January 03, 2008 |
Not a week has passed since I assembled a list of predictions for 2008 for your amusement, and already we find two well-known corporate entities deliver an official press release proving one postulation to be quite on-target.
Indeed, both Netflix and LG have teamed together to form a sort of digital download alliance, giving something of a morsel of credence to the article published here in Profy last Saturday. The arrangement the two partners in cinematic deliverance (don’t it just roll off the tongue?) have made is fairly straightforward. Netflix intends to handle the virtual storefront and download software (and likely the majority of the marketing effort, too), while LG does its magic manufacturing hardware in the form of set-top boxes.
Now, I do understand that this announcement by no means indicates that success will greet these friends of convenience. The two are no doubt hedging a sizable bet that consumers in the coming months will be quite open to seek downloads direct from the Web from the comfort of their couches. But given the fact that many millions of Americans currently subscribe to broadband Internet services, and generally also provide positive feedback for on-demand television facilities, I think it fair to say that Netflix and LG have a decent shot making a hit of this experiment.
The chief determinant of just how well (or poorly) the coming Netflix-LG project will perform on the still-young digital video download market will be price, for sure. It’s been widely understood that a home theater device tagged for several hundred dollars (as opposed to something in the realm of $200-or-less) will be adopted by quite a few.
A good number of technologically adept folk will certainly have a strong inclination to ignore a seemingly exorbitant financial “penalty” for the sake of obtaining an interesting new invention. Those few Netflix and LG will be guaranteed to join in on the experiment. But Netflix has long operated with a vast audience of mostly common individuals, who are attracted to its relatively low-priced DVD rental offerings. Thus both companies will most likely have to deliver a hardware solution at or below a price point deemed palatable for Netflix’s membership. Whether they can do so from the start or quickly see to it that production costs decrease to a reasonable level (I find $150 to be a goal the two companies should seek to reach by the end of the year) is for their respective corporate variables to determine.
Mind you, don’t expected LG to unveil an entirely new device to comply with the Netflix download software. It’s safe to assume that the company will alter slightly an already existing or planned hardware release to operate in tandem with the virtual video storefront-to-be. Rarely is in any hardware manufacturer’s best interest to “start from scratch,” as it were and build something with strangely restrictive exclusivity. Look for LG to release something that allows for disc as well as download playback.