Thursday, July 31, 2008

LG's Netflix Box - Will Consumers Connect

How will consumers watch movies? Will they schedule their viewing according to their TV guide, waiting for its 9pm start? Will they prefer the cable on-demand model and navigate through various search screens to find the title they desire? Will they reach for their HD dvd that they purchased from Walmart or Target and watch on their TV or portable player? Will they purchase and download from Netflix or Amazon or Sony, to watch a movie? Purchase or rent, cable or Netflix, so many choices.

Netflix has decided to team with LG and offer a player that provides dual capabilities, Blu-ray HD dvd player and Netflix download. "New details on LG's movie-streaming tie-up with Netflix, courtesy the Wall Street Journal: In September, LG will start shipping a Blu-ray player that also supports Netflix Internet movie streams, for 'well under $500.' More good news: Buyers won't just be locked in to Netflix's (NFLX) limited streaming content -- the device will also be able to access 'other forms of programming from other sources.'" Obviously, the more flexibility, the better the value proposition for the consumer. And even more importantly, the easier it is to connect and play, the better it is for the average consumer to hook up and enjoy.

Should consumers run to replace their standard dvd player with this device? And should cable operators be worried that this device will take revenue away from their on demand model. Operators need to improve the navigation screens for on demand, as well as improving its speed and eliminating any latency issues. They need to add more titles to their library of content and enable internet content to play through the cable box. I believe it is time for all cable operators to partner with Tivo. They have a grasp on what the navigation should look like. By creating the ultimate viewing experience, customers will have no need to reach for the LG Netflix box. If they don't, this device may just be a winner.