An old high school buddy just informed me that for 2009, Netflix is on pace to have streamed more instant-watch movies than mailed DVDs. I'm wondering: what does this tell us? Obviously the landscape of the business is changing, but what else?
A non-obvious possible conclusion I came up with: we're watching more movies alone. It used to be one would rent a movie and snuggle up with a sweetheart or the family, now it's sitting in front of a computer in a way we never used to before. Convenience can change the whole movie experience.
I'm still thinking about this, but any other ideas?
[Editor's Addendum: I fired off this post pretty quickly, full of incomplete information and first impressions. Rick Blaine just schooled me in the comments, and it's worth reading. If I were a smarter PR person, I'd just delete the whole thing and start over, but this is going to be the character-building part of my blog where I get to be the bigger man (or at least a man). The great part about having a blog, though, is that you don't HAVE to do any research if you don't want to. Thank YOU, Internet.]
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Netflix does not just stream to computers. Netflix streams to Xbox 360, a number of blu-ray players and TVs, in addition to having its own set top steaming box Roku, all of which are generally connected to a person's TV. So I don't think that we can automatically say that people who are streaming Netflix are mostly watching alone on their computers. They very well might be steaming a movie to their TV so that they snuggle up on the couch with a sweetheart or their family to watch a movie.
Another thing to factor in is that one of the most popular things streamed through Netflix are TV shows like the Office or 30 Rock. Having the ability to easily watch an episode that you might of missed or catch up on an entire season of a show relatively quickly, and according to your schedule, without having to wait for disc 3 of 7 to arrive to watch the next 4 episodes of 24, is hugely convenient and is a contributing factor in Netflix streaming success. Netflix streaming of TV shows is like having your own DVR/TiVo. TV networks have seen the power of streaming TV shows on demand and how they can benefit greatly from having episodes available of their network websites. Streaming TV shows is a way for the TV networks to fight back against TiVo and get paid in the process. No one can deny that DVRs are fantastic because they let you watch shows when you want and commercial free. Networks don’t mind the “watch when you want” part, but they are getting killed on the commercial skipping. By offering shows streamed through their website with limited commercial interruptions, they are guaranteeing that people will see their advertisers while watching their shows that they might not have seen if they had watched the same episode through a DVR. Now people are more likely to watch a TV show alone than a movie alone, but that’s how isn’t always been regardless of steaming or not. The other thing about Netflix subscribers is that they clearly are people who value convenience, as they pay to have a movie mailed to their house instead of having to drive to the local video store. So it would stand to make sense that a feature like streaming would eventually become even more popular than the movie by mail delivery method since with streaming you don’t have to wait for a movie to arrive by mail and you don’t even have to get dressed to walk to your mailbox to pick up the movie. You can just sit naked on the couch and watch whatever you want, whenever you want. I have no doubt that Netflix streaming will surely soon pass the popularity of their movie by mail method, but I think that it might not be truly happening as fast as Netflix says for two reasons. Say I have two free hours tonight to watch something. Instead of watching a 2-hour movie from Netflix delivery, I decide to watch four 30-minute episodes of the TV show the Office. Instead of watching 1 mail order movie I just streamed 4 TV episodes. So my stream to mail content ratio is 4:1, but that number is a bit misleading. Furthermore lets say that John and Bob want to watch as many movies in one week with Netflix as they can but watch no more than 1 movie a day and John is streaming while Bob is using the mail delivery service. On Monday they both watch a movie, but on Tuesday only John gets to watch a movie since Bob had to mail out his movie and wait for the next one to arrive on Wednesday before he can watch again. That means in a week John would have watched 7 movies and Bob only 3 movies since he has to wait for his movies to be delivered by mail and Netflix doesn’t ship on weekends. So even though they both wanted to watch the same amount of movies, the stream to mail ratio was 7:3 because of delivery time, not because of demand. It’s just something interesting to think about.
Sorry for the long reply, I was in a writing mood
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