Despite nascent consumer demand for 4K/Ultra HD, Netflix (NASDAQ: NFLX) has been the most aggressive supplier on the programming end, driving up the already high cost of producing original series like House of Cards by shooting them in 6K, for example.
The SVOD service is notoriously cryptic about its long-term strategic goals. But Wired writer Brian Barrett has some cogent theories about where Netflix is going with all of this.
First, there are competitive reasons--4K represents a chance to get a jump on pay-TV, which is slowly increasing its 4K wherewithal. As Current Analysis research director Avi Greengart noted, "4K requires more bandwidth than many cable and satellite systems have available."
Netflix "could and its competitors can't," he added.
Operators including DirecTV (NASDAQ: DTV) are ramping up fledgling 4K services, with the pay-TV company preparing to launch a new satellite in May that will greatly expand its 4K programming capabilities. But overall, this ramp-up won't be cheap or fast for the pay-TV industry.
In March, Philip Goswitz, senior VP, video, space and communications for DirecTV told a D.C. conference that 4K is the "killer app" and that DirecTV expects to have 50-70 4K channels in operation by 2020. With DirecTV on the leading edge of pay-TV adoption of the resolution standard, a five-year time frame seems like plenty of time for Netflix to develop a decisive edge.
Another possible reason Netflix has been aggressive in pushing 4K, as well as High Dynamic Range (HDR): "The company may also see 4K as a way to push so much data through ISP pipes that its partners have no choice but to sign on to the Netflix Open Connect Initiative, an effort to deliver its shows and movies from machines as close as possible to the viewer," Barrett writes.
For more:
- see this Wired article
Related links:
Netflix's master plan is global content licensing
Netflix's Aussie strategy: Let 'em VPN, at least up until launch
Cable's ratings collapse: Latest research reports provide more conclusive evidence that it's SVOD's fault