Netflix's CFO on HD movies rental rates and the future of discs
By Ben Drawbaugh 
posted February 8th 2008 7:19PM
posted February 8th 2008 7:19PM
Netflix has revolutionized the movie rental business by using the good 'ol US Post Office to deliver millions of discs all around the country -- even if we have to wait a long time for some titles. But while many are predicting the end of packaged media, Netflix is seeing growth, but of course, like any good business Netflix is hedging it's bets, with its Watch Instantly feature. And according to Barry McCarthy, Netflix's CFO, those shiny discs aren't going anywhere, he said in San Francisco earlier this week, "If you really think people are going to stop renting DVDs, you need to lie down until that thought passes." Well then, but we wouldn't argue with him either, especially when you bring HD into the mix. As we've seen discussed online many times recently, HD downloads leave a lot left to be desired -- some content doesn't even seem it deserves the HD name -- and Netflix just makes it so easy. The other interesting tidbit is that when the format war is over, Netflix may raise its rate on HD movie rentals and while we don't want to pay more, we have to say we expected the increase all along.
A price increase for the ability to rent High Def would sadden me. I mean, what if you only rented one high def movie a month, and the rest were DVD vs the guy who rents nothing buy high def? How's that fair?
Oh well.
Another reason to keep the format war going. Just Go Purple! And then let them cut prices to get you to buy their version.
how much could they raise the rates for hd? $1/mo? its a pretty competitive market. I think they offer a great bargain though.
KCM is right, go purple and keep the bastards honest!
"As we've seen discussed online many times recently, HD downloads leave a lot left to be desired -- some content doesn't even seem it deserves the HD name -- and Netflix just makes it so easy."
Reminds me of a quote from back in the day:
"Never underestimate the bandwidth of a station wagon filled with tapes on the highway."
So I'll have to pay more for movies they'll never ship to me? I removed everything from my queue except the HD DVD/Blu-ray movies I want and nothing has shipped in 2 weeks.
That's stupid, Blu-rays cost nearly the same as DVDs, this is not needed. But people will believe anything.
This isn't true. Netflix gets a very low price on buying as many copies as they do, and I would wager to say that they do not get the deal with hd discs, or they would simply have more copies now.
All along I've been seeking a service that would actually have HD discs to ship (ie, not Netflix and not Blockbuster) and I'd say I'm will be to pay a bit more for it. If Netflix somehow manages to achieve AVAILABILITY of the HD movies I want to watch, I'd gladly pay a premium. Not a big one, mind you, but perhaps as much as $5/month, if I was really able to see new releases in HD the week they are released.
I agree with Nathan. I would be happy to pay an extra $5 a month if it meant these pathetic "very long waits" on every new HD release go away.
Me too, bring on the extra 5 bucks, I want the new releases on blu-ray faster, I am still waiting for Santa Clause 3 (that's going on 3 months in release). Their problem is they aren't buying enough. They should have a separate plan for HD where if you rent HD and DVD, you just pay a small premium, and they can use that to buy more copies.
More for HD Disks?
I have the 4 disks for $14.99 plan, I have had this plan since April 2000. I have been VERY happy with Netflix for 8 years. (oh I remember when they used to have "Adult" content)
However I find it strange that they want to raise the rates for HD Disks. However maybe by the time the format war is completely over HD disks will be as cheap as DVDs.
I just dropped Netflix because the wait times on Blu-ray movies are recockulous. If they get the wait times on par with their dvds, I'll re-up with them. But NOT if they raise the rates on Blu-ray, that would suck. I can subscribe to HBO through Dish and get nearly as good quality with the option to save the movie forever on a hard drive.
I don't mind if the raise the rates on Blu-Ray, if it means they redesign the damn packaging so they don't get cracked during transit.
I have a A35 and a PS3 and have had netflix for about 3 years. Considering HD movies cost so much more then DVD it makes sense they would need to raise the rates. People with HD TV's and HD players shouldn't be cheap asses when they are early adopters.
hybrid! (Go Silver)
If netflix thinks HD downloads take too long and the blu-ray backup is too long, then netflix should go hybrid. An HD movie at 10Mb VBR in h.264 will fit nicely on a 9GB (dual layer) DVD. It won't be the quality of blu-ray but then for the vast majority of people watching on PCs and HTPCs it will be good enough and they could manufacture enough of these in a single day at a large dupe house to fullfill all backorders and give users a viable alternative to blu!
Netflix could also go back to the content owners and argue that it is far easier/cheaper/faster to have them master the 10Mb/s movies for download/silver hybrid than it is to produce blu-ray movies.
While technically you are perfectly right, sir, I don't imagine Hollywood studios supporting this kind of solution. They are hell-bent on continuing the use of vicious DRM, and this kind of encode on silver discs would be far too easy to copy for them.
And yes, I know the day an HD DVD or Blu-Ray comes out, and sometimes even before, 9GB reencodes of the content are readily available on the intertubes for all happy pirates to burn on DL DVDs, so that wouldn't change a thing. But try to explain that to a Hollywood exec.
They raise the rates and I'm gone. 30% of HD disks I rent (BD and HD DVD) skip or won't play all the way through due to scratches.
If they raise the rates just for HD discs, then I'll simply stop renting anything other than reguarly DVD discs. All my players upscale.
Well I for one am glad I have Blockbuster online instead of Netflix at this point. That way I can still rent HDDVDs. They also have them in my local store. This is a bad decision IMO and I think they will lose some customers over this. I know of at least one for sure that has already called me telling me he is cancelling right now.
I would rather they just drop the "Watch it Now" from my account and keep the price the same. Why would anyone who is watching HD movies even want to watch some tiny crappy streaming version of movies anyway?!