Netflix share price has risen steadily over the past four months as expectations for growth have been very good. But the company has recently capped it’s profit margins at 10% to appease studios that fear excessive price cutting by retailers is hurting the bottom line of the production companies. Redbox in particular has cut prices to the point where the studios cannot profit. Any Netflix profits in excess of the 10% are to passed along to the studios in the form of additional payments for streaming media. The company is set in increasing it’s streaming catalog beyond the current 10,000 movie and television products.
The studios may pursue even more profit as movies are moved to the streaming option from the home delivery program. Netflix plans to continually increase it’s streaming content list to compete with online options that have become very popular as of late, such as Hulu.com. Hulu recently considered charging fees for their content which caused an uproar in the online community. Netflix has a much better model were customers pay a flat rate of $20.00 and can watch as many streaming videos as they desire. And customers can use any number of different devices to receive streaming content including television, XBOX, desktop computer, iPhone, Ruko, and many others.
Roku Video Recorder/Player is one of the most desirable devices at this moment. The Roku for Netflix is so simple and easy to use, we could only play for a few minutes and we were watching a movie.
The Market
To start, we have to understand why it is important for a company that rents videos to be selling boxes for members to instantly watch videos on their televisions. Currently, Netflix has 8 million subscribers, 21% more than last year. The business is based on renting movies by mail, such as Bazooka does in Chile.
However, as efficient as the distribution of the DVDs is, Netflix has a cost that it assumes twice per film, per customer, as the physical DVD has to travel through the US Postal Service. In addition to administrative and logistical costs of managing the inventory, the company waste is great when you consider the volume that they handled daily.
That’s why companies like Netflix and Blockbuster are seeking new ways to distribute their films in a more efficient. Digital distribution is the solution. It is interesting to see how the industry has evolved: First there were neighborhood video libraries, then monopolistic chains, then the mail distribution of DVDs and now the virtual distribution.
The Roku Box
The Roku Video Player is not a media center, not a DVR, it’s no Apple TV. That’s the beauty; it offers so little and is so simple that even the price in U.S. is small, $ 99. With it, you do not buy movies, and renting is complicated by limitations of the DRM failed strategies.
The Roku does only one thing: you can now see over 10 thousand movies, whenever you want, whenever you want and for as long as you want. Netflix in the future wants to add his entire library of 100 thousand movies.
Inside, it has no hard drive, only 32MB of memory used by owners to manage their software and functions. One does not drop or download movies to the device, but you see content in pseudo real-time streaming, Internet Television.
The ports you have are: HDMI, component, composite video, Ethernet, S-Video and a Toslink optical. It also has WiFi and runs on an Internet bandwidth from 1.5 Mbps and up.
Installation of The Roku
Short and fast installation: The Roku Video Player plugs into the mainstream TV plugs and into an Ethernet connection to your broadband Internet connection. You log into your computer and your Netflix account, you select the movies to watch, and begin watching movies.
The Roku is only the beginning of a series of other devices that Netflix has already announced and will be available in the coming months in the U.S.
Conclusion
The installation took less than 10 minutes. When you are ready to watch movies, it takes about 2 minutes to start, and image and sound are flawless. It’s a completely seamless experience comparable with any cable or DVD movie.
If you desire to have more than 10 thousand movies available and want to watch them in great quality, buy it quickly without thinking twice. If you want advanced features you find in traditional DVDs and other advanced services, you might want to wait for a more robust solution.
Netflix Free Trial Compared to the Blockbuster Free Trial
Both online movie rental services, Netflix and Blockbuster, offer free trials at this time to allow new subscribers the opportunity to test their service. Both services are quite similar but also have some differences that you should consider.
The Similarities
Both Netflix and Blockbuster provide an online queue within your membership area. This queue holds in order the movies you would like to receive from the company on a rental basis. Once you finish watching a movie, return it in a prepaid envelope, and the next movie in your list or queue is sent to you. The number of movies you can have at one time is the only factor that varies and is dependent on the plan you wish to pay for.
The Differences
Blockbuster has the added bonus of allowing movies to be returned to a participating store location in your area. Overdue fees and late charges may apply though when you choose to return it physically to Blockbuster instead of mailing a watched movie back to the company. When you do return the movie you are giving a free in store rental which is a great benefit that Netflix is not able to provide. I personally liked the select of movies available better with my Blockbuster free trial.
Other differences relate to Internet streaming options which are rolling out independently by the two companies. At any one time, one company may provide the service on the game console you have already in the home while the other company is still working on making the services available. Each company also offers compatible devices that you can purchase that allow for instant watching. Broadband connections are required for the service.
The Costs
Costs for the plans are the same at this time. The initial 2 week trials is free with plans ranging from $8.99 a month to $16.99 a month depending on the number of movies you want to have at home at any one time. There are one, two, and three movie rental plans. Make sure to cancel your trial during the 2 week period if you do not wish to continue.
