift in the movie business -- as big as MP3 file-sharing was to the music industry.
It's probably better business for Netflix to buy servers and big fat pipes than to buy more gigantic warehouses full of discs.
The cost of handling and mailing discs probably stays fairly constant, while the cost of handling bits goes down (as you said).
Netflix certainly isn't an uninterested observer in this. Things might naturally trend toward more streaming, but Netflix is probably pushing hard too.
I think we're on exactly the same channel. Netflix is betting on a market split between prosumers and casual movie watchers, (where, of course, casual movie-watchers are the biggest share and they pick them up). Hardware vendors (and moviemakers like Cameron) are betting on a trend towards more realism, both in sound and video.
Hard to say where the market goes. For me, I'm always into more and more fidelity with reality. But I think there are a huge chunk of folks who only want bragging rights to have seen the latest flick first.
The problem, of course, is that if NetFlix is right and the market only wants something-right-now, that it might take anything-right-now: that people get stuff for free and NetFlix no longer has any market at all.
Very interesting quote. Not sure if he realizes the implications.
It's a bet either way and anecdotes are anecdotes, but Netflix has lots of data and personally this is how I behave.
I've dropped TV entirely for Hulu. What I can't get on Hulu I order from iTunes.
If every movie on Netflix were streaming, I'd watch it that way, even at a lower quality.
So, YMMV, maybe you're 100% the opposite and/or you know lots of people who care about 780p, 10455p, and whatever else. But I don't think I'm from Pluto, either.
From a strategic perspective I think he's right in the limit. Bandwidth is going to infinity. If consumers prefer timeliness to quality they'll put up with lower quality and wait for bandwidth to improve.
The end game is the same: high-res everything, instantly.
Yes. Instant streaming (or high-quality, lossy compression) is more important than HD. HD is worthwhile on a subset of material (do you really need the simpsons in 1080p?) while lowering the hurdles for watching any video media is valuable for almost everything (TV, movies, etc.)
According to the intertrons, a total of $750 million was spent on blu-ray discs in 2008 in the US. Netflix's instant streaming service alone brings in at least a 10th of that revenue if not more, and the library is still relatively small. More importantly, streaming is growing much faster than blu-ray adoption, so it's easy to see where these trends are headed.
Hell if I know, but it sure looks like hardware manufacturers are making different bets looking at the same market. Perhaps NetFlix spins off into a low-end video-at-any-quality delivery service and another part of the market goes 3-D?