Netflix Wants You to Throw Out Your HD TV -- Just Not Yet

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If you watched Netflix's  highly acclaimed remake of the British House of Cards, you probably viewed it in HD on a TV or a computer screen.

The show looked pretty good, right? One could be forgiven for thinking that a television picture -- especially a streamed television picture -- couldn't get much better than that. But one would be wrong.

House of Cards was not shot in hi-def; it was shot in 4K, an ultra-high-definition video format with four times the resolution of today's HD TVs. That would be 3,840 x 2,160 pixels for 4K, compared to 1,920 x 1,080 for HD.


Fans of Netflix's latestforay into original video production should know that Arrested Development was also shot using 4K cameras.

Why would Netflix go to the trouble and expense of shooting in 4K? (House of Cards cost more than $100 million to produce.)

Because it plans on eventually streaming that 4K video through our home video systems. And not in the distant future, but within a year or two, according to an interview that Netflix chief product officer Neil Hunt gave The Verge.

Hunt said that streaming will be the best way to get 4K video into homes. But, he said, there is still a lot of work to do on compression technologies before Netflix can squeeze four times the data through existing pipelines, and in the decoding of that data. The technical challenges for broadcasting are even greater than that for streaming, however.

Right now Netflix is the 900-pound Gorilla of the Internet. It is the source of over 30% of all Internet downstream traffic, not just video streaming, but all Internet downloading. Netflix subscribers stream more than a billion hours a month, a number that keeps growing, according to Hunt.

That is a lot of ones and zeros coming from the company that seemingly shot itself in the foot just two years ago when it announced it was separating its monthly DVD mailing service from its Internet streaming service. The ensuing anger from once-devoted subscribers pushed Netflix's market value down 78% in four months.

I wish I had loaded up on Netflix at that time, because its stock bounced back with a vengeance, getting closer to its peak value of $295 in July 2011.

What changed Netflix's fortunes? Netflix CEO Reed Hastings ended up being right: Streaming entertainment has just kept growing and growing. He saw DVD-player sales flatten as tablet and smartphone sales exploded.

Netflix has been out ahead of everyone else in the video content delivery business, first with its super-efficient DVD distribution network and now with its streaming business. But will it be in the right place at the right time with its 4K gambit?

Televisions that can handle 4K video now are not only extremely expensive -- how's $17,000 to $40,000 sound? -- but those monitors will be incompatible with future 4K standards, according to one television manufacturer.

In remarks made at a press event in Italy last month, Michael Zoeller, Samsung's European director of TV sales and marketing, said, "No UHD TV today will be compatible with the UHD standards to come."

I'm not betting against Netflix and Hastings being eventually right about 4K, but I wouldn't throw away my HD TV just yet. Who knows when the 4K UHD sets will be available to take in Kevin Spacey's manipulations in all their evil detail?

The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments; click here and claim a copy today.

The article Netflix Wants You to Throw Out Your HD TV -- Just Not Yet originally appeared on Fool.com.

Fool contributor Dan Radovskyhas no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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