Netflix, the US internet DVD rental giant (and trans-Atlantic cousin of our portfolio company Lovefilm) has a good slide deck up on Slideshare which details their digital strategy and competitive threats. The slide below is from that deck and it shows they expect their DVD by mail business to peak in 2013.
Regular readers will know that I’ve written a lot about internet TV over the last couple of weeks and a point which comes up frequently in the comments is that internet TV for the mainstream is a long way off because it is still hard to get your TV connected to the web and because bandwidth is an issue for streaming services.
Here we have Netflix’s prediction that in 2013 their DVD business will go into decline and their driver of growth will be internet TV and movie services – and that seems like a pretty good definition of ‘internet TV gone mainstream’ to me. It is worth remembering that as a physical DVD business it is in Netflix’s interest to call this tipping point late rather than early (although more importantly they are a $5bn market cap company with a reputation for strong execution, so they are most likely to get it right).
Netflix’s method of getting its content across the living room and onto the TV is deals with a huge range of device manufacturers to get into their devices – TV’s, games consoles, set top boxes etc, and they have done a great job of getting embedded just about everywhere.