No doubt many see this Netflix debacle, in which the company admits it just lost 800,000 subscribers in its fiscal third quarter, as vindication. They balked when the company hiked its price a few bucks a month, and they absolutely howled when Netflix tried to separate DVD rentals and online streaming into two discrete services. The solution: Leave Netflix! Because what else can you do if you can’t vote with your pocketbook?
But for all I endorse the latter, and sympathize with those of you miffed about Netflix’s now revoked service split, all this symbolic service-quitting may be cutting off the power button to spite the television.
The future of video streaming—and I mean the future beginning as soon as what you want to watch can be streamed—is online. That means the future is now, for some of us, and probably imminent for the remainder. Optical media is in its final throes, a development that’s been exacerbated by the rise of online streaming services. Retail disc-based rental is in permanent decline, CD sales are half what they were 10 years ago and now Netflix, which had been shipping a million video discs a day, has introduced a plan to put the brakes on its optical-media mailers. This, argues Sound on Sound‘s Dan Daley, “will serve to further depress the optical‑disc manufacturing base, which has already seen global capacity for manufacturing decline precipitously.” I yet to see a serious counterargument.
“While consumers angrily lambasted Netflix for upping prices,” continues Daley, “the economics behind the move are clear: streaming a file costs far less than making and mailing a disc that will eventually wear out from handling and exposure, and nudging consumers to drop discs in favor of files will be very good for the bottom line in the long run.”
When Netflix announced it was raising the monthly combo streaming rate from $10 to $16, I just nodded. That’s a trifling $6 a month more, or $72 annually for the privilege of unlimited online video-watching and checking out one video disc at a time. I mean, Blockbuster charges $5 for a single 7-day rental. What do you expect to pay for unlimited monthly streaming? $16 a month, or $192 a year—about the cost to buy a dozen basic edition DVD or Blu-ray movies—is one heck of a deal, all things considered (and no, adding in monthly Internet access fees doesn’t make sense, as you’re talking about a service you’d pay for with or without online video streaming). Special cable channels like HBO alone charge about the same for a fraction of Netflix’s catalogue, and without on-demand’s accessibility.
Netflix’s bid to shunt DVD rentals into something called Qwikster is less defensible, but only because of the methodology. Forcing those of us who want both (physical rentals and streaming) to maintain separate accounts was a clumsy attempt at summoning the future early. Netflix realized as much less than a month in, canceling what would’ve been a sunset spinoff in any event.
But here’s the score: Public relations gaffes aside, Netflix is ahead of the curve, and understands that fallingbehind the curve is a death sentence. Online streaming is the future, and optical media is exiting the building. That, and the future’s going to get even pricier, in terms of today’s ultra-cheap monthly streaming access fees, as studio catalogues and licensing costs increase. If you’re a customer who’s privately reveling in Netflix’s subscription drop-off, I’d just say be mindful of the big picture. Also: Of the fact that the company acted when customers barked (and, incidentally, before its third quarter numbers were public) by shuttering Qwikster and apologizing for moving too fast, too soon.