Netflix finally includes Macs in its streaming plans

October 27, 2008

The word at MacWorld is that the Netflix “instant watching” feature is being upgraded to support Firefox as well as Intel-based Macs. This is something the Netflix blog brought up early on as a goal. The Intel-based part means it’s not exactly Mac-friendly, but Netflix says that three-fourths of their Mac users are based on Intel machines so they’re satisfying the biggest number.

Many Mac people will be angry about this, to be sure. Netflix doesn’t seem to be apologizing, though, and is instead likely to position this as yet another in a log line of devices Netflix intends to support: LG Blu-ray players, Samsung Blu-ray players, the Roku/Netflix box, the Xbox 360, and now, the Mac.

Angry Mac fans aside, this is further evidence that the Netflix people know what they’re doing.

Device by device, Netflix is making its modest little service relatively ubiquitous. Unlike iTunes or MovieLink or anyone else, Netflix is shooting to become the base option in video devices intended for the living room. Very smart move.


Samsung adds Netflix to latest Blu-ray players

October 23, 2008

We’re witnessing the one dramatic change in the world of physical media. Now Samsung has joined LG in making Blu-ray players that also stream Netflix movies and TV shows. This Netflix strategy is the little engine that could:

  • People first said it was weak because the content was so second-string. Netflix has recently fixed that by adding Starz and some Disney movies. 
  • Some complained that a dedicated $99 box from Roku (though priced to sell), wasn’t enough to move the market. However the LG Netflix/Blu-ray player showed that there was real depth to the strategy.
  • The deal with Microsoft’s Xbox 360 to put Netflix content in the game console proved there’s a true multi-platform play there.
  • Now Samsung’s entry shows that this is going to become a big deal across multiple players in the CE and computing world.

Lessee, Netflix 4, everybody else, 1.

With Steve Jobs again this week referring to the Apple TV as a “hobby” in order to downplay previous expectations, this leaves Netflix clearly in the driver’s seat when it comes to over-the-top delivery to the TV. Maybe not in volume yet, but it will.

The biggest issue here is what this means for cable. Netflix has set its sights not on Blockbuster or even on iTunes, but on Comcast, Cox, and Time Warner. The Netflix solution pulls content automatically from your DVD rental queue, provides an easier-to-use interface than VOD, and now has as much good content as a typical VOD system, this makes cable cord-cutting that much more possible.

This Netflix move could prove to be the most important wildcard of 2008. Now if only there wasn’t a recession hanging over these Blu-ray players

Are you Netflixing your TV? Will you? Do tell.


More on Blu-ray in a recession – forecast down 25%

October 23, 2008

According to this article from Jacqueline Emigh at BetaNews, Parks Associates (technically a competitor, but a respectable one so I’ll give them their props) has reduced its forecast for standalone Blu-ray players this year to to 4.3 million globally or 2.2 million in the US.

This comes as I’ve been writing about Blu-ray prices falling to $199 for the first time and the economy’s effect on home video overall. First of all, I’ll say that Forrester has never produced a forecast for standalone Blu-ray players so I’m not in a position to comment on the specific number, however it is interesting to note that this new forecast puts the Parks number in line with the Jupiter Research number from earlier this year. (Jupiter Research, as you may know, was a competitor until just a few months ago, we now are one family, which is great as they are some smart folks.) Jupiter had predicted approximately 3 million total Blu-ray homes in the US by the end of this year, on top of just under 1 million last year, which comes out to something north of 2 million in sales this year. So the new Parks numbers line up with the Jupiter numbers. I’m inclined to believe both. (It is important to note that both these numbers are far short of the projections Blu-ray manufacturers are working from.)

The most interesting question is whether PS3 will now have a more cannibalistic effect on standalone Blu-ray sales or less of one. 

The thinking goes like this: PS3s used to be the cheapest way to get a Blu-ray player, and it also happened to play games. However, now that Blu-ray standalone players are so cheap, that is no longer the case. Is it possible that people will postpone PS3 purchases in favor of a $199 Blu-ray player, thinking they can upgrade to the PS3 when the economy improves? or will they instead go from standalone players, spend a few extra bucks to get a PS3, and pat themselves on the back for getting a system that can do gaming and video?

I doubt either will occur, actually. Instead, people in the market for the PS3 will still get one, possibly with fewer accessories, but they weren’t in the market for a standalone player anyway so the effect is not cannibalistic. People in the market for a standalone Blu-ray player will do one of two things: either move downmarket to a $199 or $229 model or just postpone the purchase for next year, assuming that prices will only go lower. In the meantime, the upconverting DVD player they bought last year for $50 will do them just fine.

What are you going to do? Did you plan to buy a Blu-ray player or PS3? What will you do now?


Do you watch video on your Xbox 360 or Sony PS3?

October 21, 2008

In the recessionary spirit, I’ve been thinking through all the ways to get video to the living room and trying to decide which ones are the most economical. The Netflix/Roku box, at $99, is a solid option that performed well in my report at Forrester, but it’s only a piece of the home entertainment puzzle. 

Enter the videogame console. This is a trojan horse — in theory, these gaming systems end up in millions of homes and then one day, people wake up and find that they can also use them to watch DVDs or Blu-ray discs, and that they can download or stream video. Cool, right?

Could be, but isn’t yet. I recently spoke on a panel with the head of home video for Warner Brothers who shared research with the audience about how Blu-ray disc purchases (or attach rate if you want to be nerdy) for people with standalone Blu-ray players are twice as high as they are for PS3 owners. In other words, people with a PS3 are only half as into the Blu-ray player they have compared to other Blu-ray owners. 

The point I’m making is that videogame consoles are game machines. Period. All the other stuff has yet to catch on. Yet. What will it take to change that?

I recently sat down with Shane Kim, Corporate Vice President, Strategy for IEB at Microsoft to talk about the Xbox 360’s upcoming UI refresh, slated to hit November 19. Together with Christina DeRosa, General Manager, Xbox LIVE Marketplace, the two answered some of my questions about the future of video in the Xbox 360 world. Here’s what I learned:

  • Roughly 14 million Xbox 360 users are Xbox LIVE members, 30% of whom have downloaded or streamed video, whether for free or pay. 

That’s a good number — it means nearly 5 million people, far more than have an AppleTV or even a TiVo. My assumption, which I shared with them is that those 30% will spend no more than a third of their time and energy on video vs. gaming in Xbox live. Like good soldiers, they would neither confirm nor deny my assumption, but that means at most, 10% of content flowing over the net to the Xbox is video related.  

  • The entire online revenue for Xbox LIVE, including Xbox LIVE Marketplace, has topped $1 billion since its inception.

Apply my maximum of 10% to that $1 billion and it suggests a ceiling of $100 million in downloads and rentals sold via the Xbox 360. This is complete back-o-the-napkin modeling so don’t hold me (or them) to it. This makes Xbox the #2 digital download store next to Apple iTunes, though the Jobster has a comfortable lead if my estimate is close.

I’ve watched video on my Xbox 360, spending time with the HD version of Hunt for Red October. (A classic, btw, I always live for the moment where the Russian dialogue changes to English on the word, “Armageddon.” Powerful.) But I haven’t done so recently. (The house is in the middle of a remodel so I haven’t done the Netflix/Xbox 360 thing yet, but when I do I’ll blog about it.)

Tell me what you think: have you watched video on the Xbox 360 or on the more recently video-enabled Sony PS3? If so, what do you think? If not, why not and would you ever?


Blu-ray player finally sells at $199

October 21, 2008

Had a quick exchange with Erik Gruenwedel yesterday on this topic which led to my quote in his piece on Home Media Magazine’s website, Best Buy Sells Blu-ray Player Below $200.

James McQuivey, principal analyst with Forrester Research, said he is surprised by the price cut since Blu-ray manufacturers he spoke with in 2007 said it was not economically advantageous to go below $299, much less $200. 

“That’s what happens when an economy goes south and people are staring at the prospect of leftover inventory,” McQuivey said. “Like any other market-driven panic, this one will lead to copycats. I don’t expect the $199 to be common, but every retailer will want at least one model at that level, if only to seduce people into that section of the store.” 

The quote is interesting just because it comes from some intense conversations I’ve had with the Blu-ray manufacturers who have tried to forestall a price freefall on standalone Blu-ray players. These conversations happened because my colleague JP Gownder wrote in September 2007 that the ideal average price point for consumer adoption of Blu-ray was a shocking $204. It’s no surprise people making these boxes didn’t like that.

But the moment a retailer like Best Buy crosses the $200 threshhold in fear of a tight economy, it does force everyone else’s hand. Except companies like Pioneer, of course, that are playing at the ultra high-end (although Google did find one Pioneer model at $299 online).

The thing we can’t really get into in an article like that is that the discounted players are always Profile 1.1 players, not Profile 2.0, which means they don’t support the Internet-derived interactivity called “BD-Live” that the industry is hoping will shape how people value disc-based media in the future. So by selling people these players at low prices today, we inadvertently inhibit later uptake of BD-Live-capable players.

So, with that in mind, will you run out and get one?


My take on how economy will affect video

October 15, 2008

As I have been promising/threatening, yesterday I completed my take on how a down economy will affect various types of video in the home. Forrester clients can read the full analysis here. 

Something I can share with everyone, client or not, is an interesting analysis I did on consumer spending on audio/video hardware. One of the questions I wanted to answer was what % of entertainment spending do affluent consumers account for. It turns out, a lot. In fact, the 45% of US households that earn more than $50K a year account for 79% of entertainment “fees and admissions” and 62% of audio/video equipment spending. That’s a lot. Interestingly, these wealthier consumer have been increasing their spending on audio/video tech less aggressively than average over the past few years. 

From the 14 October 2008 Forrester Research report, "Video Devices Vulnerable In A Down Economy"
From the 14 October 2008 Forrester Research report, 

Video Devices Vulnerable In A Down Economy

I get all of this from the Bureau of Labor Statistics’ Consumer Expenditure Survey (a datasource which, if you know how use it, can answer many of life’s most important questions, and it’s all free).

Just as Jefferson famously said that “the tree of liberty must, from time to time, be refreshed with the blood of patriots and tyrants,” it is similarly true that technology markets must, from time to time, be challenged with a lackluster economy. Not quite as big a deal, but you get my point.

Overall, the losers are new technology platforms like standalone Blu-ray and premium content subscriptions. The winners — at a very critical time for all involved, I might add — are free online video services like Hulu.com and Fancast, including Netflix’s streaming services, newly enriched with additional content. So while Netflix has warned it won’t hit 9 million subscribers as originally hoped in 2008, the millions it does have will rely on the service more than before.


Blu-ray Association optimistic about holiday sales, hmm…

October 9, 2008

As described in this short bit from PocketLint in the UK, Blu-ray Association members think Q4 is going to be great, better than expected.

The evidence is that Blu-ray titles are reportedly selling 4x better now compared to the same time last year. Lessee, a year ago, Blu-ray still had a competitor, namely HD-DVD. It still only had a relative handful of movie titles to sell. And the PS3, still the dominant Blu-ray player, was only in a few million homes. Those constraints are fading.

If we’re only selling Blu-ray discs at 4x better than last year, that’s not exactly a sign that Blu-ray has gone mainstream.

Don’t get me wrong, as I have said before, I’m a fan of Blu-ray. Menus that overlay the screen, higher resolution — I love all of it. But in a down economy, a $67.54 1080p DVD upconverter at Wal-mart is an easy choice to make over Blu-ray. In this economy, I expect Blu-ray to take a hit. Taking a hit means not growing as fast as you otherwise would have, so it’s hard to say what that translates into over time, but it certainly means that the highest-end players will sit on shelves longer, discount pricing will be more aggressive toward the end of the year, and people who have a Blu-ray player will likely favor renting over buying, even with Netflix’s $1 a month charge for unlimited Blu-ray rentals.