January 24, 2007
Netflix Expanding Beyond Postal Delivery? The Futures of Renting Movies?

Netflix is taking my advice!

Well, okay, there's a strong chance they were already thinking about these issues anyway, and an even stronger chance that the powers that be at this company haven't spent a significant amount of time surfing the Convergence Culture Consortium's blog (although they should, according to Peter Kim. But news broke recently that Netflix is going to be trying to branch the brand name established in their DVD-by-mail movie rental service to providing a space for consumers to watch films and television programs through the Internet.

The announcement, made last week, was that this will be a new product available for free to current Netflix subscribers, automatically provided to them as part of their membership to Netflix. The initial service will include approximately 1,000 properties from a variety of top content providers. The plan for the company si to remain in the rental business, not providing download-to-own or advertising-supported content. This is just a space to test out a new rental forum, in other words.

Back in June, I called Netflix "the world's best idea with the world's worst delivery system," primarily based on my disdain for the United States Postal Service, exacerbated by not having mail forwarded to me for about a month, phantom mail that's never been recovered. (Oh, and this Christmas season, I mailed two things to my parents' house, one priority and one regular mail. They both arrived the same day, about a week later).

In that June post, I wrote:

But it's still a shame that today's most forward-thinking distributor, that is helping to instill this Long Tail effect in the media industry and to create what Leonhardt calls a "meritocracy" for content, is doing so using one of the most disorganized distribution systems around (the postal service being a great example of how terrible a government-owned business becomes when it is allowed a monopoly on most mail delivery services).

Netflix already realizes that, if digital streaming of movies becomes prevalent, its current DVD-through-mail system could become obsolete, and the company is already considering ways to shift its distribution to stay on top of the market. In the meantime, though, Netflix is the best we've got, considering that Hollywood exclusivity rights only allows about 1,500 of the 60,000 DVD releases available through Netflix to be distributed digitally through the studios' Movielink. Oh, and I can't look at Movielink, anyway, because they don't support Macs.

Yet another reminder of how old thought patterns restrict the ways in which the industry can respond to new technologies and new viewer demands.

Netflix has to be sure to establish that it is still providing the same services, only in a new delivery platform, and not try to develop their system as a competitor for Amazon Unbox or iTunes or the many other providers in this crowded digital video space.

I wrote many times this summer about how crowded this space has become, such as this post on AOL's video offerings from August, when I wrote, "It's like the European imperialist race to establish the "New World," as each distribution company is looking to corner as much of the market as possible."

PSFK points out that Netflix's system requires a PC, as opposed to the Apple TV option, which works with both Macs and PCs.

More information is available at MarketWatch.

Meanwhile, Blockbuster is trying to counter by emphasizing their flexibility in providing local movie bases, in addition to the reliance on the postal system. Blockbuster Total Access allows viewers to access their next movies either through the mail or by exchanging movies at physical Blockbuster stores.

One thing is clear--the idea of renting movies will not change, even if the technology does.