It would appear that Netflix are doing something of a turn-around and are starting to push their DVD rental service once more, despite making noises in the past to suggest that this is very much a declining market place.
The company have not been shy in the past to detail their belief that the disc format will become obsolete at some point in the future; however the recent move may well be as a result of some competition that Netflix will face in the upcoming weeks and months.
This new threat to Netflix will come from the joint venture that is due to happen between Verizon and Redbox, two of Netflix’s biggest competitors. The joint venture will see a combination of Verizon’s digital distribution network and Redbox’s kiosk operations; when it happens it is sure to put the Californian streaming media giant under some pressure.
Surely the pressure that will come from Verizon’s distribution network will cause the bods at Netflix some sleepless nights, for the multi-billion dollar company has come an awful long day since its Bell Atlantic roots. When you combine this with the power of the Redbox organisation, with its 30,000 plus rental kiosks in the US alone; it perhaps is no wonder that Netflix have acted quickly to make sure that their customer base knows that they still have a DVD rental option.
One thing that perhaps will be of great concern to the likes of Reed Hastings, CEO of Netflix, is that there are seemingly a never ending array of competitors who are keen to steal some of Netflix’s customer base and ultimately market share. So although Netflix are quite clearly the number one in this sector of the market they themselves already recognise that the road ahead will not be an easy one and they have to develop new strategies to keep themselves in the pole position.
Reaching saturation point
Netflix have estimated that by the turn of this year they will have something close to 30 million subscribers on board; however recently they have taken the option to stop disclosing subscriber rates on its website, perhaps they are already aware how bad it would look if the figures stated to fall; no point in advertising bad news and all that!
Maybe the company should be a little concerned that they will reach a saturation point, with many potential customers not liking their streaming service or alternatively not having the technology to be able to use it.
So the smart money is definitely on making sure that they are not over reliant on their streaming media and that they have other ways of complementing their income.