“Home Entertainment in Flux”
by Jack Dunning
Nothing is settled in the home entertainment market. If anything, deciding how you want to bring the latest movie and television content into your house is getting more confusing. In the coming years, there will be massive changes that will affect cable providers (including the premium channels such as HBO and Showtime), broadcasters, and DVD producers. In fact, the changes are already well underway, showing immediate effects such as the closing down of many video rental stores. Nothing is sacred and nothing is safe. Although more confusing, the changes are ultimately good for the consumer.
Netflix may be the most prescient company in the industry. It has embarked on a business strategy that will most likely severely cut into its core business, DVD rentals by mail. Where many companies will hesitate to cannibalize their primary business, Netflix realizes the change is necessary to ensure any type of survival. In fact, its approach to delivering entertainment is a threat not only to video rental stores, but the old movie channel giants such as HBO. The on-demand business of the cable television providers will either need to adapt with lower prices, or it will also fall into oblivion. In the meantime, things are not getting any better for the movie theaters.
Although not the only company doing it, Netflix now streams movies and television directly to your computer or television set via the Internet for a low monthly rate. This service is included with the one-disc-at-a-time DVD mail rental plan. In most areas of the country the Netflix unlimited streaming price is less than adding HBO to your cable package. That means you can get almost everything on HBO without having HBO. While the Netflix streaming does not include everything that you can get from its DVD rentals, it is massive enough to give you plenty of entertainment as the DVDs are moving in the mail.
Netflix is considered the current leader in Internet streaming entertainment, but there are plenty of others jumping into the market. Most have a fee structure similar to video rental stores, charging for each movie viewed. Sears/K-Mart has plans to enter the market by the end of the year, and Redbox, the successful $1 movie rental kiosk company, is planning to start streaming new video release at the same $1.
Blockbuster, the largest surviving brick-and-mortar video rental chain, has added both rental by mail and video streaming to its menu. They are using everything at their disposal to battle the lead accumulated by Netflix, but it may be too little too late. Blockbuster has signed deals with some of the major movie production companies for exclusive rental rights to newly released DVDs for the first 28 days.
If it wasn’t for the production of original HBO shows and movies, HBO would probably be doomed by the current changes in the entertainment marketplace. The current movies it offers are usually old and redundant. It is almost as bad as waiting for a movie to show on network television. HBO has fortunately made a name for many of its quality programs. Of course, you can also get these shows from Netflix once they are released on DVD.
Google is not going to be left out of the fray, although its approach is a little different. Google may actually be a bigger threat to the cable companies than Netflix. Google wants to do to television what it did to the Internet. With Google TV (www.google.com/tv/) you will be able to search for and bring programming to your television from anywhere in the world. It could replace the programming from your satellite or cable company, including the DVR. If you pay for anything, it will only be for what you select from the vast menu. It’s getting just a little more complicated.
I don’t yet have Netflix, but I was given a free subscription for Father’s Day. I’ve been looking into what it will take to get it streaming to my ancient television—no, I don’t have HDTV. Streaming to a computer is no problem, but I don’t want to watch a computer for my entertainment. Next week, I’ll talk about what is needed to stream movies from the Internet to your television.
Jack is the publisher of ComputorEdge Magazine. He’s been with the magazine since first issue on May 16, 1983. Back then, it was called The Byte Buyer. His Web site iswww.computoredge.com. He can be reached at ceeditor@computoredge.com
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