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Pyrrhic Victory? Netflix “Wins” CES

on Friday, Jan. 10th

Every few years television manufacturers try to get the vast majority of consumers to upgrade their TVs.

From a certain point of view, that’s what the Consumer Electronics Show in Las Vegas is about each and every year: just how whiz-bang will the TVs be?

First there was HD, then there was the failed 3D adventure and now the TVs are 4K, some of them even curved. One problem though: there is very little that you can watch on a 4K TV right now. This is a fact that has The Verge declaring Netflix the winner of CES, since the streaming video service is producing their own in-house shows in the format.

It sets the stage for a potentially devastating series of events for Netflix’s competitors. Consumers buy new 4K TVs, and while there may be other services available, Netflix draws users in thanks to its brand awareness and original programming — the same strategy that took HBO to cable dominance. As broadcast networks are slow to catch up, consumers rely on Netflix as the main source of 4K content. In conjunction with Netflix’s recent UI revamp — which essentially aims to be a custom-programed channel for each individual user — Netflix becomes the de facto destination for viewers.

Frankly, I find this a little ridiculous.

As Bryan Bishop points out farther down in the article, even the head of Sony thinks it will take five to seven years for 4K sets to have a significant market share. In the meantime Netflix is betting on serving a top slice of the consumer base with a limited amount of programing.

Moreover 4K eats up bandwidth, you can pretty much forget about downloading a 4K movie. While Netflix still has one of, if not the best, streaming code out there, hiccups and service breaks are still a daily reality. That kind of lameness in a user experience is tolerable when the options are robust.

The problem is: the Netflix world is shrinking.

Netflix is bleeding feature films left and right, which puts the burden of subscriptions increasingly on their original programming. At a certain point the original promise of Netflix–having a Blockbuster video store in your home, for a pittance–evaporates. This has been a hot topic of conversation online in the past few weeks.

At a certain point a film and video fan finds themselves asking: is Netflix worth it? If you’re not really into the original programming it becomes a hard expense to justify. In my own experience I find myself diving deeper into the Hulu catalog and flirting with indie-focused Fandor more than I use Netflix.

For years now I’ve justified the months where I haven’t used my Netflix subscription actively as a kind of “security blanket.” After all, I might suddenly want to catch up on Continuum or binge on an Anime classic. If left to choose between a Hulu or a Netflix copy of show, Netflix always wins thanks to the lack of commercials.

Yet with the days of the user generated queue having gone the way of the corner video store, the psychological sunk cost of a Netflix subscription is fading. There’s no longer a giant “to-do” list of movies with my name on it, and unless I win the lottery I’m unlikely to pick up a 4K TV until the far end of that “five to seven” stretch.

Heck, I’m still rocking a 720p TV. Gasp.

I know that a lot of the point of CES is “aspirational consumption,” but sometimes companies get a little too far ahead of the curve. 4K video streaming, like 3D before it, might very well be one of those cases.

As more film studios pull their catalogs off of Netflix, the incentive to stay onboard dwindles regardless of how future-proof the king of streaming is.

Follow Noah Nelson on Twitter (@noahjnelson)

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