Netflix used the US Post to famously distribute movies in America after the founder Reed Hastings was charged late fees for late return of a rental movie to a movie rental store. Netflix involves a monthly subscription of under $10 and you can take as many movies you want, just use US Post and the postage is prepaid by Netflix and included in your monthly subscription. The DVD aggregation,sorting,mailing provides employment at the lower skill levels in the US and much needed business to US Post.
For all global markets Netflix is only going to go with streaming video via the Internet. No distribution by mail in 43 countries in Latin America and Caribbean and further global expansion is planned. In this video, Hastings explains how the Internet bandwidth is going to rise to 1 Gigabyte by 2021 in the US. Emerging markets are trying to leapfrog to high capacity Internet connections. On the home hardware side the price of large computer screens keep plummeting and TV's have started to come with an Internet connection or you can buy a 2$ HDMI cable (seriously, at Amazon) to connect your laptop to the TV.
All this means that anyone involved in the physical handling of DVD's would be negatively affected, at least in the short term. These include:
- Workers who work on the DVD packing,sorting,mailing lines at Netflix
- Makers of DVD players and DVD drives because if you watch movies streaming you would tend to not use or replace your DVD player
- Postal services in all these countries and US post eventually
- Movie theatres and associated businesses like the Pop-corn stand will see fewer customers
However, with Netflix taking up the long-tail market for movies globally -this is great news for:
- Movie makers worldwide, from Hollywood to Bollywood and Hong Kong. The low number of movie theater problem will no longer hold back niche movie makers.If you are a film maker and only ten thousand people want to watch your 90 minute documentary, Netflix gives you the market via streaming video. This is huge because no movie theater distributor will take you on. Physically tracking DVD copies that will have a total rental of only 10,000 is just too complicated and costly for the entire supply chain. But if the movie can be hosted on a server in California and watched streaming from Brazil – suddenly there is a market !
- Movie producers will earn more revenue as piracy margins decline and pirates lose interest
- Those who store and manage Netflix's digital content should see more work
Like the book market growth after Amazon , the movie market will grow with Netflix's decision to go digital streaming and that's a good thing. More on Netflix US market changes….