Netflix sees subscribers opting for streaming over mailing, global surplus in red envelopes predicted

We already covered the numbers from Netflix's impressive earnings call this past Monday, but there was another story lurking in there too; a potential sign of the coming apocalypse for physical media. The company is reporting that many of its customers are replacing mailed movies with streamed ones, taxing the USPS less and their broadband connections more. CEO Reed Hastings is playing coy about whether this is a strong trend or just the curious behavior of early adopters, and since his company gets paid either way he probably doesn't care, but you can be sure those still firmly attached to profits from plastic discs are going to be watching this pattern rather closely. (As if Sony needed any more bad news.)

[Chongo @ Jan 28th 2009 9:45AM]

I use my XBOX360 for Netflix streaming, and the experience would be nearly ideal if the damn machine didn't sound like a jet taking off. It gets so hot during playback that the fans go into high gear. This is without a disk in the tray. I am considering getting a Netflix enabled BD player.
That said, the streaming video is what brought me nack to Netflix after 3 years away.

[Bender123 @ Jan 28th 2009 10:10AM]

I love the Xbox streaming and streaming to my HTPC. All we need is more movies available. BTW, the newer XBoxes seem to be fine with noise (except the disc tray). I have one of the newer systems and it kicks the fan in, but it has been great.

My wife and I have cut satellite service, because everything we want is either available by mail or streaming...Those companies need to be worried by this as well. I can stream everything I want without paying for stations i dont use.

[zioncat @ Jan 28th 2009 10:45AM]

I tried streaming with xbox 360 not a big fan of it. I would rather buy blu rays on eBay or amazon for a decent price.

[Pip @ Jan 28th 2009 11:13AM]

I stream from my Tivo HD whenever I have the option. Works flawless. The HD is almost on par with cable HD quality wise. If a Blu-Ray version is available, I will always choose that first, then streaming. I refuse to watch DVDs at this point, even if its something that is unavailable in their format.

[Ordeith @ Jan 28th 2009 1:35PM]

My 360 used to be noisy too.

Then it did the red ring dance.

It came back quiet. I don't know what they did but I am glad they did it.

[neodorian @ Jan 28th 2009 2:21PM]

I just use a quiet PC with a remote. Video quality isn't amazing but the convenience makes up for that in most cases. For really visual movies I just rent the discs. There are a couple of plugins that integrate Netflix streaming into Windows Media Center and that was the tipping point for me using the streaming service. That integration makes it more like a cable on-demand service (but without giving any of my money to Comcast).

I look forward to the day when bandwidth is good enough for higher quality streaming of more programming. I would pay up to $30-40 per month for an "anything on demand" package. It would beat paying more for a cable package where I only watch about 10% of the channels and I can get nice HD network programming off the air.

[jakem @ Jan 28th 2009 9:45AM]

Great headline. Netflix isn't global.

[Ray-- @ Jan 28th 2009 9:59AM]

obviously neither is sarcasm.

[Jeff @ Jan 28th 2009 10:03AM]

@Ray: booyeah.

[joe23521 @ Jan 28th 2009 10:40AM]

Ray wins.

[David Smith @ Jan 28th 2009 9:47AM]

What are they preferring to stream? All the online content on Netflix is crap.

[ittybittytittykitty @ Jan 28th 2009 10:19AM]

You've seen them all? Impressive! Your crapconnoisseurship!

[Jonathan @ Jan 28th 2009 11:00AM]

I kind of agree. I'm in Canada so they obviously won't send me the DVDs. We are watching a lot of documentaries and some classics, but I would like them to increase their selection of new releases.

Jury Duty hardly cuts it.

[Sonic_13 @ Jan 28th 2009 2:10PM]

Netflix has lots of great movies/TV shows for streaming.
Just check out the top 50 list: http://www.netflix.com/WiTopPicks?lnkctr=mhWNTP

[Rick @ Jan 28th 2009 9:49AM]

I wonder what costs more for them, envelopes+printing+shipping costs both ways or the bandwidth?

[Kamokazi @ Jan 28th 2009 10:27AM]

"envelopes+printing+shipping costs both ways"

[Kamokazi @ Jan 28th 2009 10:28AM]

The Engadget comment system strikes again...here was the rest of my post:

And don't forget the expense of purchasing physical media (they buy disks and licenses/royalties or whatever are separate), maintaining warehouses, and the equipment inside, and the employees to keep all that running.

Streaming is a hell of a lot cheaper.

[Frankfurter @ Jan 28th 2009 10:32AM]

The comment system made you hit enter by accident?

[joe23521 @ Jan 28th 2009 10:46AM]

I just spilled my coffee - Damn it, the Engadget comment system sucks! :P

[Kamokazi @ Jan 28th 2009 12:28PM]

I tried making an arrow with dashes and a less than sign. Apparently it read it as a HTML comment.

What's with defending the crappy comment system all of a sudden?

[ittybittytittykitty @ Jan 28th 2009 12:38PM]

@joe23521
Your spilled coffee is the direct result of not using engadget comment system as your coffee straw. as it sucks, big time!

[James @ Jan 28th 2009 12:40PM]

And dont forget all netflix dvd's are inspected by hand when returned which has got to cost a pretty penny.

[joe23521 @ Jan 28th 2009 12:42PM]

My only beef now with the new comment system is taking away the Highest Ranked status. And Lowest, for that matter.

[m3nphls @ Jan 28th 2009 9:49AM]

I don't know what is the deal about streaming with netflix. I gave it a try and all the damn movies were old crappy movies....tried to see if there were any of the recent movies to stream and watch a little bit and nope...so most of the streaming catalog are all old movies.

[fashionista @ Jan 28th 2009 9:52AM]

They have plenty of documentaries and TV shows... not everyone is pining for the latest blockbuster.

[liin @ Jan 28th 2009 9:58AM]

I want my documentaries in HD too. Those cinematographer dragged those huge arse 35mm film equipments for days just to get some 2 minute shot, I'm not gonna watch those YouTube quality.

Unless the movie/documentary/short is shot with a consumer camcorder or webcam, I'm not streaming in today's technology.

[Spiny Norman @ Jan 28th 2009 10:07AM]

I couldn't agree more.

Last Saturday I was planning to watch a Blu-Ray disc from Netflix. I popped the disc into my player, and after 60 seconds...nothing. The disc could not be read. I'm sure I'm not the only one starting to have these issues with Blu-Ray discs. At first, I had no problems whatsoever with the discs, but now I'm encountering it more often. My theory is that Blu-Ray is slowing beginning to get past the early adopters, i.e. people who don't put their damn mitts all over the disc, and now is being rented by casual viewers, i.e. care for a drink coaster?

Anyway, without a movie to watch I decided to check out the streaming service. Surely I could find a decent flick to watch. I spent over 30 minutes trying to find something that had at least 3 stars. Nada. Sure, they have lots of TV series, but I wasn't interested in watching TV. The foreign releases were mostly junk, and the mainstream Hollywood offerings were either uninteresting, or something I had watched in the distant past. So, I would up watching PBS. :-(

I guess I can't complain too much. Since I was already a long time Netflix subscriber, the streaming services doesn't cost anything extra, as I'm paying for the discs anyway. However, with a newly purchased home theater w/ Blu-Ray (1080p/24) and DolbyHD, I just don't see how the service is going to attract my attention. I'm not going to give up the resolution (video and sound) of the discs, not to mention all the bonus features, for a mediocre quality download.

[7egend @ Jan 28th 2009 9:53AM]

Let the average user keep streaming while those of us who know the art of DVD-rip and BD-rip continue to get our physical copy so we have a digital copy forever.

*waves hand and performs Jedi Mind Trick* You read nothing here, you will continue to stream your movies.

[Frogboy @ Jan 28th 2009 9:59AM]

These aren't the droids we're looking for. Move along. Move along.

[Jay Voorhees @ Jan 28th 2009 10:21AM]

While I completely agree with you, 3 at a time=less than $1 a movie and you get to keep it forever, sandlot style....this is the practice that I think will eventually push them to move to streaming only once the technology and their library catches up to HD.

[joe23521 @ Jan 28th 2009 10:51AM]

Proper authorities have been notified.

[7egend @ Jan 28th 2009 11:06AM]

Why would you notify the Jedi council?

[brett.m.lucas @ Jan 28th 2009 9:52AM]

Does this mean they will finally add Linux support?

[PSN: Aggie_CEO @ Jan 28th 2009 10:05AM]

ROFLMAO

[liin @ Jan 28th 2009 9:52AM]

That's because current subscribers aren't on HD yet.

I like my Blu-rays with bonus features in red envelopes. Unless I can get cheap and crazy-speed ISP to stream 720p with no audio loss, I'm not streaming.

[bin4ry @ Jan 28th 2009 10:02AM]

netflix can stream in 720p, i do it all the time.

[PSN: Aggie_CEO @ Jan 28th 2009 10:05AM]

Audio loss & 720p Netflix Streaming!?!?!? yea right.......maybe in another year or so......ya know when they have GOOD movies for HD streaming that is....

[Chad @ Jan 28th 2009 9:53AM]

Seriously, Netflix won't keep customers as blu-ray catches on. It's nearly impossible to get a new release if you're an established subscriber. Heck, any Blu-Ray even; I've had Shawshank Redemption on my list for over 2 months.

[Spiny Norman @ Jan 28th 2009 10:13AM]

I think it's generally accepted that Netflix plays games with the long term subscribers, but I haven't had too much difficulty getting the discs. Sure, I have a handful in my queue with long waits, but others arrive within a reasonable amount of time. I received Kung Fu Panada a few days after its release, as well as Dark Knight.

I have to image that they purchase more current releases than older releases, which may explain why Shawshank is taking so long. It's a fantastic movie, but probably not anywhere near the top of their popular titles.

[Jay Voorhees @ Jan 28th 2009 10:15AM]

You should talk to Red, I hear he's a man that can get things.

[Rainier @ Jan 28th 2009 10:36AM]

@Jay Voorhees
"You should talk to Red, I hear he's a man that can get things."

Haha, nice!

[joe23521 @ Jan 28th 2009 10:48AM]

Shawshank is one of the best movies of all time.

[why not the LS2LS7? @ Jan 28th 2009 11:03AM]

Two months? Stop bitching. I have 5 movies in my queue that have been there 4 months or longer. And they are STILL "long wait".

[Timmy @ Jan 28th 2009 1:46PM]

I am having the same problem, and keep in mind we pay more for having the BluRay option selected, they should put that money to purchasing more copies of Bulray disks.

[Mike @ Jan 28th 2009 9:53AM]

Blu-ray movie @ 1080p with Dolby TrueHD audio or DTS HD doesn't compare to anything they can offer via the "Watch it now" streaming....today.

[Rob @ Jan 28th 2009 10:02AM]

Totally agreed. *petting white, fluffy cat*, but soon my friend, SOON.

[scwinn8 @ Jan 28th 2009 10:10AM]

It may look better but it is not as convenient. Give me Convenience or Give me Death! It's the american way. Who cares about quality? Really though.............................................................................................................................................................................

[SaltyGary @ Jan 28th 2009 12:20PM]

DTV just announced 1080p PPV movies coming soon. That convenience will stop me from bothering to drop my loot on a BR player + $30 a disk.

I canceled Netflix last year because the movies would just sit there unwatched for 3 months. I have an xbox but their netflix streaming service doesn't have what I'm looking for. DTV's on demand is doing a very good job for just being released last year. Add 1080p content and it's a done deal.

[michas_pi @ Jan 28th 2009 1:05PM]

@scwinn8

I care about quality.

[VitaminCM @ Jan 28th 2009 9:54AM]

Wow, maybe this will encourage them to put the good stuff up for streaming. I'm sure that they can get some big provider to give them relatively cheap bandwidth at the volumes that they would see.