AfterDawn: News

Netflix CFO says the DVD rental business isn't disappearing any time soon

According to Netflix Chief Financial Officer Barry McCarthy, his company's current business strategy is still firmly rooted in DVD technology. Speaking at the Thomas Weisel Partners Technology, Telecom & Internet Conference in San Francisco he talked about some of the reasons Netflix is so sure DVDs are still the most important way to distribute movies.

“There are 100 million DVD players in U.S. households,” McCarthy said. “If you really think people are going to stop renting DVDs, you need to lie down until that thought passes.”



He also talked about the barriers to establishing a mainstream online video system. He said that the main problem right now is that content needs to be available on a wide range of reasonably priced set-top boxes. He also said it would need to be an "open" system, mentioning Amazon's Unbox service as an example of a current system that's "closed."

He did, however, mention what may be a step from Netflix to open their own Streaming service, called Instant Watching, to Apple users, who are apparently supposed to be able to use the service from their Macs before the end of the year. Until now the (Microsoft) DRM used for the videos has made it incompatible with OS X.

Netflix started this year with an announcement that they're parterning with LG to make a Set-Top Box designed to work with Instant Watching.

Written by: Rich Fiscus @ 6 Feb 2008 23:54

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• 15 comments

• ZippyDSM

  DVD will out number everything else for 6-10 years easily.

  7.2.2008 07:54 #1

• xdgen84

  Yeah, options are nice, but DVD isn't going anywhere anytime soon.

  7.2.2008 10:12 #2

• drach

  Very true, i don't want to pay hundreds of dollars for a Blu-ray or HD DVD player when i can use what i already have, and why pay so much per disc when almost every DVD is under $20? Besides, i think it is great that CSS is so ineffective.

  7.2.2008 10:15 #3

• hm577

  Originally posted by ZippyDSM: DVD will out number everything else for 6-10 years easily.
  This one's hard to argue with complete conviction..............but I slightly disagree. 10 years?? Not a chance in Hell. 6 years?? Maybe. In 2 years the HD disc formats will be fully launched and going strong. I could potentially see 6 years until standard DVD is overcome ............. which is a long time either way so I AGREE with Zippy. But the "iffy" part is when. HD discs (Blu-ray, HD-DVD) just BLOOOOOOWWW DVD out of the way in terms of sound, clarity, brightness, sharpness, etc. I mean BLOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOWWW away!! It's just as noticeable a difference as SDTV to HDTV, NOT THE SAME DIFFERENCE, I only mean just as noticeable so those who want pristine disc watching and rentals will swarm to high definition optical discs. I know I will.

  7.2.2008 14:03 #4

• ZippyDSM

  Quote:Originally posted by ZippyDSM: DVD will out number everything else for 6-10 years easily.
  This one's hard to argue with complete conviction..............but I slightly disagree. 10 years?? Not a chance in Hell. 6 years?? Maybe. In 2 years the HD disc formats will be fully launched and going strong. I could potentially see 6 years until standard DVD is overcome ............. which is a long time either way so I AGREE with Zippy. But the "iffy" part is when. HD discs (Blu-ray, HD-DVD) just BLOOOOOOWWW DVD out of the way in terms of sound, clarity, brightness, sharpness, etc. I mean BLOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOWWW away!! It's just as noticeable a difference as SDTV to HDTV, NOT THE SAME DIFFERENCE, I only mean just as noticeable so those who want pristine disc watching and rentals will swarm to high definition optical discs. I know I will.
  Past 5 years digital distribution could surge leaving disc formats in the dust.
  
  Becuse of price and rebuying discs and buying better equipment to enjoy ion.....BR/HDVD will have a hard time booming, sure I think they will capture half(ish) the market but I do not think they will make it past a 30-50% saturation point.

  7.2.2008 15:45 #5

• silk42

  Although the article quoted "DVD" and not HD-DVD or Blu-Ray, I still read it as meaning all forms of DVD (the disc itself). I could be wrong, but Netflix is in the business of renting movies, so whether they're mailing standard DVD or high definition DVD, they're still getting business. I assume the bigger concern is what's going to happen to Netflix once people quit having any form of media shipped to their house? I think this is why they're now offering online rentals. However, is this going to be lucrative enough to keep them in business? I suppose only time will tell.

  7.2.2008 18:40 #6

• atomicxl

  That guy's quote is the best thing since sliced bread.

  7.2.2008 19:12 #7

• wetsparks

  I disagree Zippy. Online distribution probably will gain in popularity, but to think that everyone is willing to download a movie and burn it themselves is crazy. Lots of older people don't know how or don't trust that it will work right and the rest like the pretty pictures that they put on the box or just want a box to put it in instead of a big cd wallet that you would have to store them all in.

  8.2.2008 22:54 #8

• ZippyDSM

  Originally posted by wetsparks: I disagree Zippy. Online distribution probably will gain in popularity, but to think that everyone is willing to download a movie and burn it themselves is crazy. Lots of older people don't know how or don't trust that it will work right and the rest like the pretty pictures that they put on the box or just want a box to put it in instead of a big cd wallet that you would have to store them all in.Its going to take 100$ 25inch LCD HD TVs and 100$ or under disc players to saturate the market enough for the players to take over DVD this is more likely to happen in 10 years give or take 3 than 5 years.
  
  Now in that time if digital can hit the right price range as well as population saturation it could easily cause big media to drop or halve costly physical media distribution, altho its more likely this happens in 10-15 years with that said HD discs are looking to have a shorter life span than DVD.

  9.2.2008 00:53 #9

• JRude

  Until downloaded discs and or files do NOT have DRM, time limits and crappy formats less then even DVD, I do not see any threat to physical discs for a looong time. USA ISP's seem stagnant in offering and providing the necessary BW for such to happen even if Digital downloads were a TRUE alternative to physical discs. The stockholders do not want to increase BW unless it is for proprietary video to make a buck, not to actually increase the dismal showing of USA Internet. USA internet will be hard pressed to even keep up with everyday growing demands on internet video. Much less an increase in pipeline that would allow the demand for flics you pie in the sky people are dreaming of. We're a joke amongst the rest of the world. Don't think because you are a techie means the Industry is going to provide the means without MUCH investment. How much are you willing to pay?

  9.2.2008 03:12 #10

• ZippyDSM

  Originally posted by JRude: Until downloaded discs and or files do NOT have DRM, time limits and crappy formats less then even DVD, I do not see any threat to physical discs for a looong time. USA ISP's seem stagnant in offering and providing the necessary BW for such to happen even if Digital downloads were a TRUE alternative to physical discs. The stockholders do not want to increase BW unless it is for proprietary video to make a buck, not to actually increase the dismal showing of USA Internet. USA internet will be hard pressed to even keep up with everyday growing demands on internet video. Much less an increase in pipeline that would allow the demand for flics you pie in the sky people are dreaming of. We're a joke amongst the rest of the world. Don't think because you are a techie means the Industry is going to provide the means without MUCH investment. How much are you willing to pay?Is only recently they have started to move to a pay by bandwidth gimmick, if they move to that then yes digital distribution will be set back 10 years, but they get off their asses and join with big media who already own half of them they can create a streamlined digital distribution system.........oh who am I kidding capitalism unbounded will ensure digi distro is on ice for 20 years.

  9.2.2008 04:16 #11

• JRude

  Yes, not to worry...BiLL and The Industry are converting the Internet to the Entertainment Industry's Private Distribution System....They have DEEP pockets and can secure the necessary legality to hijack it...but! With their ineptness it's not a near worry except for high aggravation ...just invest in Vaseline stock! ;- )

  9.2.2008 15:21 #12

• ZippyDSM

  Originally posted by JRude: Yes, not to worry...BiLL and The Industry are converting the Internet to the Entertainment Industry's Private Distribution System....They have DEEP pockets and can secure the necessary legality to hijack it...but! With their ineptness it's not a near worry except for high aggravation ...just invest in Vaseline stock! ;- )so is true...the world revolves around porn!

  9.2.2008 15:24 #13

• kubapolak

  it is kind of sad, but pornography seems the be a major part of the the movie (technology) industry which dictates the market.

  11.2.2008 21:01 #14

• borhan9

  The fact is that the renting of DVD's will never stop just that the technology will change the renting will stay the same.

  3.3.2008 20:26 #15