Netflix is a great service, which by now everyone probably knows about — they pretty much single-handedly killed numerous movie rental chains just by being easier and better. You pick movies from a web site, and they send them to you in a special envelope that you use to return them when you’re done watching. TiVo is also a great service that allows you to watch TV on your terms (far better than the horrible “TiVo-like” DVR services offered by cable and satellite providers).
Netflix recently started making some of their movies available over the internet, on demand. But you needed a special player. More recently, you could use an XBox as that player, and there are even a couple of Blu-Ray players that are “Netflix capable”. But now, TiVo (HD models only), and that’s the best.
A while back TiVo made a deal with Amazon, who has a digital media service called “unbox“. It’s ok, but Amazon is not very strong at providing help choosing movies (Netflix is awesome!), you have to pay a per-rental fee to Amazon, and it can take a while for movies to start downloading. If you have a Netflix account, you can use your TiVo to watch any of the movies that Netflix has available for the service, instantly, for free. It’s really pretty great.
OK, but How Does This Save Energy?
So the interesting thing about this from an energy perspective is that movies watched in this manner do not need any of the following:
- To be sent via postal mail to you
- To be sent back via postal mail to them
- To be turned into DVDs with mylar slip cases and labels
- To be handled numerous times by multiple shipping facilities and employees
- To be subject of physical limitations, like the number of DVD copies made
- Have an extra set-top box consuming more electricity (assuming you have a TiVo)
We were trying to do the math on the new cost model this creates for Netflix. We still pay our $17/month fee to Netflix and can watch as many movies as we want. So there has to be a cost that Netflix pays to the movie studios each time they rent a movie — maybe $1.00? But a big cost of their transaction is cut out with digital delivery — at least $0.84 for postage in two directions (maybe less if they pay a bulk rate), then the cost of their regional facilities and especially the labor it takes to manage all those disks — I’ll bet the handlings all adds up to $2.00 or more per round-trip of a movie.
Maybe the average Netflix user watches four movies a month at a total cost of $3.00 per movie or $12.00 per customer, leaving $5.00 left over for operational costs and profit. But with the new model, maybe we watch more movies, but Netflix pays only the studio fee and bandwidth and server fees that are incremental to their existing costs (perhaps $0.10 per movie delivered? Probably less).
Naturally, the selection of movies available for download is a much smaller set than the ones you can rent from Netflix the old way — it seems better than the selection Amazon has, but it’s a fraction of what’s out there, now. This can only be due to (stupid) studio rules, and/or (their paranoia) about people stealing their movies — it’s certainly not a cost issue for anyone. Well, except Sony and the other makers of Blu-Ray HD players who would presumably love to see their players to every man, woman and child with a regular DVD player now, as well as the disks they make.
This is similar to the struggle between iTunes and the music studios (often the same ones). iTunes seems to be winning that battle, if slowly. Perhaps we can rid ourselves, for once and for all of the fragile, poorly constructed, hard to set up, energy sucking players as well as the masses of easily scratched plastic disks in plastic cases, shipped all over the place to sit in our houses, being watched a few times (or sent back and forth by mail).
Think of the energy we’ll save :-)