Blog Post

Netflix Really Serious About Streaming-Only Subscription

Netflix (s NFLX) CFO Barry McCarthy said yesterday that the movie rental company will likely add a streaming-only subscription level “in the foreseeable future.” His remarks came at the Jeffries Internet and Media conference in New York, and reinforce similar comments made by Netflix CEO Reed Hastings last week.

McCarthy said Netflix is still focused on providing a bundled DVD/online offering, but evidently there’s been enough interest (certainly in the media) in a streaming-only option. Hastings has said Netflix plans to continue offering streaming as a subscription service, rather than exploring ad-supported or transactional business models.

Netflix passed the 10 million subscriber mark earlier this month and during its last earnings call Hastings said “millions” (emphasis on the “s” there) of subscribers had used the service. The company currently offers more than 12,000 titles through its “Watch Instantly” streaming service, which is mostly made up of catalog titles (but the freshness of content is definitely improving).

Better content and pricing would obviously be the key to adoption. Right now you can get unlimited streaming through Netflix for as little as $8.99 a month (the one-DVD-at-a-time level). But a streaming-only option for a little less would be quite appealing, especially if you could augment it with Amazon (s AMZN) VOD (coming to the Roku) for a la carte new releases.

8 Responses to “Netflix Really Serious About Streaming-Only Subscription”

  1. seanfitzroy

    I would love to see an all-you-can-eat / premium hybrid model where the user can get unlimited “library” streams coupled with x-number of “premium” 24 hour rental streams per month (similar to iTunes rentals). This would more closely emulate the current model but without the physical DVD media. Something like $12.99 for 12 premium rentals per month and unlimited library streams.

    • Chris Albrecht

      @Wade, you have a point. And Netflix did float a survey gauging how much people would pay for premium content like HBO. It’ll be interesting to see where Netflix takes it.

  2. I remain extremely impressed with Netflix’s new media offerings to consumers, and their focused initiatives at delivering movies “over the top” via broadband. It makes sense for consumers now, and makes sense for their business moving forward, augmenting the Post Office distribution channel.

    Dramatic increases in titles available via streaming will depend upon establishing and improving their infrastructure for encoding and transcoding content that supports new streaming technologies and the variety of resolutions required for different consumer devices.

    While the consumer subscription products and Netflix’s business vision is outstanding, I believe their infrastructure for processing content will need significant upgrades to be successful with broadband distribution of movies. Automation of their workflow is critical by adding “Encoding Intelligence” into their processes.

  3. Oh, one more thing.

    Amazon is rental and purchase. Quite a different model from NetFlix, which is an AYCE (all you can eat) subscription model.

    If I had to choose between the two, I would chose NetFlix. I don’t want to pay per movie fees. That could really cost a lot of money. That’s why I don’t buy TV shows or movies on iTunes.

  4. I have the $8.99 a month plan now, and don’t even use the DVDs. In fact, the last time I got a new DVD was about 4 or 5 months ago. I definitely have used the Watching Instantly service more than mail DVDs.

    NetFlix just needs to get more rights for streaming. And earlier release windows. Otherwise, who wants stale movies? The Long Tail works, but the real money is in current hits.