• by Steve Sternberg , Featured Columnist, June 16, 2011

I am an early adopter when it comes to anything TV or video-related.  I got my VCR and DVR when each was in less than 10% of the U.S.  My wife bought me a video iPod a month after it came out.  I just bought an iPad 2.  My household consists of just my wife, our 12-year-old son, and me, yet we have five television sets, four DVRs, digital cable, DirecTV (we need our NFL Ticket), a blu-ray and two regular DVD players, and three computers (two laptops and a desktop) -- Mac and PC.  We also have Playstation 3 and Wii (and an Xbox 360 with the "red ring of death" that we refuse to replace for the third time). 

We just got a Netflix subscription (which we got through our Playstation, but now I also have on my iPad).   We just started letting our son watch "Family Guy," and he loves being able to watch previous seasons.  I've gone back several times to watch episodes from the first few seasons of "Saturday Night Live" (to try and show my son what real comedy is).  We love that this stuff is so readily available for free (it seems like it's free, even though it's $8 per month). 

CBS's research guru, David Poltrack, always ahead of the curve, is correct when he calls Netflix's growth a "real phenomenon."    His research indicates that more than 40% of early adopters, whom Poltrack calls "fully connected TV viewers, who already subscribe to digital TV and broadband services," subscribe to Netflix.  He also estimates that its prime-time streaming audience is about the same as a mid-sized cable network and growing fast.  Of course, if it was a mid-sized cable network, few would be talking about it. 

Most of the stuff we want to watch, however -- the best movies and most current TV shows -- are not available.  Even when they show a picture of what you want, it often tells you it's not available for instant access.  It's frustrating and disappointing.  As my son recently said, "I like Netflix, but it kind of sucks."   

I think his statement is actually a profound indication of why Netflix has so much potential.  If we like it when it "sucks," how will we feel about it when it no longer sucks? 

The $8 monthly fee is a brilliant price-point.  Even though my Netflix usage has gone from extensive to minimal over the past two months since I first subscribed, the $8 monthly charge on my credit card is not really noticeable, and I don't plan to cancel.  There's still enough I can get (particularly when traveling and using my iPad) that it's worth keeping.  Even if I use it to just watch one movie a month, it's worth it to me (and since I only let my son watch two episodes at a time at most, it will be a while before he exhausts all the available "Family Guy" episodes).   

So far Netflix hasn't had any impact on our regular television viewing, but it has cut sharply into our pay-per-view movie DVD viewing.  I think it's the first thing that's actually cut into my son's videogame playing.  We like the basic platform so much, however, that if and when Netflix does strike more content deals for top TV shows and movies, it will probably have a much bigger impact on our TV viewing -- especially in the summer.  The company has the right model, and seems to have hit that rare chord with kids, teens, and their parents.   

The real question is, can Netflix maintain a per-subscriber charge of what amounts to less than $100 per year (with no advertising) and be able to afford the highest-profile premium television content?  If the company gets enough subscribers, maybe it can.  Netflix certainly has a better chance of thriving than any of the other streaming platforms currently out there.