The Netflix Challenge

After wrangling three children all day, watching a movie with just the misses and I is one of the many little things that makes our world  enjoyable.  Our practice is to usher the children to bed after bathes, stories, and prayers, and then we insert the DVD into the player and relax together on the couch.  This has been all the more possible in recent years thanks to a Netflix subscription.  I first heard about Netflix from some colleagues, but it was mostly in reference to the option of the instant watching feature.  Prior to our Netflix subscription, we frequented a local Redbox kiosk conveniently located at our local big box retailer.

After surveying the subscriptions options from Netflix, I initiated a challenge which I have dubbed “The Netflix Challenge“.  At the time in 2009, the entry level subscription for a Netflix account was $8 a month for one DVD at  a time and unlimited instant views.  So the challenge I devised was to see if we could watch 8 movies in a time frame of 30 days.  My rationale was that to realize the value of this Netflix subscription, we needed to watch 8 movies.  If we weren’t able to do this, then it was more economical to purchase DVDs from the Redbox kiosks.  So we embarked on this challenge.  The first month we successfully met the challenged, and learned much about the system.  For instance, we learned that in order to accomplish this feat (8 movies in 30 days), we needed to watch the movie the day we received it, and have the media back in the mail the following day.  Another thing we learned was the location of the mailbox in our area that was the last box collected during the day.  This came in handy to meet the need to put the DVD in the mail the day after we watched the movie.

The second month we missed the mark by one DVD because we went on vacation for a week.  The third month we successfully completed the challenge.  As summer turned into fall and school started back up, we began to consistently fall short of  the 8 movie metric.  Around the same time, we started watching more instant watch movies.  Now instant watching had been available when we started the challenge, but I had surmised that if we could achieve 8 movies a month, the instant watch feature was an additional value.  But once we started consistently missing our quota, I chose to include the number of movies instantly watched in the quota count.

Last week, Netflix announced a restructure of their subscription services. Basically it details that beginning September 1, 2011, for us to continue receiving one DVD at a time and watch instantly we will have to pay $16 a month (a 60% increase).    I understand the desire to monetize both services they offer, but it ultimately nullifies the challenge I setup in 2009.  I don’t see how I can watch 15 movies in a month’s time.  That’s essentially a movie every other day, and the logistics of receiving and sending the DVDs through the mail hinders this ability.

So it’s time to retire the old challenge, which I haven’t meet in quite some time.  Now I’m faced with either keeping the watch instantly service (which has become a staple in my house since you can leverage the Nintendo Wii as a player) and pay the additional amount for a DVD or more likely keep the streaming service and pay the incremental costs of picking up a DVD at a Redbox kiosk.

Internet TV

“Cutting the Cord”, it’s a battle cry that many of us have heard with regards to telephone service.  The economics were simple, do you pay for land line, cellular, or both.  In 2008, a report by the Centers for Disease Control and Prevention indicated that “16-percent of households have no traditional landline phone and rely exclusively on a mobile phone”.

A similar debate has also come to the television set.  Do you “cut the cord” of your paid content subscription and leverage the fee paid for broadband Internet to receive video content.  In August 2010, a New York Times article sited that 88% of their customers still had some form of traditional video content subscription.  In the same article the president of Leichtman Research Group said that Americans were not and did not indicate they were moving towards eliminating their video content subscriptions in favor for Internet based video content.

At the same time Netflix is predicting that “members will watch more content streamed than delivered on DVD” in the 4th quarter of 2010.  Then you have reports from Cisco that likewise predicts that video will consumer 90% of the consumer internet traffic by the year 2013.  My query is whether these online video services are viewed on computers, or are they making their way to television set.

My own experience is that I’m watching more online or streaming content on my television (interconnected to my laptop) than I do from over-the-air or paid cable/satellite service.  Now I am in the minority in that I do not have a paid cable/satellite service.  At the same time online video content services via Hulu, Netflix, and even the major broadcast network’s own web pages provide ample opportunity for me to watch shows and content at my convenience.  Just yesterday I watch the entire first episode of “The Sing-Off“ because I had a scheduling conflict when it aired Monday night.

From my professional perspective, this is a significant conundrum.  Part of my professional responsibilities including managing a 40 channel cable television service for 2,500 college residents.  This represents a significant annual cost and the question I’ve wrestled with over the last three years is whether this service was used and useful.  Early indicators suggest that while college students are more likely to view video content over the Internet, they also watch traditional cable television as well.  The tipping point, in my opinion, will be when live sporting events become as ubiquitous on the internet as they are on broadcast television.