updated 11:20 am EST, Thu January 24, 2008
Netflix Mac Streaming Hope
Netflix hopes that changes in two formats will prove to be catalysts for its business in 2008, the company said late yesterday in its quarterly results call. Following a year in which the company profited by 97 cents per share and added 1.2 million subscribers, the rental firm says it intends to offer a Mac version of its web-based Watch Instantly feature sometime this year. Though it did not say how it would reach this goal, the company explained that the move would reflect a larger trend towards web video in general by expanding the available audience.
"Web-based video viewing is becoming mainstream, as a wide range of content companies make their content easily accessible on the web," said company chief Reed Hastings.
However, Hastings added that a lack of Mac-native digital rights management (DRM) remains a significant "hold-back" for the move. To date, the only widely used DRM format for the Mac has been Apple's own FairPlay system, which has not been licensed to any third parties. This has so far limited the Netflix service to Windows alone, where the company uses the protected form of Microsoft's Windows Media to prevent users from ripping permanent copies of streamed videos. An OS-independent copy protection system named Marlin is expected to debut with the beta of Pioneer's SyncTV service but has not been announced for use outside of other major projects.
Additionally, the movie house also said it should benefit from Warner's switch to Blu-ray for movies. By consolidating towards one HD movie disc format, subscribers are more likely to buy the relevant movie players and therefore rent Blu-ray titles. This may accelerate further if Blu-ray players crack the $200 mark currently reserved for low-end HD DVD players or if Paramount and Universal decide to sell Blu-ray movies, effectively ending the HD format conflict altogether.
The Netflix executive also dismissed efforts by others to join the Internet video on demand industry with Apple's iTunes rentals and similar offerings, noting that many of these services are limited by when and where they can be viewed and are dependent on the Internet, potentially causing problems in a very young industry.
"You only have 24 hours in which to complete watching the movie [on iTunes], so if you watch over two nights, you pay twice," Hastings said. "DVD rentals advantages over VoD are ubiquity of content, ubiquity of DVD players, an early window for new releases, and lower prices."
The senior official acknowledged that there will be a switch to online distribution "at some point" but considered the Watch Instantly feature an investment in the future rather than a complete business model, as with Apple's service or on-demand viewing from many cable TV providers.