Netflix Needs Streaming Only Memberships To Fend Off Hulu, Apple, Google
Traditionally a movie-by-mail model, Netflix is considering a streaming-only membership. Straight from CEO Reed Hastings, an Internet-based option would put Netflix on equal footing with Hulu -- and will be doing now what all movie delivery companies will have to do in 2011.
The streaming-only option is appealing to both national and international subscribers. Netflix can only mail within America, so Canadian subscribers are still paying $8.99/month Canadian for only streamed movies, equal to the same plan Americans get for unlimited streaming and one DVD movie rental at a time.
A lower, streaming-only plan for America would appeal to U.S. customers, particularly if Netflix is able to negotiate effectively with the Canadian Post and offer a one-movie-at-a-time deal for the Great White North at the same time. Netflix, of course, would gain less money per subscriber, but the cheaper price and sensible streaming option would gain more subscribers overall. It just launched Netflix Canada last week, and streaming should be solidly in place in current markets before it considers expanding.
A purely online movie option could also save money. According to National Public Radio's rare inside look at the company, it costs Netflix $.78 to round-trip a movie from its offices to a customer and back -- and postage prices have gone up since the NPR piece. It ships several million movies per week. Leaning more on streaming would increase server costs, but save money when it comes to labor and shipping. Dipping DVD and even Blu-Ray sales show that Netflix is still focused on a dying format. Last week Blockbuster filed for bankruptcy and Best Buy announced it was drastically shrinking its CD and DVD floor space. Both companies show that Netflix must adapt as quickly as possible.
A streaming-focused membership also would allow Netflix to take advantage of its lead against competitors, including Hulu. Backed by old broadcast media, Hulu just added the popular Roku and TiVo players to its digital venues. However, Hulu is still only in America -- and has its hands full. as BNet Media Creature contributor Catherine P. Taylor notes, dealing with internal bickering between Hulu owners ABC, Fox and NBC.
Despite the heavy press, Hulu is only a fraction of the streaming picture. A recent New York Times brings up Netflix's other competitors:
- Amazon (AMZN), which recently negotiated some 30-day exclusives over Netflix
- Apple (APPL) through iPod, iPhone and iPad rentals, as well as the new Apple TV that both supports and competes with Netflix
- Google (GOOG) and its Google TV partners, including YouTube with its paid content initiatives
Photo courtesy of swaksalot // CC 2.0
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