By Any Other Name

A few months ago, Netflix separated the subscription plans—and fees—for its disc-by-mail and streaming services, essentially doubling the cost for those who want both. This caused the company to lose as many as a million customers, and its stock price plummeted. So how did Netflix try to salvage the situation? It renamed the disc-rental business, which is now called Qwikster. If you subscribe to both streaming and disc-by-mail, you'll have to go to two different websites, and you'll pay two different bills.

This move has most folks scratching their head, and it further fuels the anger of those who objected to the original rate hike, which could certainly lead to more customer defections. What was Netflix thinking?

It seems to me that the company is trying to kill off its disc-rental business, albeit in a roundabout way. After all, the cost of managing a physical inventory—not to mention all that postage—must be exorbitant, so I don't doubt it's less profitable than streaming for the same monthly subscription fee. And the name Qwikster has a somewhat old-fashioned and questionable undertone, resembling Napster, a formerly illegal music-sharing service. (To be fair, Napster is now a fully legal music streaming and downloading service, but the association with its origins still lingers.)

My biggest concern is that this represents a trend to eliminate physical media in favor of streaming. Don't get me wrong, streaming is very convenient, and I often find content that is not otherwise available. But the quality of streamed video simply isn't up to the standards of Blu-ray—and sometimes, not even DVD. It's MP3 versus SACD/DVD-Audio all over again, and I'm afraid convenience will once again win out over quality.

The good news is that Blockbuster has taken advantage of Netflix's baffling actions by adding a disc-by-mail service to its streaming and brick-and-mortar stores—you can even return discs you receive by mail to a local store if you want. Not only that, Blockbuster claims that many new releases are available from them up to 28 days before Netflix or Redbox, and the monthly fee of $10 for one disc at a time or $15 for two discs at a time includes Blu-rays and games for PS3, Xbox 360, and Wii.

As I said, I think streaming is great for what it is, but I don't want to see it completely replace physical media. I want to be able to choose between quality and convenience, and Blockbuster seems to get that, for which I applaud them.

Old_Ben's picture

Scott, it seems to me that Netflix hasn't really thought this out. Let's face it...right now, the content available via streaming is not great. I would estimate that at least 90% of the available movies are, at best, B-movie crap that would make Ed Wood blush. There are very few first-run movies that I want to see. As a result, my very occasional use of streaming does not impact my internet bandwidth usage. However, if Netflix does provide more first-run streaming content, then my bandwidth usage will may hit some threshold set by my service provider. My ISP price may go up or my ISP download speed may drop as a consequence. Either way, I am not a happy camper. People may like the convenience of streaming, but I have a feeling they won't like it THAT much when this reality comes to fruition.

Yes, maintaining an inventory of DVDs and Blu rays is expensive, but it is a cost of doing business. I, for one, would be willing to pay a (slightly) higher price for the DVDs/blu rays and, with it, the choice from a much larger catalog, the better picture quality, and not having to worry about my data usage.

K.Reid's picture

Unfortunately, this looks like to be the new reality in the coming years. While we video/audiophiles love the quality of the picture and audio BD gives us, I fear that physical media will succumb to convenience in time.

Let's face it, we video/audiophiles are the minority voice. The transition to streaming only services is, in my opinion, inevitable with corporations like Netflix "force feeding" streaming only services to the consumer and de-emphasizing disc rentals. Yes, there will be an initial outcry - but it will fade with time. Very similar to how most Ipod users listen to awful, highly compressed music, the same will happen with BD vs. streaming - convenience will win. I don't foresee millions of people taking a stand and demanding streaming go away.

Unlike we videophiles who cherish a gorgeous, artifact free picture with deep inky blacks, I would posit that the masses careless about that. All the majority wants is a clear picture and reasonably intelligible sound (deep blacks - who cares; occasional pixelation - tolerable; DTS-HD Master Audio - what's that; somewhat of a HiDef image - good enough).

In my opinion, the key difference is that we 'philes want absolute quality where as the majority of the population can live with near high def and Dolby Digital Plus as opposed to Dolby True HD (most will not know what those formats are). The majority will hear what they perceive as good video and sound as opposed to we 'philes that know reference picture and sound when we see and hear it.

Blockbuster filed for bankruptcy, so how relevant are they? Financially, they are clinging by a thread. There are no stores where I live, so dropping off a disc would be impossible. It's not viable for me personally.

Two points -
1) Netflix is a corporation driven like any other to make PROFIT? That's what the shareholders demand. That's what the chief executive suite and executive VPs are tasked with delivering.

2) On that rainy or snowy winter night - what would you sacrifice to remain indoors not having to go to a Redbox machine or pray that a BD disc arrived in the mail? Suddenly, the convenience of streaming becomes very attractive - at the click of a button.

curtiswhite's picture

Yes i fear that the movie industry will go down the same path as the music industry. All though I believe there will always be a niche market for audiophiles and videophiles.As much as i like to have a physical copy of a movie of high quality . I do think that blue ray will be the last physical media for this.
I do have a question for Scott . Do you see anything down the road that could surpass blue ray in video quality and audio quality for 1080P sets. Or have we reached the top for video quality in blue ray ?

Jarod's picture

Great right up Scott! I pray that physical media does not phase out. I'm a die-hard believer in it but enjoy convinience of streaming. I really love the Blockbuster disc-by-mail service. My friend and I use it and we share one account and go halfsies on the 2 disc fee. We flip for which movie of the two once they come and then swap the next night then send off for two more. Beautiful arrangement it is. Luckily we have same taste in movies which is to say pretty broad so we don't argue setting up the que of which Blu-rays to send next.