Netflix sees subscribers opting for streaming over mailing, global surplus in red envelopes predicted

by Tim Stevens posted Jan 28th 2009 at 9:39AM

We already covered the numbers from Netflix's impressive earnings call this past Monday, but there was another story lurking in there too; a potential sign of the coming apocalypse for physical media. The company is reporting that many of its customers are substituting mailed movies for streamed ones, taxing the USPS less and their broadband connections more. CEO Reed Hastings is playing coy about whether this is a strong trend or just the curious behavior of early adopters, and since his company gets paid either way he probably doesn't care, but you can be sure those still firmly attached to profits from plastic discs are going to be watching this pattern rather closely. (As if Sony needed any more bad news.)

Filed under: Industry, Media streamers, Internet

Tags: netflix, netflix streaming, NetflixStreaming, physical media, PhysicalMedia, streaming

Reader Comments (Page 1 of 1)

Neutral

PSN: Aggie_CEO @ Jan 28th 2009 10:00AM

Considering MOST of their subscribers came from the addition to streaming on 360 I'm not in the least bit surprised.....but hell its not much Streaming that I actually care to watch......chances are if its streaming I already own it or can readily watch it on Hulu(TV Shows)

Neutral

Johnny Neat @ Jan 28th 2009 10:11AM

Yeah it's a cool option that at least got me to switch from BlockBuster Online, but the streaming is a throw away at this point as the movies I've added are mostly (90%) movies I've liked and or enjoyed and have hanging around for whatever. They need better video quality, sound quality as well as, the big OBVIOUS, a better, newer & larger stream library of choices to then not just be a throw away whatever option. They are on to a decent start though considering.

Neutral

d0nkss @ Jan 28th 2009 10:07AM

Honestly, these types of stories are totally overblown. I have 2 points of contention with netflix streaming surpassing physical media:
Streaming of media is decent for now, but does netflix offer HD quality video with 5.1 sound? No, and until they do and we all have the bandwidth able to stream such high quality video, dvds and blu ray will not be going anywhere.
They also do not offer many movies that have been released on dvd recently so unless you want to wait months to see a movie the only viable option is renting the movie.

Also here is what Steve Swasey, vice president of corporate communications at Netflix, said of their video qulaity.
"Most of the time it's DVD quality," says Mr. Swasey of Netflix's streaming content. "Sometimes if you have a slow connection or DSL line, it might be VHS quality."

I will stick with my 1080p resolution and 5.1 channel umcompressed sound from blu ray for now.

Neutral

Jonsson @ Jan 28th 2009 11:02AM

I agree. Articles like this making statements like "the coming Apocalypse" is just rubbish. The quality of streaming media is standard DVD at best in most places, even in the States, and simply not an option at all in good chunks of the rest of the world.

I live 10 minutes from a major city and I'm glad if I get around 5 Mbps out of my ADSL line for Christ sake!

And, a lot of people actually WANT their physical media.

It will be many many years before streaming media can compete head on with proper HD material like BD.

Neutral

Johnny Neat @ Jan 28th 2009 10:12AM

Plus I wouldn't give up on disk formats just yet. Personally I prefer to watch HD on a Blu-Ray Disk before watching a stream. Sorry but the obviously known fact that streamed HD content isn't anywhere near HD disks hurts. So until that far off day comes, I continue to prefer physical media for my ultimate viewing experience and purchasing power. Maybe streaming higher quality stuff should become a priority though, hint hint... ANYONE?! FCC, cable providers, OBAMA!

Neutral

BMZ @ Jan 28th 2009 2:42PM

You guys are in for a big surprise--VUDU matches Blu-Ray quality already.

Neutral

Jonsson @ Jan 29th 2009 2:13AM

BMZ, that is total BS.

Neutral

Lazarus Dark @ Jan 29th 2009 1:47PM

BMZ, you need a better TV. If that 32" 720p looks okay to you, so be it. But for those of us with real tv's the quality is slightly better than upscaled dvd. In fact, depending on the upscaling dvd player you have and your bandwidth, dvd could easily look better than any so-called HD stream. I've tried streaming some of the network shows in "HD", but they look nothing like the same show over local ATSC, not to even mention Bluray.

Neutral

MRBlue @ Jan 28th 2009 10:26AM

I'm trying out Netflix and while I like the streaming it certainly doesn't beat watching the movie on an HDTV.

And like others have said, streaming media is a nice feature but it's far from a total replacement to movie watching. Not to mention the fact that none of it is in HD yet.

I'm also a special features junkie. I like commentary, behind the scenes, gag reels, all the stuff that DVDs introduced years ago and thanks to Blu-ray and features like BD-Live there's even more compelling content that can change the way you watch a movie (Transformers and Hellboy II are big examples of that).

I don't have a 360 (yet) so I'm hoping Netflix gets really greedy and puts the service onto the PS3. Although since one of Sony's mantras is HD gaming my guess is that they'll put it on there once Netflix starts offering streaming HD content. My crystal ball predicts that streaming in HD will cost extra as I"m sure Netflix will need some new servers to handle all the bandwidth.

Neutral

Paul @ Feb 2nd 2009 7:07PM

While the selection and quality are certainly not on par with bluray yet, it seems obvious that streaming/downloading movies is the way of the future and physical distribution is eventually going to be a thing of the past. It will take some time but the technology will improve and broadband access will continue to grow as well. Eventually the movie studios will have to embrace the medium and let their new releases be available for streaming. Hopefully the cable companies and other broadband providers don't screw it up too much by changing their billing models.

Highest Ranked

Pausanius @ Jan 28th 2009 11:13AM

True, Blu-ray HD quality is unsurpassed.... as audio/videophiles, we know that to be the truth and are unduly impressed.

The point is that masses will care about convenience over *utmost* quality. The mass audience doesn't necessarily care about uncompressed audio (yet) whereas they are becoming ingrained to care about HD-quality picture.

Why spend the extra $40 on top of a $40 TV show for an HD version when Netflix offers several acceptable HD-quality shows via streaming (i.e. Tudors, The Office, 30 Rock, Heroes)? Ive always been a fan of TV on DVD (the best invention since sliced bread) but being able to watch these in HD while skipping the commercials has been phenomenal. This is the area where most of my colleagues have found the most benefit... that and campy horror movies.

The bandwidth will come to support the higher quality and eventual 5.1... FiOS is already hitting 30 MBPS downloads for $40/month and it's only going to get better. By the time the masses are finally convinced to move away from their 'standard definition' DVDs (which is likely years), the bandwidth will be there to support a much-wider streaming catalog/functionality. It's going to be an interesting battle...

Neutral

Larry @ Jan 29th 2009 11:52AM

Agreed. I think the next obvious question is just how many people even have a 5.1 setup anyway? Clearly if they are not even watching HD material on their HD TVs what is the chance they sprung for a 5.1 audio setup?

Neutral

lucyfan62 @ Jan 28th 2009 11:46AM

Streaming is fine if you want to watch a catalog title but until they start offering new releases day and date with the physical media version and TV shows day after broadcast - like iTunes - then I don't see how streaming could overtake physical rentals.

Neutral

kcmurphy88 @ Jan 28th 2009 1:15PM

The _only_ things slowing this down is that most DSL lines won't top 3Mbps, and that there aren't enough choices in download boxes.

Give it a year or two and both of those issues will disappear. The Netflix-enabled Blu-ray player seems a fine single solution to me. Too bad I'll never see Fios here in AT&T land.

Neutral

scott @ Jan 28th 2009 1:21PM

I think I am like most people.... A real novice.. I have no idea how to accomplish "streaming" on my tv. Until someone gives me something to just plug into the tv (and tells me very clearly where to plug it(Please risist the temptation)) I will wait 48 hours to get my dvd's by mail.

Neutral

Michael @ Jan 28th 2009 2:23PM

HI Scott,
Here you go: http://www.roku.com/netflixplayer/easy-set-up.php
I GUARANTEE you can handle this and the payoff will be more than worth the 3 mins of setup. If you get one and can't figure it out, let me know and I will help personally help you.

Neutral

Maxx @ Jan 28th 2009 1:21PM

It is only a matter of time before Comcast desides that it wants a piece of the pie. They are already setting up limits and traffic shaping etc to slow this type of stuff in favor of its own On Demand. You will have to pay Comcast in addition to Netflix if you want movies streamed.

Neutral

Chillwinston @ Jan 30th 2009 10:45AM

Totally agree. All this euphoria about instantly streaming HD movies through netflix, etc. will be met with a slap in the face when ISPs inevitably start charging by the MB download.

Highly Ranked

Ariel @ Jan 28th 2009 2:13PM

I just hope for purchase purposes physical media (HD Blu disks) are around as I don;t care to be held down by some downloaded file or what not. I like to have it in my hand in a professional official package. For every other aspect for like just simply watching something here and there without a care, streaming is awesome.

Neutral

Weekly Webcomic Wrapup is preparing to enter the fray Left 4 Dead 2 pre-loading now available through Steam Dragon Age: Origins gets patched, tool set released	You spend more time on MSN Messenger than ANYTHING else Mozilla Jetpack contest winner harnesses GPU power to process data Fugly Friday : Aiseikai Hospital has no opthamologist on staff
Yes, the Apple Store is ~~down~~ up Worm rickrolls unsecured jailbroken iPhones via SSH Heads Up: Update your Apple TV to 3.0.1 ASAP, says Apple	Six top trades for the rest of 2009 Earnings highlights: CBS, Comcast, News Corp., Time Warner, UBS, Viacom ... Trade #3: Market Vectors Gold Miners ETF (GDX)
Reminder: Watch the first episode of Halo Legends today Homemade Fallout 3 Shishkebab, make 'em now before the apocalypse Gears of War 2 celebrates first anniversary with triple XP	VIDEO: Mind the pole, please Gordon Murray working on EV version of city car? Hubinette to drift Smart Fortwo chasing Tom Cruise in Night and Day
Edited Left 4 Dead 2 PC has better performance? Splinter Cell: Conviction novel out now GoGamer.com brings us some pre-Black Friday sales	Ryan Moats Earns Texans' Starting Job Bucs Legend Excited to Christen Team's Ring of Honor Broncos Sign Veteran CB Ty Law