There’s only room for 4 devices in the average living room. They are: a display (LCD/plasma/whatever), a cable/satellite receiver (aka set top box or STB), a DVD player, and a game console. For travelers, you can add a Slingbox to that list, but that’s about where I draw the line (sounds like Erick at TechCrunch has a similar philosophy). Remember, I said “average” living room. I’ll expand on my four device theory at a later date.
Netflix was rumored to be building its own box, a project I was sure to see fail. Instead (or in addition or in replacement of) they are going to integrate their Internet delivery service into some future LG products. This is, in my opinion, the only path for success. By doing so they eliminate all risk of becoming a hardware company, which surely would have sent them on the path to failure.
Don Frommer at SAI asks 5 good questions, but of them I feel only one is extremely relevant: how much will they cost? On the PC you get one movie per dollar you spend per month with Netflix. If that model translates to the TV box, then we have a winner. If, on the other hand, I have to spend per movie, then Houston, we have a problem. That would put them squarely into competing with cable/satellite on-demand services, and Comcast has a much bigger war chest in that arena.
Over at NewTeeVee the question of competitive services is raised, citing AppleTV, VUDU, Amazon Unbox/TiVo as comparison products. In my eyes, none are competitive. The “smart” marketing of the (rumored) $799 HD/Blu-Ray player will simply label it as having Netflix “built in” or something like that. It won’t get marketed as “The Netflix Box” (except, of course, FROM Netflix). Consumers have shown resilience to these boxes, and the Netflix brand simply isn’t strong enough in that sense. We all know what movies are, and we are used to a bunch of existing models. Having the top-of-the-line LG DVD player include movies “as if by magic” is a winning combo.
My friend Dave Zatz is a little less enamored with it: “As I said recently, given content licensing fees and Netflix’s low-cost subscriptions, I don’t see how unlimited streaming could be an economically viable business plan… Time will tell if they stick with it.” I think it’s a fair point, with a big however. The however is I’m sure some math genius at Netflix has all sorts of cost/usage estimates that predict a certain quantity of movie watching. Again, just a guess of mine, but I would presume they have a long way to go before it becomes overly costly.
So to summarize – the path to success from here:
- Integrate into a DVD player and NOT a “Internet STB”, and add NO extra fees for the service beyond existing Netflix monthlies.