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Streaming Online Movies – The Story of Netflix and its effect on the movie industry.

Updated on September 30, 2012

Every month, $16 is extracted from millions and millions of bank accounts across the United States, including my own.  Every few days I check my mailbox and there is a movie waiting for me, selected from the top of my online DVD rental queue.  Generally, in the evening I stream an episode of Mad Men, or watch a classic Alfred Hitchcock film before bed.  I am a HUGE movie lover and I have decreased my DVD purchases from about four per month to around four per year.  I haven’t been to Blockbuster in over a year.  The world of films is changing.  Is it for better or worse?

In 1997, Netflix established its company and from this point on began a gradual change in the industry as a whole.  It provided an online DVD rental delivery service, where the user selects the films they want, receive them in the mail, watch them and then return them in a prepaid envelope.  It is a service with maximum convenience and at a very reasonable price as long as it is utilized regularly.  In 2008, it added to its services the ability to watch movies directly over the internet by streaming them through browsers.  The same can be said for numerous popular TV shows, currently including popular shows like Family Guy and Emmy Award Winners such as Mad Men.  To top off the convenience and great features, recently the streaming service has been connected to all kinds of electronic devices such as all major gaming consoles, most new televisions, as well as DVD players.  It is also able to use an algorithm system to use viewer history and ratings of films to create lists of films that they feel the user will enjoy, which enhances the personal experience of each member.

Since its creation, Netflix has become one of the Country’s most successful internet based ventures and currently around 24 million people have subscribed to the Netflix service.  Now, with the service provided being so successful and so unique, it has had some obvious effects on the film distribution industry, film studios and even the production of films.  These changes have hurt some people and helped others, and there are clear positives and negatives to various people.  Lets take a look at some of the different aspects effected by Netflix and some of the changes that have occurred with the film society.

The Death of Blockbuster

It is a logical assumption that an online movie rental service that doesn’t require you to leave the comfort of your own couch and is much cheaper than individual rentals, is going to provide a strong threat to in store rental businesses such as Blockbuster and Family Video.  In this case, the obvious line of thought proved to be true, as these companies have seen massive drops in business and many are on the verge of shutting down completely.  Blockbuster, historically one of the most successful movie rental companies all over the world, has already filed for bankruptcy protection.  There are a lot of other more subtle ways that Netflix can outperform competition.  One example is the fact that the idea of movies being unavailable or scarce is reduced at Netflix, especially for those available for streaming as everyone can watch these at the same time.  The destruction of in store rentals continues and with even more threats such as Redbox, do not be surprised if these companies disappear completely before all is said and done.

Effect on the Industry

Not only is the online rental craze affecting other rental services, but it also affects the entire industry as a whole.  Many people suggest that this effect is definitely a negative one.  DVD sales are dropping rapidly around the country.  There are many suggestions and to why this may be the case, and Netflix is definitely a reason that constantly comes up in discussion.  A negative to Netflix is that most films don’t appear on it’s service (especially its streaming service) until many months after they appear on standard DVD release.  However, it seems to most people studying the situation that in general, people are willing to wait the extra time to watch the film, instead of buying the DVD.  Apparently the appeal of owning your own library of DVD’s is wearing off and people just aren’t buying them anymore. 

Some people suggest that movies just aren’t worth buying anymore.  Others suggest that the biggest problem is the worldwide problem of pirate movies and illegal online streaming.  However, wit h crackdowns taking place that are preventing piracy to greater extents, and new measures taken by President Obama’s government, this threat is being reduced somewhat.  However, the threat of Netflix cannot be removed.  With movies available to stream, by being a Netflix member, you essentially do own the films, and have access to them at all times. 

However, despite Netflix damage to the film industry, sympathy towards Hollywood and film executives is hard to find.  Due to massive salaries and expensive movies and cinema tickets, people do not feel sorry for these companies, but rather relish the fact that they can finally watch movies for a reasonable price.

Can Film Execs Fight Back

Many film executives have chosen to attempt to counter the Netflix effect by not distributing through them and ignoring their services wherever possible.  Some studios however have embraced them and struck deals with them to allow streaming of their films.  These companies may lose DVD sales, but are able to earn money from Netflix and therefore limit the damage that many film executives are experiencing.  It seems obvious that there is no fighting Netflix, and those who are still trying to counter the effect of Netflix by ignoring their services completely or distributing through other mediums are just delaying the inevitable and taking part in a battle that is futile.

My Take on Netflix

As a lover of film and someone who has plans to enter the film industry in later life, I can understand both sides of a complicated story. However, overall, I cannot deny that Netflix is a revolutionary idea and it seems to be something that was inevitable in the long run. Having utilized it for close to two years I cannot claim to be against it or I would be highly hypocritical. I think of it as a great resource for lovers of film to access them at a reasonable price and it also opens up a number of small more independent films that would otherwise remain largely unseen.

No matter what you think of Netflix, and how you think it effects the film industry, it cannot be denied that it is an entrepreneurial venture for the ages that is an example of an excellent idea taking over an industry. At the end of the day, if the film industry wants to raise DVD sales, they will decrease the prices. The cost of technology used to make movies is steadily becoming more available and decreasing year by year, however the cost of DVD’s is not. If the industry wants to compete, they need to compete on the one level that is causing them to lose. This is the price. If they refuse to compromise here, then Netflix will continue to flourish. In all honestly, Netflix will likely continue to flourish no matter what they do. My advice is to get on board and enjoy the ride.

For a list of little known but excellent films, many of which that are available on Netflix, check out my hub on "The Best Recent Movies You've Never Heard Of."


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    • jmartin1344 profile imageAUTHOR


      6 years ago from Royal Oak, Michigan

      It is certainly my biggest passion! I know what you mean about anorak - I get the same way also at times. I go through phases of what is my area that I am an anorak in! It has been Hitchcock films, film noir, foreign films - right now I'm on horror but that's because it's October!

      I love Michael Caine by the way! One of my favourite actors! Zulu is a fantastic film. He is still going strong now - past his blockbuster prime, he's been able to master the art of the "superstar supporting role" and I wouldn't be surprised if he gets some more Oscar nominations soon!

      I was back in England this summer and I noticed Netflix was on there! It has definitely changed the whole dynamic of the industry!

      Appreciate your insights once again!

    • alancaster149 profile image

      Alan R Lancaster 

      6 years ago from Forest Gate, London E7, U K (ex-pat Yorkshire)

      You're quite a film buff, jmartin. I used to be a bit of an 'anorak' in this respect but I focussed on actors and their films. My interests ran on from the 'cottage industry' that grew up around Michael Caine from 'Zulu' onwards, like the actors who featured with him and who came together at different times over the years. There's half the industry on both sides of the 'pond' that's been drawn in on his career.

      See what I mean? I'm an 'anorak' (named after train spotters in the 50's and 60's who wore green ex-Commando anoraks).

      Netflix is big in Britain as well - surprise, surprise! It's like in the 70's when the cinemas were emptied by the video hire industry.


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