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Chapter 488 Following Netflix's Path

Google Video could be launched at any time, but the main purpose of this meeting was not to discuss the promotion or operation of Google Video after its launch, but to discuss whether Google Video should get involved in the DVD rental business.

Hamilton originally thought that the launch of Flash Sale would naturally lead to the DVD market, but to his surprise, Flash Sale did not do so and did not touch any video products.

It's not to say they haven't dabbled in it at all; at least some third-party merchants are doing it, but sales are dismal because flash sales don't subsidize this industry.

Since he wasn't going to do flash sales, Hamilton wanted Google Video to do it themselves.

In the conference room, the projected light was clearly projected onto the screen in front.

Hamilton glanced at Ernst, then turned to the data projected in front of him and said, "This is the revenue data for the DVD rental business in the first eight months of this year. According to statistics from a third-party market research institution, it has increased by 15.2% compared to the same period last year."

"This growth rate clearly shows that the DVD rental market is currently experiencing a sustained boom, and market demand continues to maintain strong growth momentum."

As soon as Hamilton finished speaking, dissenting voices arose in the conference room.

"But don't forget, Amazon and Walmart are both vying for a share of the video products market and are engaged in a brutal price war. Although there are no specific figures, the DVD rental market is bound to see a significant drop in the near future," warned Herven Weiss, CEO of Google Video.

The two people most fiercely debating whether Google Video should enter the DVD rental market are these two.

The two had their own viewpoints, which led to today's meeting.

One is the head of the entire group, and the other is the head of the main business.

Because this business is not involved in the overall strategic planning of the group, there is no such thing as Google Video making sacrifices for the group.

Such debates frequently occur at Google, and Ernst is happy to see them.

On the one hand, the group's senior management wanted to provide more in-depth guidance on the operations of the various business companies, while on the other hand, the local factions, namely the heads of the various subsidiaries, did not want the higher-ups to interfere too much in the specific operations.

This applies not only to Google, but to all companies, and even to every country; it's a struggle for power.

Ernst wanted to see them fight like this; if his men united, it would be disadvantageous for him.

As long as he can control the overall direction, there won't be any problems.

Faced with Herwin Weiss's reminder, or rather, his questioning, Hamilton did not rush to refute, but instead nodded in agreement: "I do not deny that the fierce competition in the current e-commerce sector will indeed have a certain impact on the DVD rental market, and that is an objective fact."

However, Hamilton then added his own perspective: "We must be aware that price wars cannot last forever; they will eventually end. On the contrary, consumer demand for movie viewing in North America is showing a continuous upward trend."

"Once price competition in the video product market returns to rationality and price levels return to normal, consumer choices will inevitably change. For most consumers, purchasing video discs is too costly, and more consumers will return to the rental industry."

"This is evident from the target price given to Blockbuster by Wall Street analysts. Despite the significant damage to Blockbuster's business, its target price has only been lowered by $0.8, a drop of less than 2%."

"But don't forget Google Video. The data from Wall Street analysts doesn't include the launch of Google Video," Herven Weiss argued, showing no intention of backing down.

"So what?" Hamilton's question made the Google Video staff in the conference room frown.

This is questioning their research achievements and showing them the utmost disrespect.

Hamilton didn't actually mean that; he was just stating the facts: "The best streaming resolution currently available is only 480p, and I'm referring to the latest, well-equipped computers on the market. For most older computers, the highest resolution they can offer for smoothly watching a movie on Google Video is 360p."

"And what about the DVD market? Most of them use the 480p format, and they've even started transitioning to 720p."

This is the key reason why Hamilton wanted Google Video to enter the DVD market: video clarity.

Due to various limitations, streaming media cannot achieve the same high definition as DVDs.

This is not a problem with Google's video technology, but rather a limitation imposed by various factors.

Whether it's network speed limitations or hardware development, achieving DVD-quality clarity requires overall improvement across all related industries.

But such hope is not in sight in the short term.

As the economy continues to grow, consumers will inevitably demand higher quality of life, and their needs for audio-visual entertainment will become more diversified and of higher quality.

While Google Video has solved the problem of convenient video viewing for users, allowing them to watch videos anytime, anywhere via the internet, it currently has obvious shortcomings in terms of practicality and user experience.

Many people will likely abandon Google Video due to its video quality issues, especially considering that computer penetration in North America is only 42%, less than half.

Currently, DVD rental remains the largest market for film supply.

"You've prepared quite thoroughly." Ernst, who had been silent and listening attentively, suddenly interrupted the argument, drawing everyone's attention to himself.

Although Ernst is the chairman, Hamilton and Herwin Weiss are the actual operators, but his opinion is crucial. He is described by industry insiders as someone who can see the future of the Internet at a glance.

Business management is a strength of these professional managers.

But strategically, Ernst was the real god.

Looking at the broadband data displayed in front of him, Ernst smiled and said, "In 1996, broadband penetration in American households was only 30%. In less than two years, it has reached 42%."

"Do you know my prediction for future broadband penetration?" He asked everyone present, paused for a moment, and then gave his answer directly: "If nothing unexpected happens, by the end of next year, broadband penetration will at least soar to 58%, and may even exceed 60%."

This predicted data far exceeded everyone's expectations, and most people showed expressions of surprise.

Seeing this, Ernst continued, "You may not know this, but almost all network providers on the market have already formulated development plans for next year, planning to invest huge sums of money in upgrading and transforming network infrastructure to improve network bandwidth and transmission speed."

This wasn't some inside information Ernst had received; it was an inevitable outcome.

Once the dedicated line from Chicago to Wall Street is officially launched, this arms race to upgrade network speeds will begin in earnest.

The opening of this dedicated line will greatly improve the data transmission efficiency in the financial sector, and will also force other industries to increase their investment in network infrastructure, while the residential broadband market will also benefit as a result.

"If nothing unexpected happens, broadband speeds in North America will increase by another 30% next year without any problem."

Seeing Hamilton's worried expression, it was clear he was wondering why he hadn't heard the news.

Ernst did not answer him, because he did not have this information either. "And in my opinion, the DVD rental market is definitely in a downward trend."

Upon hearing this, Hamilton immediately raised his question: "Why? According to current market data and user demand data, the DVD rental market clearly still has a lot of room for growth. Why do you think it will decline?"

"Because of the diversified development of the entertainment consumption market," Ernst explained. "With the rise of the gaming industry, various console games and PC games are constantly being updated, attracting the attention of a large number of consumers."

"Previously, consumers had relatively limited choices in the entertainment sector, and DVD rentals were almost the only form of entertainment at home."

"However, due to the rise of games and the development of other entertainment projects, this will to some extent reduce the time consumers spend watching movies."

"In the past, consumers had no choice, but in the future, consumers will have too many choices and not know how to choose."

The Google Video staff, represented by Herven Weiss, all wore victorious smiles, believing that Ernst was supporting them.

But Ernst's next words stunned everyone on the spot.

"Therefore, I am more supportive of Hamilton's idea that Google Video can develop its DVD business."