Netflix: Wii, NAB, HBO, and Revisiting Serial Monogamy
Andy Tarczon, Founding Parter
April 16, 2010
I’m enjoying a late start to my morning, rationalizing it by spending time in the LifeLab – my fancy term for the big broadband and home media testing center that sits above my garage. We’ll ignore the fact that it is also the computer room, the library, the kids’ playroom, and has a dusty stair climber in the corner.
Arriving home from NAB, I finally had the chance to test Netflix on Wii. My reaction: great job on the interface – it is consistent with the other platforms such as Roku, Sony, and XBOX. Yet is uniquely built for the Wii remote. Set-up is a breeze (assuming you’re already ‘Net connected), navigation is simple, and the buttons are intuitive - ‘a’ button is both play and pause, the ‘b’ button is go back. And that is where all platitudes end. Unfortunately picture quality is nowhere near what I’ve come to expect from the other platforms. I don’t want to be an HD snob, but this appears to be less than DVD quality.
Quality aside, what does this mean for streaming to the TV? You may have seen in our press release earlier this week, 54% of Wii consoles are Internet connected. But digging a little deeper, our recent study, Profiling Netflix Streamers - A Consumer Snapshot, revealed that 71% of Netflix Streamers that own a Wii connect it to the Internet. Even more surprising, among Netflix Streamers Wii has the highest penetration rate of modern game consoles (though the percentages are within the margin of error).
Netflix was indeed a hot topic at NAB this week. Partly because of the Wii announcement, partly because of the Irdeto security announcement, and mostly because “Netflix is the poster boy for streaming at the moment." (SIDE NOTE: Wasn’t it but four short years ago when NAB had the small IPTV section in the front of Central hall? Now streaming is indeed everywhere – from solutions, to consumer services, to infrastructure. Heck, even CES is adding a Telecom Pavilion. SIDE SIDE NOTE: Doesn’t that feel a bit like when Comdex added consumer devices? Has CES lost its focus?)
Especially important to the Netflix discussion was the impact to content windows associated to the “digital delay” – another of my terms of endearment for the 28 day window agreements being signed by Netflix. Certainly Blockbuster has been playing up the fact that they have Sherlock Holmes and Netflix doesn’t (the corporate version of na-na-na-na-boo-boo).
But two factors play. First, Blockbuster’s future continues to be in doubt. (See: Can Blockbuster Be Saved) Second Netflix’s competition, as we’ve often said, is no longer Blockbuster, it’s HBO. In that context, Netflix is the premium movie service that is also on-demand. While the industry has talked extensively about Cord-Cutting, have we felt the impact yet? Convergence Consulting Group released a study pointing to 800,000 cord-cutters in the past two years (600k of which came in 2009). TDG has often pointed to the fact that a more immediate concern is downgraders – those who downgrade their subscription to a basic package. My favorite quote continues to come from an unnamed cable colleague who quipped that they “lose more customers to death than cord cutting.” In this case, these downgraders are supplementing their subscription with other services. Enter Netflix.
A great example of this competition to HBO is the current Starz original series: Spartacus: Blood and Sand. Netflix has been releasing this series to Watch Instantly as the episodes air. So while the finale airs tonight, the episode was in my queue this morning. So naturally testing the Wii, I also got to watch a great episode. Since I know the ending, I won’t spoil it… except to say there is a guy called Spartacus, there is blood, and there is sand. Pretty much like every other episode.
A couple years ago, I coined my personal behavior associated to Netflix - Serial Monogamy. Instead of watching multiple series in weekly installments, I wait for release on DVD or streaming and watch shows (serials) one at a time – thus Serial Monogamy. Examples: Weeds season 5 came to Watch Instantly. Madmen season 3 just released on DVD.
We’ve not quantified this behavior and impact to viewing behavior, so for now it is my personal term. However, the simultaneous release of Spartacus is an interesting concept for Netflix. Now it is more than just a rental service, it is even more than catch up TV, it is an example of a subscription service that brings premium content to the consumer on-demand the same day it airs. And that should have HBO quaking.
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