BADass SINema Unearthed - Blu-ray Review

Netflix Results Show Members Prefer Instant Movie/TV Content

A few years back, Netflix began offering to its subscribers at no extra charge, the ability to watch from a limited catalog of movies and TV programs on computers and other internet-connected devices. Within the last six months, usage of the streaming service has skyrocketed with one-third of all new subscribers opting for the newly-added streaming-only plan. That's all fine and dandy, after all it's the wave of the future, but many users have speculated that the shift in focus is at the expense of the DVD-by-mail segment of its business plan, resulting in fewer copies of DVDs and blu-ray discs being purchased and incorporated into current stock. Many members who live in rural areas are also growing more and more concerned with the de-emphasis on physical media as the options for broadband internet access are few or non existent.

While the below excerpts - from the most recent Netflix earnings report (via Hackingnetflix) - shed little light on the growing disc shortage conspiracy, they do offer interesting insight into the growing sophistication of the viewing habits of its consumers.

Netflix just announced Q4 2010 results, and they broke 20 million subscribers and reported $596 million in revenue. Netflix added more than 3 million subscribers in Q4, and had an operating income of $78 milliion with a net income of $47 million.

Do you see this giant cable companies? People want to watch what they want to watch, when they want to watch it... at a reasonable price. Tap into that, and you'll all become billionaires.

And from the most recent letter to shareholders:

  • One third of new subscribers are signing up for the $7.99 streaming-only plan, and the majority of the rest are signing up for the $9.99 one-DVD plan.
  • Very few existing subscribers are downgrading to a streaming-only account.

netflix Instant WatchWith that kind of results, it appears members are gobbling up the streaming only plan like a fat man at an Independence Day picnic. And it appears they're not downgrading their accounts as many had threatened to do on various web sites and blogs (and as we had speculated they would). But one question still remains: can the country's infrastructure hold? Recent reports have Netflix Instant Watch subscribers hoarding a whopping 20% of ALL bandwidth consumption in the U.S. during evening peak hours. "I'm giving her all she's got cap'n. She's not gonna hold!"

Still one aspect left to analyze, and we'll likely get the results in the next Netflix quarterly report: will Netflix be able to retain all the new subscribers who joined at the end of last quarter with their shiny, new Christmas subscriptions in hand? Or, will they become frustrated with scrounging for "just anything" to watch from the purported dearth of new and relevant online content currently offered? If the following proclamation comes true, we don't think so:

Paidcontent: "Netflix will attempt to outbid HBO for streaming rights to the movies the pay-TV giant gets from its current output deal with Warner Bros. the streaming service’s chief content officer, Ted Sarandos. “We will be an aggressive bidder for that programming,” he said in a Q&A on Tuesday at the National Association of Television Programming Executives conference in Miami."

Did you hear that? It was the sound of 20 million Netflix subscribers shouting with glee at the prospect of Netflix acquiring HBO content for its streaming service.

Netflix expects DVD shipments to decline this year. Not surprising, as it's now crystal clear people prefer instant downloading and streaming of movie/TV content over physical media. Netflix founder and CEO, Reed Hastings, has stated the company expects to be mailing DVDs until 2030. But with the recent earnings results in mind, it's clear he won't be shipping as many by then.

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