Everybody knows what Netflix
Not all digital media is created equal
In his Media Maverick column yesterday, CNET's Greg Sandoval interviewed Eric Garland, CEO of digital-media consumption tracker Big Champagne. Garland feels that Netflix intended to kill the DVD with last week's price hike. He likens it to Apple's
"It was outrageous, until it wasn't," Garland said, suggesting that Steve Jobs was simply ahead of his time in killing a media platform that would eventually die anyway.
If I can build off of Garland's argument, Apple has also hastened the CD's gradual demise. Note its MacBook Air, which made lightweight laptops even lighter by ditching their optical disc players. No CDs. No DVDs. Last year's refresh even killed off the operating system backups that had previously come on disc.
However, Apple's ultimate weapon of mass disc destruction has been iTunes. The sheer genius of offering piecemeal singles at $0.99 apiece made economical sense to folks who were pirating tunes before. They could no longer blame evil record companies for making folks pay $10-$15 for a bad CD with just one or two songs worth buying. Record companies fought back at first -- just as movie studios are rebelling against Netflix's streams for their more desirable content -- but eventually embraced the disruptive technology.
Netflix seems to be doing to the movie and television production industry what Apple has done to the prerecorded music labels over the past few years. Unfortunately for Netflix, the analogy's not a perfect match.
To DVD, or not to DVD
I'm all for disruptions. I won't deny that the DVD is on the way out. Disc duplicators and home theater component makers know that their days are numbered. However, I think Netflix is underestimating the length of the optical disc's tail.
More to the point, I think Netflix is underestimating where it will stand when DVD and Blu-ray ultimately kick the optical bucket.
I'm won't hit you with the argument that streaming lacks the nifty special features of bloopers, audio commentary, and "making of" vignettes that make DVDs superior in terms of content. As it grows more popular, streaming may grow to include many of these extras anyway.
Netflix isn't jumping the gun on trying to herd everyone into streaming. But it may have far more trouble trying to convince an entire industry to serve itself up on Netflix's low-priced buffet.
We're barreling toward a disc-free future, but there's no reason for studios to devalue their freshest releases through a $7.99-a-month free-for-all. When the DVD dies -- and it will -- the studios will still collect fat fees through Apple and Amazon.com
From red mailers to Redbox
When Apple battled the record companies, it faced an easy fight. Music lovers who wanted cheap, convenient songs online had two options: iTunes or piracy. But when it comes to movies, cinephiles have too many options for new releases: discs, Netflix, a host of on-demand and pay-per-view options, and even low-end rental kiosks.
Compared to these kiosks' convenience and selection, Netflix's more limited online offerings just can't measure up. Picture the 100 most popular titles available through Netflix streaming, and stuff them into a Redbox kiosk. How successful do you think that business would be?
I've been a subscriber and shareholder for nearly a decade. I love Netflix. I think the company is simply biting off more than it can chew here.
I'm not alone, apparently. After initially popping higher on the news, shares of Netflix have fallen by more than 8% from last week's all-time intraday high. If Netflix thinks it can speed up the closing of its regional distribution centers -- which ensure that its subscribers have access to every flick or television series available on DVD -- it fired its shot too soon.
The DVD will die, but only when movie studios can make enough money from streaming to allow it to give up the ghost.
Is the DVD dead? Share your thoughts in the comment box below.