Over the shark we go: as promised, Samsung has delivered a 110-inch ultra HDTV. Sure, it's expensive -- custom-only orders start at more than $140,000 -- but by now, we all know the drill. In a few short years, that price will come down, pulled by competition among producers and consumers. (What corporation worthy of the name doesn't want those babies descending from the ceiling, rising from the floor, or decorating the lobby?)
And there's no end in sight when it comes to bigger, better video screens. Ultra HD, also known as 4K TV, can already be yours for much less than six figures. Yes, you'll have to junk your Blu-Ray setup. But you're as obsessed with the latest in high-definition innovation as the rest of us, right?
Not so fast. Don't assume that lower-quality video is as obsolete as your old not-so-flat-screen TV. Think about how we're already used to using the Internet: after explosive innovation in video, image, and animation-rich websites, how do most of us experience the viral web content that drives traffic, wins clicks, monetizes users, and boosts valuation? That's right -- text and GIFs. On our small-screen smartphones.
Yeah, Upworthy's got videos. But how many people watch them for the eye candy? And how many watch them on big screens?
Start pondering the logic, and the market opportunity is obvious: go lo-fi. There's a whole world of merely watchable content out there that consumers would be perfectly happy to stream on the cheap.
And sure enough, we're starting to see the new kids on the web video block doing just that. Netflix (NASDAQ:NFLX), hot off its foray into original programming, is testing out a new plan that gives users a discount for choosing standard definition. For $6.99 a month, Variety reports, select users can choose "only a single stream (one device at a time) and standard-definition video. That's one dollar less than its standard $7.99 monthly package, which offers HD video and streaming to two devices simultaneously."
This is about more than catering to the "older demographic" Merrill Barr identifies at Forbes -- consumers who are used to SD, don't see that $1 worth of value in HD, or don't watch shows on smartphones or tablets. As Sam Thielman points out at AdWeek, ISPs are hiking prices on high-speed Internet, opening the door for bargain DSL accounts. It's narrow-minded to think that anyone who'd rather not pay top dollar for bandwidth or max out on gadgets is a "casual viewer."
Serious viewers might well choose to marathon a '70s-era BBC miniseries, The Wire, or a Netflix original series -- on a small screen, and on SD. We've known for years that standard definition looks pretty much the same as HD on your tablet device. As one CNET writer observed back in 2011, "the iPad's square-ish screen has a 4:3 aspect ratio, meaning if you maintain a movie's 16:9 aspect ratio (meaning, you don't zoom in), you're getting an effective resolution of 1,024 x 576 pixels -- barely higher than what you get from an SD movie (which is upscaled to fill the available screen estate)." Plus, plenty of mobile devices still in circulation can't even utilize Netflix's upgrade to Ultra HD.
So why shouldn't Netflix take the same diverse approach as their subscribers? They could stand to save some money on bandwidth, too. A growing subscriber base does want the 4K experience Netflix is hard at work trying to stream over broadband without painful buffering. Anything that smooths that process along is a plus.
On a per-view basis, opting for HD is only a few dollars more than SD. But, all told, enough people watch a lot of video content -- and enough people are looking for an effective way to do it on a budget -- that we shouldn't be surprised to see the lo-fi market take off and expand.
Think about it like coffee. A decade ago, it seemed like Starbucks was as upsold as coffee could get. Now, the "third wave" of boutique coffee purveyors has pushed Starbucks to cater to even more particular tastes. And the market for cheap coffee isn't going anywhere.
Coffee is currently plentiful and cheap -- much like plenty of popular video content will continue to be. The epic failure of 3D TV should remind us: with high enough production values, more of us will come to realize that most of the time we watch, we're OK with something far less eye-popping than even HDTV provides. In fact, we might even prefer it.
Businesses learned a harsh, if now intuitive, lesson from the 3D TV debacle. Today, companies involved in content are key to ensuring a 4K rollout that minimizes the risk of a 3D-sized flop. Those firms, including Netflix, know that innovations in 2D video deliver a qualitatively different viewing experience. But they can also understand that for millions of customers, the definitive viewing experience isn't related to quality of picture but quality of programming. Sometimes technology still has to take a back seat to art.
Fool contributor James Poulos has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.