Netflix making consumer case for gigabit service

20 March 2013 by Steve Blum
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Building a business on 4K content.

Netflix is throwing its weight behind the new 4K ultra-high definition video format and, once again, potentially disrupting the broadband industry. Neil Hunt, chief product officer at Netflix, told The Verge “we expect to be delivering 4K within a year or two.” Sony has also floated the possibility of supporting 4K services in future networked products.

Network routers won’t start melting under the strain anytime soon. There’s not much content that meets the 4K spec yet. HDTV, by contrast, had decades of filmed movies and television shows to draw on. Hunt is only talking about having “at least some” 4K movies ready in a couple years, not the entire Netflix library.

The format doubles both the horizontal and vertical pixel count of the best HDTV standard currently available. The result, in raw form, is terabyte-scale content. Compression technology and other improvements could bring file sizes down, but even the most optimistic predictions are in the 100-plus gigabyte range.

In round numbers, you need a gigabit connection to watch a terabyte-sized movie in real time. A 100 gigabyte program takes a 100 Mbps pipe. Either way, fiber is the only technology that can support mass market streaming at those speeds.

Assuming the 4K standard gains traction, it’ll be a while before it hits the mass market. If you can find one, you’d pay somewhere in the $25,000 range to buy a 4K display this year. If prices drop and units sell like HDTV sets did (a big if given the need to build content from scratch) it’ll be ten to fifteen years before it’s a no-brainer purchase at Costco.

Nevertheless, it makes me eat my words. Last year I unwisely said until we’re talking about something like real time in-home genome sequencing, nobody is going to need a gig.

It’s not here yet, though. Gigabit-class Internet subscriptions will follow 4K technology adoption, not lead it. It’ll be years before building fiber to existing, served homes on a pure pay-as-you-go basis is feasible in all but exceptional circumstances. But for investors – public or private – willing to bear the cost now, there’s finally a plausible upside story, albeit decades away.