Netflix is edging a step closer to its name with a test of streaming only service in the United States. The new offering allows users to purchase a net-only subscription for $7.99 a month. Adding DVD rentals is an option for an additional $2.00. This represents a $1.00 price increase from recent offers of $8.99 for unlimited streaming and unlimited DVD rentals with 1 DVD out at a time.
The online selection still lags its DVD catalog. That’s unlikely to change in the near future.
Netflix has been de-emphasizing DVDs lately. For good reason: streaming is much cheaper than postage. It costs roughly 5 cents to stream a movie vs. close to $1 per DVD rental. It has put a substantial emphasis on streaming, with Netflix capabilities embedded into dozens of devices, including Apple TV, Google TV, blu-ray players, iPads, iPhones, TVs and game consoles.
The company also recently entered the Canadian market with a CDN$7.99 streaming only plan with no option for DVDs.
H/T: Andrew Cooke on Quora
Netflix streaming only offer
This year has seen the biggest push yet to bring the Internet (or parts of it) to the biggest screen in the house. The newly revamped Apple TV started arriving in stores and homes last week. Logitech is announcing the details of its Revue Google TV box tomorrow. The boxee box is due in November. Roku has revamped its product line. TiVo is planning enhancements to its Premiere boxes. Prices are all over the map, from $60 for the cheapest Roku box to $500 + subscription fees for the most expensive TiVo. Capabilities vary dramatically.
It should be quite the battle at retail this holiday season.
Regardless of who sells the most boxes, these are the likely winners and losers in the overall entertainment ecosystem.
- Netflix. Apple TV, Google TV, roku, Boxee, blu-ray and DVD players, networked TVs… Netflix is everywhere. In the last year, its stock is up 250%, compared with 51% for Apple and 8% for Google. Netflix recently reported that 61% of its customers had watched 15 minutes or more of streaming video online in the last month. Not only does that reduce distribution costs (the company spends $600 million a year on postage), it gives Netflix more leverage to negotiate distribution deals with studios. Netflix is already the number 3 video content distributor, beating out all but Comcast and DirecTV. With all of this additional distribution, I wouldn’t be surprised to see Netflix be the top video distributor in a few years.
- hulu. It could be a big beneficiary, but its ownership could keep this from happening. hulu’s network owners (NBC/Fox/Disney) seem conflicted on whether they want hulu to succeed. hulu integration is planned for roku and TiVo, but hulu has repeatedly blocked boxee. It will be interesting to see if hulu chooses to block Google TV’s browser.
- YouTube. As YouTube pushes more into longer videos and higher quality videos, it becomes more compelling to watch them on a big screen. A good 10′ interface would drive additional consumption.
- Traditional media buyers. Ads today are sold by show, which serve as a proxy for demographics. e.g. ads on Grey’s Anatomy are targeted at young females. These will become more algorithmic and bought by individuals.
- Lesser cable channels. Some cable channels today only get distribution as part of bigger deals. For example, Disney may say if you want ESPN you have to carry the Ocho.
- Traditional pay-TV providers. Pressure to unbundle channels will increase. Making Web content easier to access will steal share of audience from traditional premium programming. On the plus side, it should drive additional demand for faster tiers of broadband.