Netflix's hot new video player
Posted
May 20 2008, 01:43 PM
by
Kim Peterson
Today we're seeing the future of Netflix. The company announced its $100 set-top player, available now and getting all kinds of frothy reviews (Wired calls it "just shy of totally amazing"). Hook the box to your TV and your wired or wireless high-speed Internet connection, and you can stream videos from Netflix's library.
Before we drill into the details of this thing, note that Netflix shares rose nearly 4% today, but closed up 2% to $31.63. Netflix shares have enjoyed a good run over the last year as the company grew subscribers and beat out Blockbuster in the DVD-by-mail business. But mailing DVDs has always been a short-term play. Now, we're seeing what Netflix wants to be when it grows up.
An important thing to know about the Netflix Player by Roku is that it doesn't download movies. It streams them over the Internet without storing a copy in the box. The good news: Once you buy the player (and maintain a Netflix subscription paying at least $9 a month), there's no charge to watch the videos. The bad news: Only about 10% of Netflix's library of 100,000 titles is available for streaming, and most of those are older movies and TV shows. That's mainly due to licensing restrictions, and you can bet Netflix is working on a fix. The company didn't shell out $40 million to build this service just to show "Dirty Harry" and "National Lampoon's European Vacation."
The comparisons with Apple's $230 Apple TV player are obvious, but Fortune says that's an, er, apples-and-oranges thing. Apple TV costs more and charges per rental. It also has fewer movies, but many of those titles are new releases that Netflix doesn't have. Apple's movies have higher video quality, too. Netflix's advantage comes in price: Paying $100 to get free access to 10,000 titles is very appealing.
Developing a set-top movie player was a smart move for Netflix. Pricing it at $100? Absolutely brilliant. Netflix is creating other players with more bells and whistles that will be more expensive, but getting this one out first and making it so easy to use will energize its 8.2 million subscribers and attract new ones.
Netflix has deep-pocketed and smart competition in this area. Apple, Amazon, TiVo, Microsoft, Blockbuster and others are deeply invested, and a host of small start-ups have jumped in, too. But Netflix's debut player shows the company has the savvy to stay in the game.
Here's what others are saying about the player:
News.com: "Setup is simple, and -- if you've got a solid broadband connection -- picture quality is acceptable and streaming performance was almost entirely lag-free."
Fortune: "Given the new competition, it will be interesting to see whether Apple rethinks its current pricing scheme: $2.99 to $3.99 to rent, $9.99 to $14.99 to own."
TechCrunch: "Good for them. Instead of wading into a losing battle over cheap downloads and rentals (see Vudu, BlockBuster, AppleTV, Google, etc., which charge for each movie), they jump right to free. They know what the consumer wants."
Thomas Hawk: "They'll sell a couple of them I suppose, but this thing will never really get off the ground in a big way. We've seen this movie before, it was called Akimbo."
Ars Technica: "A lucrative portion of consumers are happy to rent -- not own -- their movies and TV shows, and the Netflix Player could very well score an early win for Netflix in the living room's digital distribution market."
Disclosures: I don't own shares of any companies mentioned in this post, but I am a Netflix subscriber. And while Microsoft owns this blog, Microsoft does not control, censor or otherwise have any editorial influence over what I write.
