I’ve been thinking about Netflix’s Instant Watch service lately, how it’s fueled such tremendous growth for the company, and how it’s no secret that the company’s future lies in streaming on-demand content and not in its traditional business of delivering content on disc via the postal service. In fact, new customers looking to sign up today might be forgiven for thinking that Netflix is primarily a streaming service and that its mail delivery service is just an afterthought, so strong is the company’s marketing emphasis on the former.
At what point will Netflix stop delivering discs by mail and focus solely on streaming? For a lot of us who have been Netflix subscribers since the time when discs-by-mail was its only service, the assumption is that the company won’t make this definitive switch until such time as they can stream about as many titles as they can deliver by mail. I couldn’t find definitive numbers, but it seems generally accepted that the company currently streams somewhere around 20,000 titles from the 90,000 or so that it claims to carry. By any measure, its streaming catalog is currently just a fraction of its disc catalog.
Inflection Point
The likelier scenario is that the company will make the switch when its streaming business becomes as profitable as the disc business, or when its disc business becomes a drag on the company’s profits. Not being privy to Netflix’s internal calculations, I have no idea when that will be, but it’s clear that streaming a movie to its customers is far cheaper than mailing a movie. So it’s conceivable that at that future point at which it will halt its discs-by-mail service, Netflix may still have dramatically fewer streaming titles than disc titles.
If that turns out to be the case, it will be a shame. I enjoy the company’s streaming service, but as an enthusiast for films of all different stripes, I value its discs-by-mail service even more. It provides as thorough a back catalog of obscure movies as I’ve ever come across as a video consumer; you could probably combine the catalogs of every single bricks-and-mortar video retailer I ever patronized (back when that was how one rented movies) and it would still pale in comparison to the library of movies on disc that Netflix has assembled. For me, the great innovation that Netflix created was that I could find and rent just about any movie I was interested in, so long as it was available by disc. That’s tremendous.
Many Netflix customers I know have switched from its discs-by-mail service to its streaming service exclusively, and it’s clear to me that the company would like us all to do that. But I’m pretty sure I won’t be making such a switch anytime soon, because there are so many great movies currently available only on disc that I won’t want to lose access to. My current queue includes only 68 movies out of 311 (roughly one-fifth) that are available to watch instantly. Even if that number doubled, I’m not sure that would be enough to keep me subscribing. In its rush to transform itself into a provider of streaming content, I hope Netflix doesn’t overlook this essential value.
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