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Cable Technology Feature Article

October 15, 2014

Netflix Begins to Build 4K Business Model

By Tara Seals, TMCnet Contributor

Netflix is starting to craft a real business model around 4K entertainment, announcing that it is offering the $12 "Action" family plan, a $3 premium over the standard streaming subscription, for access to UltraHD content. 

The company has been a first mover in 4K, shooting some of its originals, including House of Cards, in native 4K. Other than that, the portfolio is still very small, and includes only a handful of 4K titles so far, like Ghostbusters and Ghostbusters 2, and the Smurfs 2. Breaking Bad and the Blacklist will be coming in 4K soon, it said.

It should be noted that going 4K is not for everyone: Users need a large display capable of rendering 4K (like one of the top-end 60-inch UltraHDTVs from LG or Samsung (News - Alert)) and a broadband connection of at least 25mbps to adequately support the experience.

The upper end of HDTV offers a 2K resolution (2048 pixels over 1080 lines). UltraHD ups the ante with 4K resolution (4096 pixels over 2160 lines). It thus delivers a resolution of eight million pixels, or four times the resolution of HDTV. It’s a big change. As such, it’s much more expensive to deliver (the packets are much larger than HD), requiring content delivery network investments—hence Netflix’ move to incorporate an upcharge.

Netflix is targeting 2015 to have a host of additional UltraHD content available, and it believes that it’s well-positioned to get ahead of demand. For one, there is no broadcast standard for 4K television feeds yet, nor compatible Blu-ray players or other STBs so far (the first Blu-ray 4K discs are expected at the end of 2015). That means that the majority of TV companies have thus far opted out of spending the money to upgrade their equipment to deliver the content.

Thus, “streaming will be the best way to get the 4K picture into people's homes,” Neil Hunt, chief product officer at Netflix, in an interview with the Verge last year. “That's because of the challenges involved in upgrading broadcast technologies and the fact that it isn't anticipated within the Blu-ray disc standard. Clearly we have much work to do with the compression and decode capability, but we expect to be delivering 4K within a year or two with at least some movies and then over time become an important source of 4K.”

Edited by Maurice Nagle

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