Hollywood Shoots Itself In The Foot Yet Again With Netflix Set-Top Box

from the customers-are-the-enemy dept

Wed, May 21st 2008 2:14am — Timothy Lee

When I started reading CNet's write-up of Roku's new Netflix set-top box, I was beginning to think that the movie industry might finally be getting its act together. The price ($99) seemed reasonable, and the subscription rate (as little as $8.99/month) seemed about right. After years of missteps, I thought, maybe they were finally starting to figure out this Internet thing. Then I read this sentence: "Thanks to Hollywood's byzantine licensing system, less than 10 percent of Netflix's 100,000-plus library of titles is available for streaming to the Player." Even worse, only two of Netflix's 100 most popular movies are available for streaming. It's almost as if Hollywood doesn't want its customers' business.

Apparently, three other manufacturers, including LG, are working on competing set-top boxes. They should be careful not to put all of their eggs in the Netflix basket, given that Netflix may or may not succeed in getting the studios to release more of their titles. And as we've said before, the last thing the video streaming market needs is yet another pointless standards battle. What's needed is an open platform that supports free and paid downloads from a variety of different sources. Some of the Netflix boxes will reportedly include DVD or Blu-Ray drives, which is a smart move. Device makers should also be exploring more open content-delivery options, either in conjunction with existing video sites like YouTube, or developing a new, open platform where anyone can share their videos. In the long run, a lot of video business models will likely involve giving away free content, and a company that provides the set-top boxes for delivering that free content is likely to make a bunch of money. That market will grow especially fast if Hollywood continues its campaign to make its content as difficult to purchase as possible.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: downloads, movies, proprietary, settop box
Companies: netflix, roku

23 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

PRMan, 21 May 2008 @ 3:05am

Beware of Roku
As a previous stranded owner of a Roku Photobridge, realize that they have no problem stranding their customers with unfinished beta firmwares and promises that are never delivered.

I wouldn't buy this box from them...
[ link to this | view in thread ]
Travis, 21 May 2008 @ 3:33am

Game Consoles?
Would it be so hard to implement this sort of technology into an XBox 360 or PS3...oh wait...they already do that...why can't we get more movie titles...

Then, for those of us with only 2 HDMI inputs, we could actually still use this feature for watching HD movies.
[ link to this | view in thread ]
Falindraun, 21 May 2008 @ 3:40am

What Hollywood wants
What Hollywood wants us to do is to walk into a 'brick and mortar store' and physically buy a physical copy of their movie. They would also love it if the movie rental business were to just disappear entirely. Why? Because that would force us to actually buy a copy instead of just renting it. And when I say buy what I ... err Hollywood means is lease the privilege to watch the movie in your home.
[ link to this | view in thread ]
Nate, 21 May 2008 @ 4:49am

This is all a step in the right direction. If they can make affordable downloadable/streaming movies the movie companies will be better off. They want to fight illegal downloads, but aren't willing to work with consumers for a way to get movies to us, they way we want. The Roku box is not going to be a winner if Netflix is unable to get more movies in their streaming selection. http://www.custompcmax.com
[ link to this | view in thread ]
dazcon5, 21 May 2008 @ 5:14am

Re: What Hollywood wants
What they really want is;
1. Pay high prices to a theater to watch it once.
2. Buy a physical copy that we can only play on a device of their choosing.
3. If we want to watch the movie on any other device we have to pay again per device/viewing.

I have no problem paying for contact that I want, but I should be able to choose when, where and how. DRM just makes that nearly impossible.
[ link to this | view in thread ]
Anonymous Coward, 21 May 2008 @ 6:16am

Re:
The problem is that what the consumer wants is contrary to what the companies want. We want the freedom to choose when, where, and how to enjoy their content. They want to control that same when, where, and how (presumably so they can maximize their profits by leveraging that control). There is no "working with the consumer" because the consumer is the adversary. This is the exact mentality that brought about DRM, a system which is designed to lock out the legitimate owner.
[ link to this | view in thread ]
Matt, 21 May 2008 @ 6:24am

PC vs Set-Top Box
I know that not everyone connects a PC to the HDTV (in part because Microsoft told us we all would, which probably steered people away), but I have. There are remotes available, but I personally use a powered USB hub which connects my mouse and keyboard (with cables) from across the room.

As a Netflix subscriber, I get unlimited viewing of the available programming, which is growing all the time. I can also watch competitor Hulu.com's offerings. I'm happy with it -- this is the only way I watch TV. Yes, less is available this way, but I'm willing to deal with renting DVD's to span the gap for now, and believe the barriers will begin to fall in the future. This is what's next -- not Blueray, but subscription services.
[ link to this | view in thread ]
hegemon, 21 May 2008 @ 6:25am

Great idea!
I was actually excited to see this, and its availabilty has now made me consider starting back up with Netflix. Maybe only 10% of their catalog is available, but it is still 10,000+ titles, which is a whole lot better than any other all-you-can-watch streaming video service. And, it is really just an added value because you still get the same DVD-by-mail service that they have always offered with the plan. With all the TV episodes available, I see this as a great alternative to a DVR, assuming they have shows I watch. For $8.99/month, the selection is a whole lot better than all the premium cable channels combined, and it is on my schedule, at a MUCH lower price.

This is definately a step in the right direction. Now, if only they would use an open streaming format...
[ link to this | view in thread ]
chris (profile), 21 May 2008 @ 6:32am

Re: Re: What Hollywood wants
you forgot one:

4. re-buy your physical copy in 5 years when they obsolete the new current physical format standard.

and this is why the content industry is so fixated on physical formats, and will continue its fixation until its demise.

it takes a decent sales person to sell something once. it takes an evil genius to sell the same thing to the same people again and again.

i purchased a number of movies and music on tape, and then again on optical disc, and i'm pretty much finished with that process. i've already paid, sometimes twice, i'm not paying again.

ebooks, digital music, digital video, downloadable content... none of this stuff will be allowed to succeed as long as the content industries think the physical format is still viable.

open and accessible formats are bad in their minds because once you buy it and can do what you want with it, you aren't going to buy it all over again.

in fact, i would be willing to assert that hollywood will continue this madness for at least a few years after sales of physical formats have ceased all together.

this is why they want copyrights to never expire and why they want to push draconian DRM systems on us so we just buy physical media repeatedly to avoid the headaches.

hopefully they come to their senses before they do something that makes [what's left of] the buying public truly rebellious. they could do something truly psychotic, like pushing to make obsolete playback devices (cassette players, VCRs, SD DVD and CD players) illegal and have some sort of enforcement division conduct raids ala the BSA/RIAA.
[ link to this | view in thread ]
Overcast, 21 May 2008 @ 6:44am

Video gaming is such a better option for entertainment anymore.

At least for now, anyway. I get far more out of the games I have and pay for each month than Movies. Most of the movies I care to see I've already bought.

Anymore, with all the B.S. - I just wait on the movie to come out on the regular movie channels and their on-demand. If it never appears there, I guess I'll never watch it.

I do buy movies on occasion, but I can't say they are 'newer' ones, usually the older stuff. In the last 3 years, I have to admit - I've seen maybe 3 movies that were really good - the rest were cliche mediocrity.
[ link to this | view in thread ]
chris (profile), 21 May 2008 @ 7:04am

Re: PC vs Set-Top Box
Yes, less is available this way, but I'm willing to deal with renting DVD's to span the gap for now, and believe the barriers will begin to fall in the future. This is what's next -- not Blueray, but subscription services.

no, it's not.

bluray just won the standards battle so it will be forced on us more and more.

there will be no viable streaming or subscription services as long as the movie and television studios believe that physical format sales are profitable. hollywood will actively sabotage these services to protect their media sales.

it's a chicken and egg problem: as long as there is physical media, the industries around it won't support alternative distribution. physical media will continue as long as there are no viable alternatives.
[ link to this | view in thread ]
sk3ptic, 21 May 2008 @ 7:38am

Netflix Bandwidth
I've been using nexflix to download movies to my PC connected to my HDTV for a year now. Yes the selection is poor, but there are a few gems in there.

However, lately I have been unable to download on Friday and Saturday nights. Netflix tells me that *my* internet connection is too slow. Of course what they mean is that *their* servers are swamped. I can't wait until they launch this system, I won't be able to use downloads at all.
[ link to this | view in thread ]
longfellowx, 21 May 2008 @ 7:40am

Conspiracy theorists unite! BluRay will be "forced" on you? Isn't that a bit of an exaggeration? Already I can purchase HD quality movies via the XBox and AppleTV. I imagine soon enough Amazon's Unbox program will start offering the same (it's only more bits afterall). I watched an Unbox movie on my 47-inch LCD the other day streamed through my Xbox, and it looked great. Not as good as movies played through the BluRay player, but quite good. Hollywood, whoever that term may refer to, should get some credit here for learning from the mistakes of the music industry. While many movies are still not available (it would be great to access episodes of Battlestar, Seasons 2 and 3, online), the Netflix/Amazon/Xbox/AppleTV/Cable On Demand system has come a long way in just the last few years. As those models prove successful, and a better counterpart to P2P downloads, the movie studios will migrate accordingly.
[ link to this | view in thread ]
Anonymous Coward, 21 May 2008 @ 7:45am

Re: Re: PC vs Set-Top Box
"bluray just won the standards battle" and sales dropped.

I for one will do every thing in my power to not buy or receive a bluray player or disk but I have been like that for any thing involving Sony. If I do it will be used unless forced like i cant buy a new computer with out one but then I will go back to building them.
[ link to this | view in thread ]
Sean, 21 May 2008 @ 8:10am

Re: Netflix Bandwidth
Now if they only integrated something similar to Bittorrent they could even use a modified version of Waste. Allowing the software to send and transmit the data for the movies with a heavy bias to sharing with others that use the same ISP node. This will make the service more valuable to its users they get the movies quicker since the dependency on the original server is lower. It saves bandwidth for Netflix making the option more profitable and can save the users ISPs money by reducing the amount of incoming traffic. If they factor demand for popular movies in the aount time the files are stored this would help even more the idea comes to mind for new releases the first few weeks will save for 7 days but a five yr old movie will only stay for 1 day or less if the demand is very limited.
[ link to this | view in thread ]
JohnnyHeavens, 21 May 2008 @ 8:15am

@Mater of the overstated and obvious
Nate-X-Box/PS3?/AppleTV already do this and they do it very well. I own all 3 so it's not a step in the right direction at all. At most it's just one more person on the path of almost nowhere. There are too few titles out on any format and it's too bad because it is a great way to watch movies. Redbox is great as a evolution of brick and mortar but I still have to get up and go get the movie. It's not a lazy thing but it's simply faster and I can get HD. With the e-delivery it's already there and I just need to find something I want. That is the problem...finding a title. The Hwood industry are a bunch of greedy fools. What other group gets to screw the customer longer and not have to change bad business practices? (Music Labels as well)
The real question is what can we do about it? Take it like THEY want or download them for free...hmmmm. I wonder why they have a problem.
Morons. Absolute morons!
[ link to this | view in thread ]
Nate, 21 May 2008 @ 9:12am

Re: @Mater of the overstated and obvious
What I meant by a step in the right direction is that they are making something that typical households will have. I know that there are a lot of households that have a PS3/Xbox360 in them. But, there are way more houses with TVs that don't have one of those consoles. This is aimed at the household without one of the next gen gaming systems, but wants to have EASILY downloadable movies on their TV. If Netflix can improve the selection on their downloadable content and offer you a box to do it from why sitting in front of your TV, I would imagine it would be well recieved. DLing movies from Bit Torrent, or the like, is not for everyone. The risks involve, both legality and the threat of viruses, keep a lot of people away. Though a lot of people do it because it is the easiest way to get the movies they want to see as quickly as possible. Just set a few to DL before you go to bed and by the morning you have a bunch of new movies to watch. Burn them to a disc and you have it. Or in the case of some people, you have an HTPC that you can watch them directly on your TV with. The future for movies is downloadable content. Whether or not this specific box will take off, I don't think so. But, it is a step in the direction that will eventually be the mainstream for how we watch and rent movies. http://www.custompcmax.com
[ link to this | view in thread ]
Robert, 21 May 2008 @ 9:33am

Re: PC vs Set-Top Box
That is great to hear Matt, I have a similar setup with a media center PC hacked to play many more codexs then what Micro$oft provided out of box.

The only problem I have now is not the content, content providers, or even the technology. My problem is the ISP that provides access to the internet (Comcast.com). This company throttles every port I attempt to use. Hell, not just throttle but purposely disrupts my internet connection ever 5 seconds. Because of this the $60/mth I pay for 3-8meg/sec is more like 50k/sec. Attempting to play online games, stream video, or just surf the damn net is near impossible.

When ISPs are competitors or in league with special interests we (the consumer) will loose.
[ link to this | view in thread ]
Steve, 21 May 2008 @ 10:14am

Physical media has its place
Physical media will have a home for quite a few years. NONE...NONE of the streaming services offer FULL bitrate HD with 7.1 PCM as well...

The backbone of your service provider cannot support the MASSIVE amount of data the a FULL bitrate HD movie takes up.

There is also not currently any equipment that can play Full HD content out to mutliple feeds without spending many millions of dollars.

Sooooooo...If you want FULL HD experience and not some watered down garbage, the only way you will be able to get that over the next few years is physical media...which happens to be Bluray....So quit your damn whining.

If you like view the world will vieled eyes, then streaming is for you, but I like to see the subtle nuances that only Real HD can offer.
[ link to this | view in thread ]
Anonymous Coward, 21 May 2008 @ 10:40am

Re: What Hollywood wants
Actually, what Hollywood wants is for us to pay for the privilege of watching a movie each time we view it.
[ link to this | view in thread ]
Bill, 21 May 2008 @ 11:04am

Pirating
The thing that I find the most hilarious here is that currently with a PC and a little know how you can save these Neflix streaming movies right to your hard disk. This device prevents you from being able to do that, so the movie industry should be more for this type of thing and force people away from PC based streaming. By not embracing this fully, they are just keeping the other technology going strong and people will continue to pirate the movies. One day the entertainment industry will realize that it is a complete and total waste of money to invest in ANY DRM technology, it will ALL be circumvented so why bother. Focus on ways to make movies and CDs cheaper and maybe people won't bother going through the hassle of getting them for free.
[ link to this | view in thread ]
Anonymous Coward, 21 May 2008 @ 11:06am

NetFlix at the beginning of the year was doing surveys about streaming movies to Xbox 360 and PS3. That seems a much better alternative to yet another one use box.
[ link to this | view in thread ]
Sachin, 22 May 2008 @ 8:17am

Makes perfect business sense
A quick bandwidth-cost calculation shows how Netflix is to benefit *a lot* with the CDN-to-box delivery model instead of the DVD-in-the-mail model: http://multicodecjukebox.blogspot.com/
[ link to this | view in thread ]