Netflix has Interesting Predictions for Blu-ray Disc

Posted by Dave Cowl on February 13, 2008 
Filed Under: Blu-ray, Format War

netflix.jpgOver at Silicon Alley Insider they have posted notes from the Netflix conference call from late January.

While Netflix insight into the studios may or may not be better than anyone else, they made the following comments regarding Blu-ray Disc:

Appears Blu-ray has advantage in format war. Consumer adoption will
increase. Look out for players falling below $200, and Universal and
Paramount adopting Blu-ray. Would be a positive for studios and NFLX,
fueling "another decade" of "robust, robust" disc-based entertainment.

Again, it is not clear if they have insider information or are just hazarding a guess – none the less it is pretty interesting to see this statement to their shareholders.

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17 Responses to “Netflix has Interesting Predictions for Blu-ray Disc”

  1. Jonsson on February 13th, 2008 12:06 pm

    Well, it is a perfectly logical comment.

    The only ones blocking mass penetration of HD disks and hardware for everyone now is Universal and Paramount.

    That Toshiba clinging to their investment is logical but, as far as I’m concerned, the plonkers at Universal and Paramount are only shooting both themselves, and everone else at the same time, in the foot.

  2. indadogghouse on February 13th, 2008 12:52 pm

    Give me a break. Universal and Paramount not going Blu is a problem, but they being the reason blocking mass penetration? Give me a break.
    Even if everyone were Blu, we’re not going to get mass adoptation for quite a few years.
    1) You need an HDTV, prerequisite. In the US, only 30% or less have an HDTV. Maybe concentration needs to be getting an HDTV in the household first.
    2) HD education. Even those 30% that have an HDTV, only 20% have HD content. Need to educate everyone on HD first.
    3) BR adoptation is moving along like any other new technology, slowly but as expected. The only reason why HD players is further along then DVD is in the same time frame is due to the format war and drop in player prices. It’s not going to explode once the war ends.

    I wonder if Netflix has some insider info. If they have info that Universal and Paramount are going Blu very soon, then Netflix’s decision makes perfect sense, otherwise it’s very curious why they did it. I wonder if Netflix isn’t leaking a “big” anouncement very soon, in their own way.

  3. DS2 on February 13th, 2008 1:01 pm

    I agree. Universal and Paramount ARE shooting themselves in the foot. They are exclusive supporters of HD DVD, yet they have only been releasing miniscule amounts of HD media for some time now. Blu-Ray has made significant leaps forward in recent months both in terms of mass-adoption and promotion, and the faltering HD DVD format has been hobbling along with almost no support from its chief players.

    Toshiba aired a weak commercial during the Superbowl, and with each new critical victory that Blu-Ray achieves, they lamely issue a press response that invariable states something along the line of “We are saddened by the loss of X to Blu-Ray. However we’d like consumers to know that we still exist, however marginally.” Meanwhile, Universal and their recently purchased Paramount/Dreamworks team release titles that are nearly unsubstantial (Mobsters? Come ON) or weakened versions of SD releases like Top Gun and the Jack Ryan Collection with NO extras.

    If they don’t up their game, they truly should just admit defeat and become format agnostic.

    For the record, I’m a HD DVD supporter, but I’ve grown tired of watching my “team” throw away opportunities left and right to advance, and at the same time fail to step up to the challenge of their rival. I’ve fought hard to stay loyal to my format of choice, but now I think it’s time for those companies to show that loyalty to me.

  4. Jonsson on February 13th, 2008 1:04 pm

    Sorry but I totally disagree inadogghouse. You can have as many breaks as you want but what I said was simple facts.

    Yes, not everyne have a HD but quite a few have but that doesn’t really matter.

    The bottom line is that even if 100% had a HD TV as long as there is not a single standard people will not want to invest, in hardware or in disks.

    The big block for getting HD on the road properly is the stupid stubbordness of Uni and Para, full stop.

  5. Belard on February 13th, 2008 1:30 pm

    Let’s call them “Uni-P” ;)

    I think the reason that Uni-P is releasing ho-hum titles is that they have little faith in the format as well. Look at WB, when they dropped HD-DVD, their title releases for HD-DVD got weaker very quickly, as has Uni-P.

    Where is Raiders of the Lost Ark on HiDef?

    If Paramount uses their Escape Clause on Feb 15 (that would be interesting if it comes true), it may take a while for them to ramp production. Repoduction equpipment needs to be bought, built, installed, tested before they can ship out videos.

    But I am betting that after WB’s move, Uni-P were looking at buying Blu hardware…. One way to know is see who is buying the mastering hardware and materials. ;)

    In 2009 – SD broadcast ends. And as our old TVs die, they will be replaced by HD-TVs. Those with CABLE TV aren’t using broadcast anyways… but I think by 2011/12 most of the USA will be HD.

    Even in Walmart, about 90% of their TV inventory is HD-TV. Best Buy = 95% HD-TV. And of course, almost nobody is making TUBE TVs anymore… too bad, but that help reduced the price of LCDs.

  6. indadogghouse on February 13th, 2008 2:41 pm

    “In 2009 – SD broadcast ends. And as our old TVs die, they will be replaced by HD-TVs. Those with CABLE TV aren’t using broadcast anyways… but I think by 2011/12 most of the USA will be HD.”

    I think analog dies, not SD, am I wrong? 2009, US OTA goes digital, doesn’t mean HD, it can still be SD.

    Not everyone will get an HDTV, you’ll have those die hards with analog cable and the digital to analog converter boxes. By 2011/12, I’m going to guess 70% of US households with HDTV, maybe 90% of those with HD content, I hope.

    It just drives me nuts going into homes of people with an HDTV and all they got hooked up to it is analog cable and DVD, when they can get rabbit ears and get themselves a digital signal at the very least, HD most of the time.

  7. indadogghouse on February 13th, 2008 2:51 pm


    “Yes, not everyne have a HD but quite a few have but that doesn’t really matter.”

    I have to respectfully disagree with you here. It does matter. You’re not going to care about an HD movie player if you don’t have an HDTV, no? If I don’t have an HDTV, why would I care if there’s a format war going on? Is the format war preventing me from purchasing the HDTV?

    “The bottom line is that even if 100% had a HD TV as long as there is not a single standard people will not want to invest, in hardware or in disks.”

    Reality is, not everyone has an HDTV, if 100% of people had an HDTV, my opinion would change and I would say yes Para/Uni not going Blu may be hurting adoptation, but the truth is only 30% in the US has an HDTV, only 20% of them have HD content. So it matters because 70 – 90% of US households do not care about the format war so this affects BR adoptation how much?

  8. Dave Cowl on February 13th, 2008 3:25 pm

    I also wonder if Netflix has inside info.

    It is quite bold to make such a statement to investors without having strong information to back it up.

    With respect to what is holding things up – there are a class of consumers who want to be sure, and that means the big 7 at least announcing releases on a given format. Many of these unsure people though I think have made their move based on the Warner news alone – this appears to be evident in both hardware and software market share numbers since the middle on January.

  9. Jonsson on February 13th, 2008 10:45 pm

    Inaddoghous, maybe you should read my post once more.

    What I said was that it doesn’t matter how many have HD TV’s because CURRENTLY they wouldn’t buy HD disks anyway since the incertainty caused by the format war would make them hold off.

    Second, the reason some people do not have a HD TV, could it perhaps be because they have no players that can provide the material because they do not want to invest in a player that’s possibly obsolete next year.

    Those 30% who already got a HD TV are probably the 30% that will buy the most disks as well so be careful with percentages.

    You can hardly buy a new set today without it being at least HD Ready. Thus people will automatically get HD TV’s as time goes. They will not automatically get HD players since normal DVD’s are still plentiful. If the format war continues then the “window of oportunity” will be lost as WB correctly stated.

    Thus I think it is fair to say that Uni and Para is the biggest blockers of success for HD right now. The major reason for poor market prenetation (of HD altogether if you so want) is this idiotic war which now has come down to the stubbordness of Uni and Para to accept realities.

  10. indadogghouse on February 14th, 2008 7:07 am

    “Inaddoghous, maybe you should read my post once more.

    What I said was that it doesn’t matter how many have HD TV’s because CURRENTLY they wouldn’t buy HD disks anyway since the incertainty caused by the format war would make them hold off.”

    You type too fast ;oP

    You’re saying having an HDTV plays no role in HD movies, “it doesn’t matter”? I’m saying it plays the #1 factor. Without an HDTV, I’m not even looking at HD anything, needless to say HD players and movies. So, you can not remove HDTVs from the equation, because it provides the basis.
    If I don’t have an HDTV, why should I even care what is happening in the HD movie format war? It affects me how? The argument that the format war is preventing me from buying an HDTV is also weak. HDTVs have been around since 1998. HD content in the US is widely available now in the form of Cable, Satellite, Fios, OTA, and others. HD content is affordable, “On Demand” is available, DVRs are available. Yet only 20% of 30% of HDTV owners or 6% of US households have HD content going into their sets.

    Let’s evaluate your original statement:

    “The only ones blocking mass penetration of HD disks and hardware for everyone now is Universal and Paramount.”

    I’m saying whatever Universal and Paramount does, they have no effect on mass penetration, because not enough “mass” is educated about what HD is. If the “mass” are not paying for HD now or getting HD now, what makes you believe they will invest in a new, expensive HD movie player, format war or not? Do you truly believe, if at this time we all unified under BR, that the “mass” will all of a sudden go out and buy BR players and movies given that only 6% of households have HD content, but up to 30% have the opportunity to get HD NOW through Satellite, Cable, Fios, or OTA that would be much more affordable and provide a considerable upgrade in picture quality?

    Now, if the numbers were better, like 50% have HDTVs and 50% of 50% have HD content, then yes, I will agree with you that Uni-P hold out has an effect with “mass” HD movie and player adoptation. However, that is not even close to the case, and thus what Uni-P does at this current time is irrelevant to the “mass”.

    The biggest effect of the “format war” are the early adopters, the enthusiasts, who are “on the fence”, maybe 5% of the US households.

  11. Dave Cowl on February 14th, 2008 9:12 am

    As far as HDTVs go, I also imagine that we are not yet to the point where the reason people are not buying players is no HDTV.

    While that is true for some portion of the market, I believe the number if HDTV owners in the US is much greater than the number of HD Media player owners still…

  12. Jonsson on February 14th, 2008 10:35 am


    No I do not really type to fast. You just seem to refuse facts.

    What I said was that the #1 factor for adoptance of HD players IS the format war. The amount of HD TV’s around is imaterial at this time and the format war is actually a important factor to explain the low numbers if HD TV sets, not the other way around.

    If people wouldn’t be holding off bying HD layers due to teh format war so much there would also be a bigger purchasing incentive for buying HD TV’s. You do not buy a HD TV in the hope of some day having material to play on it. You do not seem to get this simple fact.

    I do not have a HD TV, yet (altought it’s coming soon for other reasons), but I still have a real interrest in the availbility of HD players ONCE THERE ONE FORMAT.

    The “early adopters” are the one that have already bought players. The rest is holding off.

    I also said that the 30% that have HD TV’s are the ones most likely to buy HD material. Yet they do not since there is war.

    The fact that you can get SOME HD material through cable etc is not yet a compelling enough reason. The amount of HD material you can get that way in Europe is also much lower than inthe US. The quality is also always less than a proper Blu-ray or HD-DVD disk.

    Saying that what Para and Uni does now is irrelevant is just stupid. As long as people KNOWS that they will have to buy two sets if they want to see all of their favorite films is just going to block them from buying at all.

    I have loads of friends that say that they will not replace their TV’s unless the format war is over since they do not want to buy a player unless the war is resolved and without a player they will not be able to use the TV.

    This is just plain logical facts.

  13. indadogghouse on February 14th, 2008 2:05 pm


    But I am giving you the facts. I’m just talking about the US. HDTV has been around since 1998. HD players since 2006. HD content for HDTV is widely available now in forms of Satellite, Cable, OTA, Fios, and others. You don’t have to get HD players to enjoy HD. There are more then just “some” HD content on these medium. All the US primetime networks are HD, movie channels are in HD, sports is HD, you can record in HD. Why do you need an HD player to enjoy HD? Are you talking about 1080p vs 1080i vs 720p?

    If I’m understanding you correctly, you are stating that people are not buying HDTV because the only true HD are in HD movie players? This is totally not true and hard to believe. Again, I’m talking about the US, maybe that’s where the disconnect is? The numbers I presented are applicable only to the US market. That’s the thing, there’s HD galore in the US, but still only a fraction of the population is taking advantage of it, 6%.

  14. Jonsson on February 14th, 2008 11:02 pm

    Well inadogghouse I think we’re probably not going to agree on our views here. I’m just going to add a few points.

    You’re stating facts you say. The facts you’re stating I do not dispute. What we are talking about is the effect of the format war and there we seems to disagree.

    About cable, yes I’m talking full HD and I’m talking globally. HD via cable or broadcast is not widely available in Europe for instance and most people do not care that much about whatching news and TV-series in HD (720p or higher) anyway that it compelles them to buy a expensive HD-TV.

    With films it’s another matter. There’s the real interrets (at least here). The only to get a reasonably new movie in high quality HD with high quality sound is to get it on disk.

    Another factor that I didn’t mention is of course that prices of hardware as well as media would be going down much faster if the total production volume wouldn’t be split over to products which would also contribute to faster adoption. Another negative effect of the war on “mass-adoption”.

    Guess we simply have to see. Even if one discards half of the news today as rumours it looks like the HD-DVD side is crumbling. Once the war can be said to be officially over, well it will be interresting to see what happens 3 or 6 months after that.

  15. indadogghouse on February 15th, 2008 6:37 am

    It’s all good. I read these blogs and forums to get a feel of other’s opinions and experiences. Yours is one I’ve never heard before, its good to know. I guess that’s a big difference between the US market and the rest of the world, maybe not Japan?
    In the US, I guess we’re lucky, we have HD content already available in the form of Sporting events, Movies, News, everything and anything (mostly 1080i). Granted HD movies at 1080p and high bit rates are better but not that incredibly better that it deters would-be buyers. Movies and Sports in 1080i is a considerable step up from 480i, you get more of a “wow” from that versus from 1080i to 1080p.
    Of 13 people I can think of now that have an HDTV, only 1 bought an HD movie player with his set (and I think it was a package deal); I coerced another guy to buy a PS3 as a BR player. The 1st guy was more enthusiastic about the Sports he was able to see in HD and the Discovery Channel and TLC in HD. He thought the BR player and the 1 movie he watched on it was “okay” too. The guy with the PS3, I let borrow some movies (Walt Disney) and games, and he ended up getting more enthusiastic about the games.
    So, you see, in my experience, I haven’t run into anyone who’s even remotely affected by this “format war” (soon to end it seems). I think what drives the “mass” in the US away from buying HDTVs is price. Prices have come down considerably, but you’re still looking roughly around $1000 minimum for a descent set. $1000 is still pretty steep for many, especially now in our “recession”. The only ones I’ve seen complaining about this format war are on these blogs and forums. However, I don’t think these blogs and forums speak for the masses. Mostly early adopters and enthusiasts (like myself).
    I assume you are in Europe, then. Hope HD gets more widely available and cheaper for you guys soon. Is this the case throughout Europe, or are there some countries that have more HD content then others?
    I guess that’s why “2 million BR discs” sold in Europe is a big deal? I didn’t read the article, but that didn’t seem all that much. I thought the article was talking about players, but I read the title again and was scratching my head a bit. Again, comparing with what’s happening here in the US. I need to go worldwide and get better perspective.
    If this is the case, worldwide demand for HD players (or should I just go ahead and say BR?) will probably help what happens here in the US.

  16. Jonsson on February 15th, 2008 7:18 am


    I can not say that I speak for every European of course but HD material is indeed pretty scarce in most countries.

    If I read the telly magazines in France (I live on the Franco-Suisse border) I do not think even one tenth of the shows or films are distributed in HD. Belgium is supposed to be a forerunner on digital TV.

    A not so insignificant number of people actually still lives with analog PAL signals only. I myself have digital TV (not cable) from Switzerland but analog only from France. We will get digital at the end of the year.

    However, most of my friends have HD Ready or Full HD TV’s. Strange one might think but this is not not really because the needed the HD but because they wanted flat/wide screen TV’s to replace their bulky CRT’s and more or less got HD “for free”. None have a HD-DVD or Blu-ray players because they do not want to invest until the uncertainty is over.

    The few people (again that I peronally know) not having HD TV’s say they do not want to invest at all until they can safely buy a player but most people looking at bying a TV now pays attention to the HD capabilities mostly to know that they will not be forced to change TV again soon.

  17. indadogghouse on February 15th, 2008 8:04 am

    Yeah, buying an HDTV in the US is the same. A lot buy them for the “flatness” or replace an old TV. They stick their old analog cable into it or SD satellite and think they’re in “HD”. Just not enough education or knowledge about it. “HD” is just a buzz word to many.

    Kind of explains the numbers I see, only 20% of HDTV owners have HD feeding it, even though probably all 100% of them can get considerable HD content, for not too much more or free. Eeek.

    I see you and your compatriots’ predicament now, I would say where I was about 6 years ago. Not much incentive to get an HD set if not much HD content is available. So, I truly understand your compassion regarding the format war.

    Bonne chance mon ami.

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