Netflix Won't Replace DVD Rentals

Netflix Won't Replace DVD Rentals

People always speak to the uncertain viability of the DVD rental industry with Netflix, downloads, and streaming solutions staring them in the rear-view mirror.  The DVD rental industry is alive and growing.

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Skeptics fail to take into account that the service providers, the networks over which streaming video is carried, are not prepared to carry out the infrastructure upgrades required to eliminate the spotty quality of Netflix delivery in most areas.  And the FCC appears prepared to back up those service providers by permitting them to charge based on the type of data moving over the network.

The net result will be, I think, that cable service will move to the Internet through providers like Netflix.  Instead of paying for a channel, customers will pay for a show.  But a single movie download, especially current in-demand stuff (first 6 months of a DVD life), will remain at or higher than today’s cable on-demand costs.  And until the service providers invest the billions of dollars required to get the last-mile reliable service to allow movies to be effectively streamed anywhere, that higher cost will not have any improvement in delivery quality.  That means the $1 DVD or Blu-Ray rental will still be an attractive option for customers a long time after Netflix becomes the de facto standard for online delivery of produced video content.

Especially Blu-ray, even on today’s networks, streaming 4.7 GB (DVD) of data is no small task, and a published Blu-ray holds up to 50 GB of data, with projected formats extending to 200GB.  The streaming industry wants the DVD and Blu-Ray formats to go away, but I really think they have a much longer life than expected by the streaming industry.  The TV set in the home isn’t going to start delivering lower quality pictures so streaming video can be used more effectively.

Also, the streaming industry is failing to account for the impact of the other unsaid intent.  Right now, most streamers / digital downloaders are burning or storing copies of what they get, to watch any time, a one-time payment for a DVD quality movie.  The industry is getting better and better at locking down the digital security techniques, which inconveniences real customers and torques off technically savvy customers.  Once the industry actually gets it right, and they will, the DVD will again become a good option for both groups (lower budget real customers and all the technically savvy customers).

The DVD industry won’t be at an end until a major studio releases a blockbuster movie for online streaming only, I’m not talking about indie stuff, I’m talking about Avatar.  Even then, the industry will survive many years longer in niche markets like automobile DVD players, travelling public, and outside the US.

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