Roku is pretty cool, but what does it mean for Netflix?
As a father with one, now two, young children Netflix (NFLX) has been a godsend over the past several years. For nine bucks a month I can get unlimited awesome movies. I get to see an occasional children's movie in the theater, but to go out on a date with my wife to a movie it usually ends up costing a hundred bucks between the $20 tickets, popcorn, babysitter, and dinner. That's OK once in a while, but not on a regular basis.
My brother sent me a Roku for Christmas. For those of you who aren't familiar with it, it's basically a tiny black box that connects to the your television. It uses your wireless Internet to download movies onto your TV screen. Of course, one could basically do the same thing with a laptop and a few wires, but it's convenient. Using the Roku box one can watch any of the thousands of Netflix on-demand movies instantly on their TV. The new stuff isn't on there, but it's neat for checking out slightly older movies that I wouldn't have normally ordered on my normal Netflix subscription.
A Roku box
The other day I checked out a movie called The King of Kong. It was a surprisingly interesting documentary about a battle between two guys for the World Record Donkey Kong score. I know that it sounds dumb...my wife was like turn this thing off when I first started it...but by the end we both were completely sucked in. It's almost a story about the struggle of good versus evil and one man's lifelong quest for perfection.
Anyhow, back to the point of this post. Today Roku announced that it will enable people who have its box to instantly download Amazon.com movies, the new stuff: Roku to Add Amazon VOD. People will be able to download movies from Amazon using the box that they already have for anywhere from $0.99 to $3.99. This is the direction that the industry is headed. There's no need to ship stuff through the mail. It's inefficient in terms of cost and the time that one has to wait to get the movie that they want.
Of course, Netflix is going to try to hold onto its movie by mail business model for as long as possible. Why shouldn't it, the barriers to entry are much larger for that sort of services than they are for a download service. Still, the death of NFLX's old business model is really only a matter of time. I can't help but think that Netflix will eventually go thw eay of Blockbuster (BBI). I am seriously thinking about shorting it in CAPS. Can anyone out there tell me why Netflix will survive?