Netflix had better get it together because there’s a little company quietly moving its way in to the streaming industry that will throw a 1-2 punch to put the company out of business. That company? Apple.
About 2 years ago I signed up for a Netflix streaming account. I did so because there were certain TV series (Saturday Night Live, 30 Rock, Glee) that I liked knowing I could go to any time I pleased. I never bought the DVD service only because it seemed like too much work and I was never really one to sit down and watch TV or a movie often enough to justify the mail-in service.
Shortly after getting Netflix and watching a couple old episodes of Saturday Night Live that I hadn’t seen in a while, and one or two episodes of 30 Rock, I realized something. I was paying more for the peace of mind rather than the actual service. It was comforting to know that I had the account to go to when I wanted, but found myself using it somewhat rarely. I even had 4 devices that streamed the service: my Mac, iPhone, iPad and Nintendo Wii and still couldn’t find myself using it.
So I got to wondering. Why didn’t I ever want to use the streaming service? The answer was simple: the streaming catalog was frustrating at best. How many times have you searched a movie or TV show on Netflix only to find that it’s “DVD Only.” For me that was pretty often. Aw, man! What a bummer, right? So then you might be surprised to hear Netflix CEO Reed Hasting’s thoughts on DVDs (from THR):
Hastings predicted “a slow decline over the next many years for DVD,” even comparing it to the AOL dialup service from 2002 through today. In a 17-page letter to shareholders that included quarterly financial results, Netflix said it doesn’t anticipate any further material investment in property, plant and equipment to support the DVD side of its business.
A slow decline? Probably. But until Netflix provides its entire DVD catalog on streaming, there is going to be a huge demand (even need) for the DVD service. It won’t just fade in to nothingness if the latest titles are being offered exclusively through DVD. In my opinion, the catalog offered on the streaming service is junk. I would much rather pay the same exact price for Hulu Plus and be able to watch this week’s episode of Modern Family + pretty much everything that Netflix has to offer for TV.
Let’s also not forget that people like buying things. One could compare Hasting’s thoughts to the digital music industry. Yes, digital music pretty much put every record store in America out of business, but there’s a big difference between downloading an album and downloading a movie. Digital size, purpose, and use are all very different for the various types of media. A great example of the pro-DVD theory is Redbox. For $1, you can bypass the streaming services as you pick up the latest movie releases on your way in or out of a grocery or convenience store. According to the Seattle Times, while Blockbuster shuts down 500 stores, in 2010 Redbox was adding 30 new vending machines daily. The DVD, in my opinion Mr. Hastings, isn’t going anywhere any time soon.
But regardless of Hasting’s ridiculous controversial decisions to hike prices, or to separate the streaming from the DVDs, or to reverse the separation of the services, the fact of the matter is that right now Netflix can get away with its apathy towards its customers because there is a want/need for the services offered. But, for how long?
Hulu Plus is in some ways a better alternative to Netflix. It doesn’t hold as many titles in its catalog, but you can stream entire seasons of newer shows, and typically the last 5 episodes of the current season.
I believe that pretty soon Apple will throw its name in the ring with an all-in-one device (that means hardware + software) that will possibly put an end to the torture that Netflix customers are facing. This summer, Apple launched its iCloud service, moving documents, movies, music, and all kinds of goodies to the cloud. After the death of Steve Jobs, it was noted that he had “finally cracked” the problem standing in the way of making a great television experience for customers. The problem he is talking about is exactly what Netflix is creating: the opposite of all-in-one service, not putting the customers first, and not offering a fantastic catalog and service. All of these things I expect Apple to do when a television set is released to market sometime over the next couple of years. They may not get it 100% right the first time (Apple TV, MobileMe anyone?) but Steve said himself that the next industry he wanted to revolutionize was the TV industry, and all signs point to that happening.
In short: Netflix needs to stabilize itself because it will not be able to get away with mishandling customers and business for much longer. It could probably do well to get a new CEO, or at least one who owns up to his or her decisions. If these shenanigans continue I can guarantee Apple coming in and sweeping through the streaming service industry the same way it has with the Mac, iPod and iPhone.
What are your thoughts on Netflix? Do you have it? Did you cancel it? Do you have Hulu Plus? Post in the comments below and let me know what you think about this whole messy situation!
Also, check out HYPE podcast, where Andrew, Ben and Matt talk about the Netflix/Qwikster situation on episode 18, “Pop Like Pop Tarts.”
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