NETFLIX AND THE FUTURE OF MOVIES

It’s easy to imagine movies on demand, streamed to your television over the Internet. Unfortunately, there’s also reason to think that it will be many years before that becomes real. Not only are there significant technical barriers, but movie studios make a lot of money from their long-term deals with channels like HBO. They won’t switch business models easily.

The New York Times has an article about Netflix (subscription required). Investors have been pessimistic about Netflix stock, but there’s a strong likelihood that Netflix will continue to be the only significant provider of movies on demand for years to come. It currently sends and receives 700 million packages a year; its new head of operations is a former postmaster general. Competitors have come and gone and Netflix is still standing. Nothing seems likely to dislodge it until some far distant day when movie download services become meaningful – and Netflix is working on its own service for that eventuality too.

There’s a statistic in the article reflecting the concept of the long tail, described last year by a Wired magazine editor. Out of the 60,000 titles in Netflix’s inventory, how many are rented at least once in a typical day?

Answer: 35,000-40,000. Every day, almost two of every three movies ever put onto DVD are rented by a Netflix customer. The studios act as if the world revolves around blockbusters seen by everyone. That world is gone. We live in a world where every film finds an audience.