The end of DVD is here… and no it isn’t Blu-ray
Netflix. It changed how America sees movies. You go online you create your list of movies you want to watch. You select the number of movies you want to see at a time. And Voila! The DVDs are at your doorstep.
10 Million Subscribers. That’s One Crore Accounts.
Then about 2 years ago, Netflix introduced direct download. Watch movies on your computer, within your same account. You would still be getting DVDs by mail, but now at no extra cost you could also watch more movies on your computer.
Then something happened last year. Netflix introduced a box called Roku. A small box about twice your palm size. You connect the box to your television set just like your cable or satellite television box. Switch it on, enter your Netflix account credentials and your movie queue that you build in your account gets miraculously transported down on your box to watch. The catch? Absolutely nothing. With a one time box charge of 99$ you now have more than 18,000 titles that Netflix has converted for downloads.
What about the Internet connection? You plug in the Internet cable directly into the box and you are done.
Better still, if you have a wireless router running your home’s net, you don’t have to do a darn thing. Roku downloads your movies by connecting to Netflix servers via your wireless account.
Then, the news came in this morning.
Netflix CEO Reed Hastings announced that the number of DVD rentals may lose it’s number one spot in Netflix’s video distribution.
Whoa! With ten million subscribers, the number one spot in Rental business, what could be going wrong?
Nothing. Nothing’s going wrong. You are witnessing a huge new trend, a movement, and shift in market-wants – that will change the face of digital movie and entertainment business forever.
You see, most of the 10 million subscribers are moving to Netflix’s direct download, where they can download an entire queue of movies, sit, relax on their couch, and watch the movies they want.
And this will impact television and the behavior of channel surfing. Though not by tomorrow or the day after, but soon. Think about it. Rather than surf a million channels to find what is good for you to see, you will be moving your remote controller to flick through libraries like movies, television serials, reality shows, cartoons etc. etc. to browse, choose and push what you want to see in the queue the your selected shows start playing back to back.
So what happens to Blu Ray?
Sony may never see the kind of success videotapes or DVDs received. Because a user can now see HD movies through Netflix downloads right on their TV set. And it will take Sony a lot of time to recover it’s cost of investment into the product not forgetting the massive costs it poured into its fight with the now defunct Toshiba’s HD. I’m not sure where this all will go or how Sony can turn this around, but Blu Rays are not replacing DVDs.
The Internet is.
Yet, the tragedy of India
Sadly, the country which takes one of the largest pies of technology development may not see the digital revolution of movies and television shows zipping right onto their television set via the internet – anytime soon.
The Internet is still controlled by a kind of a cartel; some call it the traditional mafia iron hold on monopoly. This has been true for in every other industry. And so, it exists with the way the Internet is provided to consumers in India.
With just a handful of web providers, it is easy for them to control how the way web connection is priced in its current structure and form.
It is depressing to see that the decade old price format of charging you for the number of hours used is still followed diligently. You get charged for speed slabs that you choose, is another area, they are making ridiculous amounts of money from the Indian consumer.
I don’t see any problems in charging for high bandwidth T1 lines, but if your pricing is based on slabs created with ridiculously low to moderate speed connections, then it is nothing short of fleecing.
Until this stronghold of the Indian net-provider cartel can be broken into, the Internet will never truly be free in India. It is still shackled and very contained.
Consumer Convenience
Not only has Netflix made downloading movies easy, but it has gone ahead and extended it beyond your computer and its Roku box. You can connect to Netflix and download movie via any of these that you may already have: Blu-ray disc players and new Internet TVs from LG Electronics; Blu-ray disc players from Samsung; Microsoft’s Xbox 360 game console; TiVo digital video recorders; and, soon, Internet TVs from Sony and VIZIO.
What they have done is follow one key principle of the internet. Open themselves up. One for All. It’s one of the principles I’d outlined in the six mantras of the internet.
Unlike the still deeply entrenched policy of many Indian entertainment firms to control control and control, thereby making it more difficult for the consumer to reach out to your product, here is Netflix following the virtual opposite of what I see in Indian entertainment companies and in two years, this morning, it’s announced that DVD will soon be overtaken by… you now know what.
Where to Invest?
So you are an investor, with a business plan for a Netflix style DVD distribution business on your desk?
Scrap it. Trust me. Scrap it. Do not burn your money up in smoke in a product which will soon be on its way out. It won’t be extinct or it would not disappear tomorrow morning, but it is on its way out. And if your business plan focuses on Blu-ray, I would say pause and see what comes out of it. Though video rental libraries have a Blu-ray section in every store, warehouse and what have you, Netflix’s announcement should stop investors to pause and rethink their investment strategies and plans in this business.
The new digital wave has hit fast and hard. I’m only surprised it hit faster than I’d imagined.
Besides PFC, I run Utible Inc, where we offer consulting on web marketing, branding and content development to our clients. Please feel free to contact us for any of our offered web services.
Tags: Blu-ray, Downloads, DVD, Netflix, Technology
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One thing that has been beaten to death during those countless movie marketing threads here is the question why Indian movies never take the easiest route, of releasing them online!!
The internet speed has been terrible and probably the worst if you take into account the leaps and bounds we have taken in the IT otherwise. Fuck, man!!
Aur ab to seriously Kalyan goes ‘ho! I have taken advantage of Blockbuster’s download plans but it was more expensive as compared to renting three DVDs at once (part of the rental plan of course but still).
I have utilized Jaman.com to rent Hindi movie sitting in India with its terrible speed. If only that website becomes more popular with the cinephiles across the world..
What am I saying! Is anyone listening!
One should be able to watch movies from a Facebook account man!! Look where the gaming industry is going with Farmville and Mafia wars! Why not release films over Facebook!
Actually another plug for Jaman – you are able to login with Facebook ID and watch movies. However, what I am talking about is actual movies shared over FB. Imagine the traffic that site gets and with FB ads in their infantile stage – NOW is the time to release movies there to get maximum attention!
You can do that with Hulu
its moving fast and before any other version of digital entertainment happens, this one is going to hit hard.
So Oz, how much you get paid for this article? Or is it a free long-term subscription?
Ok seriously, Oz couldn’t be far from the truth. Because there’s been a ton of discussion on where the future of distribution is heading. Certainly, online is one of the key ways. But the thing is, it’s hard to quantify what it means for independent filmmakers.
There’s no one way you can put a finger and say, ok, here’s my film heading.
It’d be other factors like theatrical release dates and how far away it is from dvd/internet release. Clearly, the audience wants entertainment here and now. While I’m not advocating piracy here, we have to realize that many viewers of pirated material are the reluctant-viewer kinds just for the reason that they don’t have proper access. Distribution channels are not far-reaching. Of course, there are many problems.
But I guess cheaper distribution options will defly control piracy while making money for the producers.
Well, the one thing that is pretty awesome about India is that we’re good at catching up with tech infrastructure these days, allowing favorable markets like US to do the trial & error for India. Bigflix.com from Reliance already provides streaming movies (horrid quality) and DVD rentals. UTV and other producers are releasing movies On-demand. TRAI, the telecom regulatory authority in India, has indicated it’s intention to redefine broadband internet as 2 mbps instead of 256 kbps (because broadband in India is subsidized).
From July 23rd 2009 at http://www.thehindubusinessline.com/2009/07/24/stories/2009072451070400.htm
“Dr J. S. Sarma, Chairman, TRAI, said that the target set for roll out of broadband by the Government can be achieved only if the definition of broadband is redefined and resources from USO fund are utilised.
Dr Sarma said that while there are countries which offer speeds of over 20Mbps, India is still stuck at 256 kbps.
Changing the definition of broadband will have major ramification for operators if they want to claim subsidy from the Government.”
Also, check out this article on Netflix operations: “How Netflix gets your movies to your mailbox so fast”
http://www.chicagotribune.com/entertainment/chi-0804-netflixaug04,0,6424990.story
So true Oz..Netflix is a phenomena..and good read a post by you after a long time.
Internet may be available to more number of people in the country..but the speed in an average internet consumer household cannot sustain 5 mins streaming.By the time buffering is done with,the average viewer is done with the window or website itself.
It’s no big news actually, movies will sooner or later go the music way, MP3’s killed CD’s long back, and now DivX will kill DVD’s.
The only problem I see with digital format(as far as movies are concerned) is that streaming a video on the internet is a downright pain. Our current video standards and internet speeds are nowhere capable of handling the kind of traffic that video generates, and I am not just talking about India, it’s the same all over the world.(MJ’s death crashed servers all over the world)
We are still not quite ready for the video on demand service on the internet, already YouTube is clogging up half of the world’s bandwidth, precious bandwidth which I feel can be put to better use.
What we need is to look for other channels to deliver digital content to the user, like the TV for example. Complete digitization of the TV in India will free up important bandwidth, which in turn can be used to give pay per use content to the consumer through DTH.
Netflix is being a game changer. India shall copy, been always doing that effectively, shall do it again, but in this case a few years hence. Why?
Cost of delivery. That’s why.
We know why pirated CDs caught on fast in India. The Lo
sorry…continuing…
The low cost of pirated CDs. Internet isn’t low cost. Far from it, as Oz says, is very costly yet.
So, we need a game changer here too. I know who’ll step in R-ADAG with Netflix and Big DTH. They have plans and remember what they did to Indian telecom with the Ambani scheme – 501!!
When that happens, the crash shall evolve a new way India receives entertainment and the cables shall bloom…it is all a matter of time. The glitches that tech faces in our country is unimaginable coz the last mile has not been worked out as yet.
Guys are onto it and then it is a matter of time.
They can’t kill of the collectors.
Blu-ray is here to stay. Just have a look at the anime industry in Japan. That’s soon to follow. Having a copy with good packaging is important. Why do think audio cds still exist. Dedicated fanbase still buys CDs. Atleast I do that for the underground.
I wouldn’t bank on the Japs…they sure are leaders but their eco-system is different, they choose things from an engineering perspective, not the rest of the world.
Lot of things do come back for collectors. I doubt if you can call it a trend though. I personally still buy CDs, but strongly feel that labels need to start giving out extras with each and every CD. That is one big way to make people buy CDs.
Like with one Iron and Wine CD I got a hand drawn poster of the inlay picture. That was terrific and added tremendous value to the CD.
DVDs on other hand have always handed out those extras. However, it is time to give out more for the same price. When I spend spending 20$ for a new DVD, I sure wish to get something more than just the movie and the extras which get stale the minute I am done watching them.
And streaming 1080p is far away in India atleast. And what about all the special features? What about the collector’s edition.
The conception that mp3’s killed music industry is completely bullshit. Why the fuck does a label need to exist anyways? for distribution. Well now we do have enough ways to ship the CDs.
Blu-ray and post-blu-ray home video shall stay like they always did.
Why do you think metalheads still buy original metal CDs still atleast the few they want to own?
Oz, completely agree with dPsychc…out here in India at least, watching movies online can hardly ever replace the excitement of waiting for,say, the Criterion 3-disc Remastered Special Ed Seven Samurai, loaded with Special Features, or “Pacino: An Actor’s Vision” a rare collection of Pacino flicks found only on DVD…I’m not an expert and can’t opine on whether Blu-ray’s gonna replace DVDs or not – but I can tell you, the passionate movie lover/collector will always be there and he’ll always prefer going down to the store and browse thru titles (or browse thru DVD categories on Amazon or cdwow), and then zero in on one (in my case, quite a bunch)…funny how this reminds me of a similar claim made about books being on their way out, a few years back…but they’re very much in circulatuion, and how!
In the case of books,display was the main issue which created strain on eyes..But with E-ink technology ereaders like Amazon kindle are doing well..
I hope that internet downloads take off in a big way..No more watching scratched DVDs from local library,no more waiting for guy from online rental company to deliver DVDs..
At your comfort of ur home u can watch good quality movies..
@ sharathchandraprasad, Kindle is truly immensely popular and one of the hottest selling products of Amazon, but does it sell as hot as the real books Amazon deals in?
All I’m saying is, stuff like books and DVDs were always ‘bought’ by the collector or the enthusiast for his/her private collection; for the rest, we’ve always had Rental Libraries! And since the former is a sizeable chunk of the population (don’t we all agree that the number of people buying DVDs from Landmark or Planet M or grey market footpaths almost always outnumber those exclusively subscribing to Bigflix or Seventymm?), one can infer that there’ll always be a tangible, ‘collect-able’ medium to enjoy home video, catering to the bloke who loves watching his movies again and again and again and yet again, discovering it ‘all over again’, and enjoys fiddling around with the bundled Special Features and Easter Eggs or hidden goodies (I actually discovered the 2-disc Batman Begins had a host of Special Features, one full year after I bought it!) !
Oz,
that’s another of very insightful and very well-written pieces from you. If this is happening, as you say maybe not tomorrow but sometime very soon, then IT IS a paradigm shift.
May be the next generation will look down upon CDs/DVDs as we now do to floppy-disks or pagers. I have friends in the fields of technology, research, advertising and media and they all seem to point towards the horizon and tell to look for the clouds forming right now. You have just added to the list, with a very definitive fact-loaded ‘prediction’.
As for we in low-bandwidth zone called India – I am more hopeful than you are. As somebody suggested, it will just take a single market player to open its eyes and do a ‘kar lo duniya muthhi mein’ repeat.
In fact, we (me and a few friends) just launched India’s first Late Night Comedy Show on internet (called Jay Hind) and though we haven’t found any sponsors yet, the response has been more than overwhelming. And surprisingly (even for us), the B-towns are giving us a good viewership. So may be, the broadband is gaining more ground than we think, vis-a-vis width as well as demographics.
“television and the behavior of channel surfing” will be impacted. but this paradigm of entertainment isn’t going away. each one of us will, every now and then, feel like just putting our legs up and checking out what’s on (maybe like at the end of a tough day at work), rather than make the effort to seek out our entertainment.
I could never figure it out – does anyone know why internet in india is so expensive and limited as compared to internet abroad, even compared to other developing countries like thailand?
I havent seen many places in the world that offer download limits on internet. Europe and Australia offer 50 mbps speeds without download limits. Here we struggle with 256 kbps – thats 1/200th the speed of what is being offered abroad!
One correction is worth pointing out. ROKU does not provide high defintion. The quality of online movies on Netflix is still below DVD quality, forget about high defination.
Pranav, it does. Not all movies are HD. Netflix has a separate HD section. It lets you know the quality of the movie you are steaming 1 to 4 and the 5th bar is HD. I recently saw Shrink in HD on Netflix via Roku