Hard to tell if this is good or bad Blu-ray news for Sony (SNE) and the movie studios: Blu-ray adoption is “growing nicely,” Netflix (NFLX) CEO Reed Hastings said today. But it seems to be growing slower than Netflix’s Internet movie streaming service.
Some 700,000 Netflix subscribers are renting Blu-ray discs through the service, Netflix CEO Reed Hastings said today on the company’s Q4 earnings call. That’s up 40% from last September, when about 500,000 Netflix subscribers were Blu-ray users.
Not bad. But it’s still a relatively small percentage of Netflix subs: 700,000 subscribers represents just 7.4% of Netflix’s overall customer base. (And at $1 extra per subscriber, per month, the Blu-ray surcharge is only a $8.4 million yearly run rate. Is that really worth it?)
Meanwhile, Netflix’s digital delivery seems to be taking off faster than Blu-ray: “Millions” of subscribers used Netflix’s streaming service within the last month, Hastings said. Digital delivery is Blu-ray’s biggest threat, and the more people grow comfortable watching movies on the Internet, the bigger the risk that Blu-ray will never take off.
(Caveat: Demand for Blu-ray from Netflix is not necessarily a direct reflection of the Blu-ray market, of course. Netflix is increasingly building its Web movie streaming service into Blu-ray players from LG and Samsung, which could boost Netflix Blu-ray usage faster than the overall market. And there’s surely also plenty of Blu-ray buyers, especially those with Sony PS3s, who will never subscribe to Netflix.)