You're Wrong About Netflix

• Report this Comment On February 25, 2009, at 4:43 PM, jkellynewyork wrote:

  anders - look at DVD rental share market for redbox with only 12,000 location - In 2007 they had about 2.3% of the market. Now, at the end of 2008, they jumped to 9%. the company is to expand so many espcially big cities will not have to go far to get the DVD - in 5 years you will see one of these on every other block - $1 rentals is dirt cheap and even NFLX cant compete with that - costs NFLX $.50 just for round trip shipping of a DVD - look at alexa.com rankings growth for redbox.com -

  I believe you are incorrect in stating that redbox serves a different demographic - many if not the majority of NFLX subscribers are those who want newer release DVDS at a low costs as opposed to more expensive instore rentals or VOD (which is really expensive) - the $1 DVD from the kiosks especially when it is right down your street is going to take many of these customers - and if VOD gets significantly cheaper in the future, which I beleive it will, you will see NFLX and the like losing more of this demographic

  yes it is convenient with the rental fees but it is more of an inconvenience to have to wait for your movie, suffer through a movie you are not in the mood for, or be throttled on a long wait for a new release (redbox does not throttle but has a convenient reserve system on its website - and forcing people to return the DVD right away with the extra $1 late fee each day gets newer releases to its customers faster)

  have you seen the talks the cable companies are having with content providers re cable providers providing their own online sites - content providers do not want to disturb revenue from cable and NFLX does not have the money to pay more than cable for these

  i think the most likely scenerio is movies/TV will follow CD music model (unless online pirating is somehow stopped) where you will have everyone and their mother providing this stuff and paying content providers based on views - NFLX will be nothing special in streaming in the future - they are to dependant on content providers and do not own the pipeline

• Report this Comment On February 26, 2009, at 9:47 AM, jmt587 wrote:

  You forgot:

  5. Online piracy will kill the will of people to pay for videos, or at least enough of them that it will be really hard to eke out a large and growing business from it (I think there may still be a niche for things you can't find for free online, but that's not much of an explosive business model).

  Any response to that one?

• Report this Comment On February 26, 2009, at 11:33 AM, colinnwn wrote:

  @jkellynewyork

  I think you make some sweeping claims you don't have enough backup for.

  "if not the majority of NFLX subscribers are those who want newer release DVDS at a low costs "

  I don't want new releases at low cost. For me I used to rent 3 or so movies a month at the store. Netflix is a slight premium. I pay for the large and obscure catalog, freedom from late fees, and convenience of queuing shows I want and having them just get delivered when available.

  "and if VOD gets significantly cheaper in the future, which I beleive it will, you will see NFLX and the like losing more of this demographic"

  I don't see any reason to believe cable VOD will significantly change their exorbitant pricing or restrictive viewing model (24 hours to watch a movie). Netflix has probably the 2nd best foothold in this market with their "Watch Now" and Netflix Player offering. Their pricing and viewing model is very attractive.

  "but it is more of an inconvenience to have to wait for your movie, suffer through a movie you are not in the mood for, or be throttled on a long wait for a new release"

  I don't see the wait as an inconvenience, I see it as a value that I don't have to spend my time and mental energy trudging to the video store and keeping track of liabilities (movies that can rack up overdues) in my house. I don't suffer through a movie I'm not interested in, I turn off the TV. And people who get throttled by Netflix are heavy users getting a lot of value already (probably watching 15 movies a month that would cost similar at Redbox). I (a light user) have only once had a short wait on a new release. Usually when I request a new release I get it immediately.

• Report this Comment On February 26, 2009, at 11:44 AM, TMFZahrim wrote:

  Oh dear. "Piracy will kill everything."

  No it won't. It's possible to beat the pirates, but not the way the RIAA/MPAA/whoever is doing it now. Treat piracy as a competing business model and beat it with a better model. Example: downloading a movie from Pirate Bay is free -- but takes hours, may spread viruses, could be a crappy "camera in the theater" video, and other downsides. Which one of these 15 versions of "Dark Knight" should I download? From which piracy hub? And will I regret it later?

  Pay a reasonable fee to get guaranteed quality video, near-immediate watching, no downloading of dodgy files, giving centralized access to good content in a single list/search. NFLX is working on all of that, arguably only falling short on the content library already.

  Piracy will kill bad business, by necessity. Netflix will survive.

• Report this Comment On February 26, 2009, at 11:57 AM, Bandit46 wrote:

  I am one of the many that will not give up NFLX for the kiosks. I remember the days of going down to get a movie only to fine that it's all out. I don't have to deal with that with NFLX. Goodbuy Kiosk and video store forever.

• Report this Comment On February 26, 2009, at 12:33 PM, 44cuse wrote:

  Honestly...I can't believe I am reading some of the above comments. Kiosks? Availability? Returns?

  Those are three words that should NEVER be associated with Video rental ever again. Why would anyone want to deal with a Kiosk, availability, or returns when you can push a button on your remote in your living room?

  Bandwidth rates have been through the floor for years now and these types of business models (Tivo partners, Amazon, Netflix) are only just getting started. Show me the person who wants to deal with a return versus accessing a digital copy. Doesn't exist...except for maybe the relatively small group of folks who do not have broadband access.

  And yes, I'll anticipate the commentary around relevance of library in the Watch Now service and respond, in advance, with: It's fairly obvious that this model is in its infancy. Unlocking content in a more relevant timeframe is clearly the next step and just looking at content acquisition for Netflix over the last 2 years demonstrates their progress in this area.

• Report this Comment On February 26, 2009, at 1:54 PM, stone9 wrote:

  I'm a very pleased customer of Netflix. I get DVD's and stream through my XBOX.

  However, I'm not fully convinced they'll be able to compete with Comcast and other cable providers in content delivery. Yes Netflix has a larger library, but what's to stop Comcast from doing the same thing? They already deliver a good amount of on-demand content, a lot of which is more current than Netflix.

  I think Netflix will need to come up with a free device to stream HD movies to your TV. Why pay for an XBOX Live account? Why do we need to by a Roku box or a Blu-Ray DVD player with Netflix enabled?

  Yes you can stream to your computer and connect it to your TV, but the majority of people don't have the know how or patience to hook that up.

  Netlfix's biggest question mark is if they can stay relevant when the TV providers really begin to up their on-demand offerings.

• Report this Comment On February 27, 2009, at 11:54 AM, thegriswalds wrote:

  I have been in the rental business since 1989. The entertainment industry is like the aliens in the movie 'Independence Day'. If asked what they want from middle men like Netflix, Blockbuster and Redbox, they would say 'die!'. Unfortunately, the entertainment industry needs these forces for now, until it becomes viable through I-2, or Internet two to indeed download directly from studio servers. This is in the machine code form of 1's and 0's. Nothing really gets exchanged in a download; the cost is negligable. Remember, this is content that only the likes of Viacom own. When beta rentals hit the market in the 70's, the entertainment industry tried vehemently to quash rental. To thier dismay, the first sale doctrine prevailed. In cyber land, this doctrine ceases to have impact. Without permission from folks like Viacom, the middlemen like Netflix will cease. Unless Netflix can come up with some kind of 'virus' for the Studios, like in the Independence Day Movie, my money is on studio stock.

  Also keep in mind, along with the stimulus package comes money for a much improved infrastructure for high speed internet:).

• Report this Comment On September 28, 2010, at 8:28 PM, jodan42 wrote:

  It is really quite remarkable in these discussions that there is so little understanding that Redbox and Netflix live at the discretion of the major studios. If rental pricing reaches a level where it makes sense for the majors to look at other alternatives Redbox and Netflix can be cut out of the rental process without much fuss. Also keep in mind that there are many distribution windows before Netflix gets digital rights and those rights are for the most part completely non exclusive.

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