Is Netflix a TV Star?

After weeks of thinking outside the box, Netflix (Nasdaq: NFLX  ) may not be able to escape the boob tube.

Speaking at the entertainment industry's Mipcom conference, Netflix content chief Ted Sarandos conceded that 50% to 60% of the service's streams that his company is serving up are for television shows.

"That can be misperceived as Netflix giving up on movies, which it's not," Sarandos explained, as retold by PaidContent.org. "It's just consumers saying what they want."

Well, cynics may argue otherwise. It's not the consumers calling the shots here. Netflix doesn't give subscribers too many new theatrical releases in streaming form to choose from. Revisiting old episodes of Mad Men or Lost is just more tantalizing than watching You Again -- again.

Would television shows still account for at least half of Netflix's streaming activity if its entire DVD library were available via Internet? I doubt it. Why do you think DISH Network's (Nasdaq: DISH  ) Blockbuster and Coinstar's (Nasdaq: CSTR  ) Redbox primarily stock new theatrical releases on DVDs? Now that is what consumers want.

Unfortunately, couch potatoes are unlikely to ever get that chance. Major studios know they can't give up their latest releases to be part of a $7.99 a month buffet line. The sticking point with Starz (Nasdaq: LSTZA  ) , reportedly, was that it wanted to be part of a higher-priced package. Netflix wasn't ready to commit to tiered pricing, though who knows how that would have played out if Netflix would have known the brutal September that was waiting in the wings.

Hopefully Netflix will still find a way to beef up its theatrical content. It is a differentiator. The last thing that it needs to become is another television-centric Hulu Plus.

Netflix shouldn't be proud that its streaming service is being used primarily by folks catching up on earlier seasons of television shows. It's not a sustainable model. It's also much less of a compliment, and more of an insult of its digital movie selection.

If you want to follow this saga, track the latest news by adding Netflix to My Watchlist.

Motley Fool newsletter services have recommended buying shares of Netflix and Coinstar. Motley Fool newsletter services have recommended creating a bear put spread position in 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.

Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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  • Report this Comment On October 04, 2011, at 1:41 PM, Rdsunder wrote:

    What this would imply is that NFLX needs to raise prices on its streaming service to attract high quality movie content from the likes of Starz. Or, do what Starz asked for, and create a tiered membership structure ($7.99 for TV or movies only, and $9.99 for both, which, incidentally, is what we were used to paying for DVDs-by-mail and streaming).

    Though, after the month they've just had, a price hike is probably the last thing on their minds.

    And then again, Reed Hastings appears to be the kind of guy who enjoys root canals ... w/o any kind of anaesthesia.

    So, who knows: Maybe that's the next shoe to fall.

  • Report this Comment On October 04, 2011, at 2:22 PM, nhalden wrote:

    Call me a Cynic....

    I said it VERY well. NF is talking out if it's [rear]. I dare them to show any shred of proof that customers want old rehashed TV shows.

    NOW look if they can get TV episodes after they air like they did Spartacus then they have something....BUT after that wildly popular show became a hit...Starz pull the plug on doing that. I would suspect the same would be true of any Network or cable show. Thus far NF has shown that they don't have the cash to make the deals to foster day after or even week after streaming.

    NEW RELEASES are where it's at. I don't care who you are. IF you have a new release offering you will reign supreme...you don't even need older content. Just run new and recent releases for up to 2 years and that's it...If you want create an add on service for older movies that are archived. Let TV and free streaming be the source for older shows.

    Bottom line...My DVD collection gathers dust. I go see a movie at the theater if I really want to see it or I wait for it to come out on DVD (NF, REDBOX, etc...) I watch it possibly a few times...then never see it again...maybe on TV.

    THIS IS THE MODEL OF NEARLY ALL PEOPLE WHO BUY/RENT DVD's. This is the model NF should take. NEW NEW NEW NEW....

    Problem is they can't.

  • Report this Comment On October 04, 2011, at 7:04 PM, darkmargaret wrote:

    My beef with Netflix streaming is that most of its content, whether movies or TV, is garbage. Most of the interesting content was pulled at the beginning of this year.

  • Report this Comment On October 04, 2011, at 7:05 PM, darkmargaret wrote:

    Oh and that goes for new movies and TV as well as old. New garbage is just as bad and boring as old garbage.

  • Report this Comment On October 05, 2011, at 8:49 PM, chadscards1274 wrote:

    Is anyone actually a NFLX subscriber who is commenting? Here is the deal, first the reason that consumers are streaming 50-60% TV shows is simple. It's easier to sit down and watch a 30 minute or 1 hour TV episode then it is to sit down and watch a 2 hour movie. Simple as that. The idea that they don't have new movies is crap. Check NFLX they just got Tron: Legacy and that is not some "old garbage". Where TV is concerned the queue shows which shows they have "New Episodes" of. So we aren't talking all old shows like The Cosby Show (which they do have), we are also talking more recent shows like Grey's Anatomy, The Office, Lie to Me, etc. NFLX should be more then happy to have 50-60% of their streams as TV shows. The content in theory should be much cheaper to get then a blockbuster movie.

    One more thing, and sorry RIck but I have to call you out on this....the reason Blockbuster and Redbox fill with recent movies is think about it, how many people are going to pay $1 for 1 episode of say Lie To Me?? Seriously? The model with both Blockbuster and Redbox is movies, not the same for NFLX.

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