This is Mistermix’s turf, but apparently Netflix has abandoned their plans for Qwikster.
We’re now to the point that their business model, price, and ability to deliver product may be secondary concerns, and the primary concern for customers is WTF is Netflix doing?
No, this is exactly the right way to go. They made their customers unhappy and are now taking steps to reverse course. Don’t you wish politicians would act this way?
Belafon (formerly anonevent)
They tried and failed at something and are trying to fix it. At least after they realized they had made a mistake, they didn’t double down on it.
Of all the white people problems (see CK, Louis), this is the biggest. Streaming service was down all Saturday night and I was outraged.
Ended up watching Peckinpah’s The Killer Elite on On Demand so it wasn’t a wash.
wife was out of town last Friday. i thought i’d spend the evening drinking red wine and watching The Hudsucker Proxy (a favorite of mine). i figured that, even though Netflix’s streaming selection is really shitty, there’s no way they not have this 20 year old low-rated non-hit. wrong!
as soon as we’re done re-watching BSG, i’m not going to have much problem cancelling Netflix for good.
The fake fake al
Netflix and Romney, match made in heaven.
@Belafon (formerly anonevent):
I can’t decide if it would be a good thing for the GOP to learn from that example, or better if they continue not to.
Put me down as one who is more disturbed about Netflix’s decision this time than I was by the first one. With the first one, it seemed like they were going to piss off some customers, but for a good reason in the long run. The DVD is going to die, sooner rather than later, and it’s a good idea to get out of that business before everyone catches on. But this? Flipping back? Not a good call at all.
Mitt Romney is Netflix’s CEO.
they made the mistake of thinking that streaming and dvd were two separate products for the end user because they are two separate businesses for them that require entirely separate things. however for the consumer the product was always “movies” and i was very unhappy at the prospect of needing to check multiple websites to see how a movie was available plus maintain two queues of movies and have no crossover records to be used in recommendations (movies i watched on disc wouldn’t be used to recommend movies i might want to stream)
some people are still residually upset over the price hikes, but whatever to that. netflix is a business with the right to raise their rates. decoupling the streaming and disc pricing and letting users pick and choose what they want makes sense given the increasingly separate nature of the two methods of movie delivery on the back end.
This is another example of how the Job Creators are hampered by government regulation.
Why? Because shut up, that’s why.
I keep saying this – but streaming content done well (and Netflix is done well) causes people to unplug cable, and if you don’t charge as much as cable, then you lose content because the networks lose revenue. DVD rentals don’t cause that. The networks will give much better rates for DVDs because it only adds to their revenues.
Until someone figures out how to get $40/mo out of households for streaming, you HAVE to tie your streaming service to something else that ether generates that kind of revenue, or at least does’t undermine the networks cable revenue. That’s why the Dish/Blockbuster setup will probably work very well – Blockbuster is just a value add to the Dish service that you have to pay full rate for. Same for the various streaming services coming off of your cable provider (Comcast, Verizon, Cox, etc).
Netflix broke their business model once they went into streaming and provided you with a free TV interface (baked it into DVD players and consoles) – they took revenue off the table with that move, and that’ll kill you. Now Netflix is trying to fix that, by charging more, separating the services, etc. and customers are pissed because they got used to the old, cheap setup. Well, unplugging cable is not going to be cheap. It might be better, but it won’t be cheap, but I can’t fault customers for feeling duped. Netflix should have known this would blow up on them.
NetFlix: “Dear customers, we screwed up…”
@4tehlulz: If that was true, we’d have more choices.
Belafon (formerly anonevent)
The company is trying to change the way we watch movies and television, and I ultimately think for the better because they are embracing technology rather than trying to squash it. They’ll make some mistakes being innovators. It happens. But I’d much rather have innovators making mistakes than movie studios ruining the whole thing.
Certified Mutant Enemy
And be called a flip-flopper?
@Brian S: And this was their thinking, too, but look at the selection of what’s available streaming v. what’s available on disc. I have at least 50 movies in my queue that aren’t available to stream. I don’t have any doubt that DVDs are dying, but I really can’t believe we’re there yet. There are just so many, many, movies and TV shows and documentaries…
But the DVD business is the only one they have a near-monopoloy on. No one else can really get into that business now (high cost of entry in buying that many DVDs), and once they have the DVDs all the profit of renting accrues entirely to them. With streaming, on the other hand, they’re going to be fighting the content providers tooth and nail for every cent of revenue from here until forever, and it’s a business that lots of other people can get into at any time (everyone from the cable and phone companies to the Hollywood studios to the TV networks to Amazon, Apple, etc. — basically anyone who can put up a Website). So it was a bit odd for them to say “we’re going to abandon our monopolistic profit-guaranteed business in order to focus on a far more competitive, far less profit-guaranteed business.”
The Snarxist Formerly Known As Kryptik
Am I the only one who misread the topic title as ‘NeWTF?’ and wondered ‘Oh great, what did Gingrich do THIS time?’?
Cable is a most ridiculously overpriced service. If it were me, I’d just get the high speed internet and Hulu Plus it or something.
But… Mr. WereBear’s chronic illness means he’s got hours a day, happening at unpredictable intervals, when he has to lie in bed and needs to watch content that is low engagement and constantly available. Anybody floored with the flu who tunes into Lifetime or ESPN (depending on yer tastes and chromosomes) will understand.
In the meantime, yet another ripoff.
I have a full queue of 500 movies. Of those I’d say about 10% are available to stream.
@Unabogie: @Belafon (formerly anonevent): This and this.
I’m one of the people who was likely going to drop “Qwikster” once they separated. I wish more corporations were led by people capable of cutting their losses and reverting a bad decision like this in the face of public criticism.
Yes, it’s several times in as many months it seems like they’ve done something like this. But I respect them a little more for making changes to try to fix it than I would’ve if they’d doubled down with corpspeak about what a good idea it was.
I like Netflix. I use both DVD and streaming. I wasn’t mad when they raised prices; their prices have stayed the same for a long time, as opposed to everything else on the planet.
The DVD shipping to our little semi-rural area is really fast. The streaming quality is great.
Adults in America continue to act like overindulged adolescents who don’t have enough real things to do.
Having movies in your home at all is magical. The convenience and savings and quality are all just fine. I can’t and won’t go miles to a movie theatre and pay those prices. Many theaters are filthy and annoying and have poison popcorn. At home we can control the quality of our experience and be comfortable.
I can’t quarrel with them having to adjust their business, and I admire them for having the guts to backtrack on the DVD decision.
We don’t have TV at all — no cable, no broadcast. We have Netflix and it works well for us. Netflix is one of our biggest bargains.
Well, the Qwikster move was both incredibly bad on its merits – the customers hated it, and it promised to make the service far harder to use and far less attractive – and the implementation was ludicrously bad (a possibly drunk 3 AM email from the CEO? a name drawn from the reject pile of the least imaginative mid-90s dot-com consultants? not securing the URLs for the many likely mis-spellings of the name, nor the twitter handle?). I’m just glad they were able to see sense, and I wish their email were more abject in its acknowledgment that they’d been utter idiots.
They were/are surely eying a tax-free spin-off of their mature DVD business and separating it from their still expanding streaming business. Section 355 of the tax code. Separating corporations without separating business conduct makes this much, much tougher to do tax-free.
Raven (formerly stuckinred)
@Rafer Janders: Yep. We watched “Ship of Fool, The Comedians, the Sandpiper and the Guns of Batasi” in the last 2 weeks. None of them are streamed.
@cleek: The Hudsucker Proxy–I love that movie.
@The Snarxist Formerly Known As Kryptik: No, you are not the only one who thought that. My first thought on seeing it was “he got caught having another affair.”
@The Snarxist Formerly Known As Kryptik:
Yep, thought this was more Newt grifting and/or dementia.
@Zifnab: And none of those choices would have any value next week in other markets.
@Rafer Janders: What’s the benefit of having a near-monopoly (and given the rate at which DVD rental vending machines are sprouting up everywhere, I’m not sure I even buy that) in a dying business? It’s like having a near-monopoly in the horse buggy business 5 years before Ford introduced the Model-A. The only benefit in having that position is that you can sell it at a premium to some sucker who doesn’t get that the model is dying. It looked like that was what Netflix was doing by splitting the company in half like that. Yes, it was a risky move, and it might have failed, but it was still a good move to make given where the market is headed.
As far as the complaints about their streaming catalog are concerned, I have little doubt that Netflix would make everything on everyone’s queue available if they could get the rights to it. Studios are to blame for the lack of availability, probably because they think they want to do it themselves and reap all the profits.
Cris (without an H)
@WereBear: @soonergrunt: @cleek:
You know, for kids.
Listening to their customers and ex customers, that’s what.
We love Netflix. Our dog likes it, too; it keeps us home with him, happy, and out of trouble.
But it’s really not. People forget that there’s two revenue sources in there – the subscription and the advertising. Affiliate fees (what the cable provider pays the network) are combination of the two, but bottom line, it roughly works out that the cable provider keeps the ads and passes along 100% of the subscriber rates.
So what you pay for cable is what pays for show production – writers, actors, directors, post-process – the whole thing – and it’s really quite expensive. For leading shows, you’re in the $2M-$4M per episode range. A season of Chuck costs $75M – $100M to produce (out of total affiliate fees of $30B/year in the US, so those prime time shows are a BIG chunk of the total industry revenue) Now, that includes show advertising and shitty shows you don’t care about and some profits by the studios, but if you pull that revenue, you get no programming, and Hulu simply doesn’t provide any money to the affiliates. If all you watch is Hulu, how do you pay actors? $5M per month would work out to about $3B per year, spread across all affiliates. They could never afford to produce another prime-time show. It’d be nothing but American Chopper 24/7, which is cheap as shit to produce.
Raven (formerly stuckinred)
@CynDee: you so funny
Don’t think it’s dying. What will happen is that as DVDs become rare, then content providers will jack up the price of digital versions. When the cost to stream movies rises to $20 each, you’ll want to hang on to those DVDs.
Villago Delenda Est
Apparently, their customers sent them a message, and, in a truly miraculous happening, they actually paid attention.
From a branding standpoint, splitting the two seemed to be a non starter. I didn’t want to pay more for both so chose the streaming for now and will switch back to the DVD’s when I am tired of the subpar/lack of content. Or I might have picked up both again when I had more money and/or time. Splitting the two lessens the likelihood I (or new users) would continue to identify with the ‘other’ brand. I’m glad they figured it out cause there was
very littlezero chance I was going to maintain a queue on Netflix once they banished me to Qwikster (hate that name BTW).
Oh, and it needs to be stated, ESPN commands the highest affiliate fees by a mile. If we find ourself in a TV market where everything looks like Netflix, there will be no broadcast sports at all – it’ll all be NFL Prime Ticket and PPV. The money simply won’t be there for the broadcasting rights.
I’d think a relatively sports-friendly place like this would be considerate of that fact. I personally don’t mind not being a big football/basketball fan (baseball alone is well suited to radio), but if the NFL/NBA and college football/basketball fell off the free programming, I expect a backlash 10x as monumental as Netflix raising rates by $1. Anything worth having is worth paying for. If you don’t want to pay, don’t be surprised if you wind up with nothing.
@Martin: There’s like 22 minutes of advertising for each hour. I think they’re doing okay :)
And I want the talent to get the money… only they don’t, by and large. We had a recent link to the Simpsons’ voice actors; doing quite well, except when compared to who is getting all the merchandising money.
You make good points; it’s just a ripoff the way it’s structured. I pay a bunch of money to support PTL and reality shows; they are not letting the market really speak, because it’s not like I can make better choices if they are not offered.
@Brian S: Why are you telling people what they should want, based upon your projections of where things are going and how they should be in the future? Is your motto “Put up with crappy shit now despite the ready availability of a currently satisfactory solution because in the future the theorized next greatest thing may have worked things out?” Plan for future developments but don’t discount the current state of affairs (or revenue stream) either and let the fucking customers want what they want, even if it doesn’t conform to theoretical expectations. Hell, Amazon seems to be willing to sell you the bloody DVDs in addition to streaming them.
I think the primary concern is “WTF are so many people obsessed with/addicted to Nexflix?”
I’m tellin ya people, it’s just like with the banks: you let the colossus run your life, and then you get all freaked out when the colossus starts acting weird. What did y’all think was gonna happen?
@Cris (without an H): “Finally there would be a thingamajig that would bring everyone together, even if it kept them apart spatially.”
Well, I think the second paragraph of your post answers your first. Dying business or not, they do own all those movies in DVD form and can rent them to customers in exchange for money.
They can’t, however, stream 90% of their existing DVD catalog to customers in exchange for money because they don’t have rights to do so.
It’s all well and good to be modern! and new! and exciting!, but if you don’t have the rights, you don’t have the rights. The studios can hold Netflix up forever for one price increase after another when it comes to streaming, but they can’t do so when it comes to DVDs. As long as that’s the case, there’s going to be a market for DVDs because there’s going to be no other way to access that content in a cheap and convenient manner.
Yes, but …
What is implicit in WearBear’s take on cable rates is that people want a free ride. They don’t want to pay a fair share, or any share, of content production costs. They want some undefined other to pay that. Alas, as far as I know there is no unicorn that shits out production costs in $500 million increments.
It’s like having a near-monopoly in the horse buggy business 5 years before Ford introduced the Model-A.
But why would you forgo your near-monopoloy in the horse buggy business for those 5 years? Why would you give up 5 years of guaranteed profits now because at some unknown time in the future your market share will shrink?
And it’s not like horse-drawn buggies went away entirely as soon as Ford introduced the Model T. They hung on for years, because lots of people still couldn’t afford cars. So the people in that market still made money.
@burnspbesq: Oh, thanks for speaking for me in such an insulting manner.
I didn’t know your cable service was so brimful of fresh new content. Mine’s about 90% reality shows and reruns.
Dirt cheap, in other words.
Looking to the long run doesn’t quite work if what you are doing today is not working.
Netflix’s split of DVD and streaming would have been fine if the inventory of movies available by the two delivery methods were equal. They are not.
Netflix might have been OK if they offered a ton of first run movies via streaming. They don’t.
And Netflix, and some techies, assumed that customers always chose one method over another. They don’t. Netflix ignored the fact that some people with families get DVDs for kids, and stream some stuff for themselves.
Also, people run up against broadband limits. Streaming may be the future, but both the movie studios and the telcos are throwing up stupid roadblocks.
There is also this. The majority of the movie ratings were based on what came from DVD customers. Netflix was throwing away a big chunk of their value in separating the services.
Bottom line: the new Netflix business model failed because it was based on faulty premises. Kinda like HP’s current death spiral.
And there is also this. The new Amazon Kindle Fire is about to kick Netflix’s ass big time.
Look for a stream of stupid tech articles and podcasts later today talking about how consumers are stupid and don’t understand what is good for them.
Lastly, I have seen some stellar reviews of the Blu Ray DVD release of Ben-Hur. This is more competition, if minor, for Netflix.
Ads don’t deliver a lot of revenue:
A #1 show will attract 20M viewers. That’s $380K per spot, or $16M per hour-long show. That’s maximum. That’s Lost at their peak, that’s Monday Night Football with a hot team playing. And that’s broadcast, so that $16M has to make up for what the affiliate loses by not having cable subs in their fees, but you can’t blame cable here – they’re just a passthrough as required by the FCC, and they keep none of the ad revenue.
A #1 cable show will attract maybe 7M viewers. That’s $2M per hour-long show. That’s also maximum. That doesn’t even cover production for an HBO or Showtime original program. That barely covers production for a USA original. Jersey Shore could live on ad revenue alone. Pawn Stars. Spongebob. That’s about it.
Merchandising is an entirely different argument. It’s a valid complaint – don’t get me wrong, but the entirety of what is wrong with merchandising is orthogonal to how production of shows is paid for. For one, it’s almost entirely dependent on the show already becoming successful in order for merchandising to be profitable, so while shows may be chosen based on merchandising potential, and while they’ll wind up the merchandising engine early, those revenues are almost all after the fact.
Well, the structure was for many years mandated by what technology could provide. There simply wasn’t enough bandwidth to do a-la-carte (cable scales very well as everyone shares the same signal with repeaters carrying it out to your house, VOD scales very poorly as everyone requires an independent stream from end-to-end.) But that’s changed, and new business models are developing, but VOD is still very expensive to deliver but everyone wants it for less. Not gonna happen. VOD is a value-add over linear programming, that suggests it should cost the same or more, not less. Just because web pages are free and come via the internet doesn’t mean that everything that comes via the internet can be free.
What you’d probably find is that PTL and reality shows are HUGE profit centers and generally serve to subsidize the rest of the offerings. Lost needed Dancing with the Stars to give them enough room to make that investment. The Lost pilot cost something like $30M – as much as a medium-budget movie. Good programming costs. The reality shows are subsidizing the stuff you like, not the other way around.
Sorry, this doesn’t sound right at all. There is, for example, the NFL on free broadcast TV. And the revenue from TV and ancillary markets is obviously huge.
And look at college football. Very few seasoned sports journalists have been able to adequately explain all the financial dealings involved, but the NCAA and related entities, and all the broadcasters, seem pretty happy with the realignment of teams and the stupid college post season bowl nonsense. And there seems to be plenty of money for everyone.
However, sports doesn’t lend itself to much of a DVD market, so comparisons with Netflix or the Netflix model don’t really apply.
Interesting point, and of course I don’t watch stuff I don’t like.
One problem I do have is finding stuff I do like… again. One of the nice things about Hulu or DVR (which I don’t have) is the way the different networks move shows around, randomly insert reruns, and start again at odd times and days. I don’t know how people keep track; or why it’s so difficult.
Now that the cable companies have On Demand, it’s actually a better deal that way. This is an investment I can see them needing to reap back, too.
Gotta disagree here. Netflix streaming’s key to success was bridging to the TV via DVD players and game consoles. Without those, consumers would face buying another box, and they won’t do that. People don’t like watching TV on their computer enough to dump the cable in most cases. Netflix promised watching TV on their TV for drastically less than cable. I can’t fault people for taking them up on the offer.
But the Fire doesn’t offer that. Amazon hasn’t pushed for easy ways onto your TV like Netflix has. Yeah, there’s a few implementations out there, but I don’t think the Fire will hurt Netflix any. Hell, the 3-5M 7″ Fire units expected to sell this year are dwarfed by the 50M 10″ iPad units expected to sell this year with a native Netflix client. The 7″ experience, with no TV connection is an individual convenience but not a replacement for what Netflix has promised, and the 10″ experience at worst will be better than the 7″ experience.
Honestly, the only way that anyone is going to get VOD right, and right for the long haul, is to find a way to get consumers to agree to pay an average of $40/mo for it. That can come through a-la-carte pricing, subs, ads, etc. but that $40 has to show up. If it does show up, that’s the ballgame. Cable will die and so will Netflix and Amazon. Whoever cracks that nut wins. Nobody is particularly close yet, though.
The thing that tied me to Netflix more than just enjoying the service was the user interface. I found it so easy to look for films I may not have heard of, or had forgotten. The little pop up description with stars and ratings, the decent guessing algorithms to find similiar films. It’s all pretty sophisticated.
*After* wading through all that artificial intelligence, I decide whether I want to stream a movie, or want it sent to my house. Splitting the services meant that what I watched and searched for on streaming wouldn’t help the algorithms for searching for DVDs, and vice versa.
I suppose after a couple rounds of Netflix going, “Hey y’all, watch this!” to their friends and customers they’re hoping once the dust settles and the EMTs have departed, everybody will have forgotten the fee increases that began the episode.
And if that happens, in a few years biz schools will use it as a case study of how to get away with an unpopular rate increase.
At least that’s how it looks to this non-customer.
Exactly. Which is exactly why splitting the businesses now would be a bad move.
Personally, I doubt whether the DVD business will ever go to zero because of the barriers to putting together (or keeping together for any length of time) a similarly exhaustive library of streaming content. That smaller business may wind up being a better place to be than streaming which may be as impossible to do profitably as running an airline.
Are there a lot of reality shows on HBO, which has lots of excellent, expensive programming.
You are confusing ABC’s costs with producer/program originator production costs.
Also, an idea of the complicated world of TV can be seen in the recent battle over The Simpsons. Fox threatened to cancel the show and demanded that the voice talent take large pay cuts (somewhere in the neighborhood of 45% plus). They also wanted to cut producer payments as well.
The crazy thing is that some of the voice talent offered to take even larger pay cuts, in exchange for a share of the profits. Fox’s response was a big FU.
Ultimately, Fox and the producers came to terms and agreed to extend the show for 2 more years. The voice talent supposedly will take a 30% pay cut, and Fox will keep their profits.
And if anyone can find a rational business model in this somewhere, you are ready to become a studio accountant.
What’s my “fair share” of “production cost in $500 million increments” of stuff I have no interest in watching? I don’t watch “Chuck.” I haven’t found the Simpsons or any other network shows worth watching on purpose in years. I don’t care if some “undefined other” pays for it or not because I don’t care if it gets made. I would buy PPV ESPN (for example), at least at some price point, to relieve the non-sports fans on my cable system of the burden of subsidizing that habit, but I don’t understand what my fair share of the costs of stuff I don’t watch is supposed to be.
Broadcast TV is time limited. That’s the problem cable solves – more parallel channels. How many NFL games per week are broadcast to any market? Between 5 and 7. That’s a lot when there are only what, 16 games? But if your game isn’t among the 5-7? But college football isn’t any different – 5-7 games out of dozens.
College sports took off because of cable. College sports are why ESPN pulls down so much money. ESPN could fill in a ton of other games that the networks just didn’t have the time slots to provide (and tape delaying games is not acceptable) and expand the NFL games by a similar amount. With more ESPN properties, more games became available. If you really want to watch that 3rd tier game, you can. That wasn’t possible before cable. Hell, that 1st tier game often wasn’t available.
Actually, they’re directly related because we’re not talking about DVD anymore, but VOD. It’s the Netflix streaming service that is causing all of chaos. Starting last year, cable subs were falling by half a million per quarter. 2 million per year. That’s almost $1B per year in lost affiliate fees, about a 3% decline. Now the economy almost definitely had a role in that, but Netflix/Hulu/etc had a big role as well. And that $40/mo from cable was replaced with $5-7 from the VOD services. So $120M of that $1B was probably replaced. That’s not going to last long. You keep cutting into those numbers, and it’s just a matter of time before the affiliates run out of money to pay for those sports broadcast contracts and the Pac-10 go shopping for other models, and NFL Sunday Ticket and MLB At Bat have been huge successes.
If things continue in the direction they’ve been going it’s just a matter of time before the mass-market model for sports winds in and gets incrementally replaced with direct-market models. Like I said, I don’t mind this, I’m not going to pay the $350/yr to subscribe to NFL football, but everyone pissed off about having to pay for Survivor or American Idol needs to consider how much they are willing to pay for the stuff they really want, because if they want the really good stuff, they may wind up paying a lot more than they are now.
Netflix is ground zero in this economic battle right now, which is why they’re getting beaten up so badly, and why they’re making such big mistakes. I don’t think they realized the consequence of getting into the VOD market in the manner that they did. If they stuck to DVDs, we wouldn’t be talking about any of this. The economic implications of DVD rentals are pretty narrow. The implications of VOD are massive.
@drkrick: ESPN is by far the most expensive component on basic cable, which is why the battles to move them up a tier are so bloody and public. For my provider, ESPN/ESPN2 would receive over half of all subscriber revenue in a package of about 70 channels. Take ESPN/ESPN2 out of that lineup, add in the broadcast channels which the cable provider is required to offer, and you’re probably pretty close to where you started in terms of cost, and you’ve lost 55 channels including a lot of other weekend sports channels like TBS, etc.
Sports are incredibly expensive because you can’t delay it and generate revenue, there’s no syndication revenue to bake into the model, there’s no DVD revenue, etc. You have to make all of your money at that moment. But sports are why a HUGE portion of the country have cable. Sports are why HD programming even exists now – they’re the ones willing to put the extra money in to make it happen (buying TVs, HD packages, etc.) It’s unquestionably the primary driver for cable, TV sales, HD program expansion, etc. Sports subsidizes all fixed costs and gets subsidized for all recurring costs.
And brachiator has it right – it’s a fucking mess.
@Martin: RE: And there is also this. The new Amazon Kindle Fire is about to kick Netflix’s ass big time.
What? People watch video content on all kinds of devices. People watched stuff on the tiny iPod nano and iPod video screens.
Consider this. When broadcast TV still existed, I knew people who would go out to lunch, but take a small portable TV with them so that they could watch soap operas with their friends over lunch. Few portable devices have digital TV tuners, but I can’t believe that the demand has disappeared.
People watch video content on mobile devices during their commute, while they are at the gym, all over the place. They watch content that they have downloaded or that they can stream. Cable is often an afterthought.
And obviously, there is a huge market for devices that can easily stream video content from a mobile device to a TV with a minimum of fuss. When I go visit my brother at Thanksgiving, I might want to play a movie or TV show that I have on my iPad on his big screen TV. I couldn’t give a rat’s ass about either cable or Netflix. I think we will be able to do this with an Apple TV device. It should be easier.
And services like Slingbox are doing tremendously well, because people have become used to reading books and watching video content on a range of small mobile devices.
Don’t compare the Amazon Fire with the iPad. At least, not directly. The Fire is going after the iPod Touch.
And the Kindle Fire has one big advantage over the iPad. It supports Flash for video. And you can also easily buy DVDs. Not too sure about the rental services. But either way, you have one stop shopping.
That there is a native Netflix client is not really meaningful. I have an iPad, but I have never used Netflix. It doesn’t really interest me. But I use other streaming apps. And I am waiting for the US version of the BB iPlayer.
People just want to watch stuff when they want and how they want. They don’t care about an Android experience, an Apple experience, a 7 inch experience or a 10 inch experience.
Steve Jobs, by the way, understood this. He offered people a way to do stuff and enjoy stuff, easily and elegantly. The people at Amazon understand this. The folks at Netflix are stumbling all over themselves to deal with a problem that they created.
Cris (without an H)
What device do you watch these Netflix movies on, if no TV? Your computer?
Because the longer the horse buggy licensors try to prop up their failing industry, the more they try to fuck you on the licenses for the Model A.
I don’t know why everyone’s avoiding targeting the content providers and focusing on Netflix here. It’s the content providers that raised the price of their contracts by 1000%.
@burnspbesq: Cable might be a better deal if (and that’s a big “if”) ala carte channel selection/pricing becomes the norm.
Let the market actually speak with regard to what programming is of value. I don’t want shopping channels, crap reality programming and lots of other nonsense clogging the dial (maybe I’m not the only one?).
Personal case in point, I would like to get Speed channel. Comcast insists I take their next higher programming tier adding 30 more channels for $30/month. I see that as $30 for 1 channel, so I don’t.
Cliff in NH
@Cris (without an H):
tv’s can be computer monitors too you know. Just plug it in.
They can turn this into a PR coup by renaming the DVD service to “Netflix Classic.” It worked for Coke!
Sure. But the Fire is only a threat to Netflix if it takes away sales of those other devices where Netflix has a native player and replaces them with Fire where there is no Netflix player. And add to that, when you get home, you can dial up Netflix on your TV using a device you already have. You often can’t do that with Netflix. So if I have to pick one service, Netflix will be more flexible. If I’m willing to switch services, I’m still going to use Netflix at home even if I use Amazon on the Fire. Either way, Netflix is unchanged. Remember, Amazon streaming isn’t free – you still need to pay $80/yr for Amazon Prime.
The only way that Fire can materially impact Netflix is if that 7″ screen on a $199 WiFi device is a sweet spot. Then it beats the iPod Touch. If 3G/4G is important so you can watch out of WiFi range, then the Fire is a non-starter. If screen size is important over cost, then the 10″ 3G/4G tablets will win. If portability is more important than screen size, then iPod Touch will win.
Fire will have an impact in many ways – it looks like a solid product that will help Amazon achieve a number of things, but knocking down Netflix isn’t one of them. Having a top-rate interface to the TV is critical to most VOD customers. Only Netflix and the cable companies have that right now. MSs new XBox deal will have that too, but you need a cable sub to take advantage of it (it’s an interesting contribution to the market).
I didn’t suggest that the OS experience mattered here. Just that since there’s likely going to be between 10x and 20x as many 10″ devices with native Netflix players sold each year vs 7″ devices with native Amazon players sold each year, how can Amazon have a material impact on Netflix? Anyone willing to spend the money (and the anticipated sales numbers suggest a lot of people) is going to go for the larger screen to view on. And even if we limit it to the iPod Touch, the Touch will outsell the Fire as well, likely to the tune of 2x or more. And let’s not overlook the 20x-40x as many iPhones and comparable number of Android phones with native Netflix players as well.
Even if Amazon beats their forecast on the unit, they’re going to have to grow really fucking fast to start offsetting those other devices that consumers are choosing – all of which gives them Netflix.
And really, nobody wants Flash video on their device. What’s the point of getting Flash video streaming if your battery doesn’t last as long as the show? That’s why everyone is dumping Flash video. You might still get the video served up in a shitty Flash player on your computer, but if you hit it from your iPod Touch, you get native video in more cases than not. Being dependent on Flash to deliver video will kill you in the current market.
@Cris (without an H): I’m sorry, the way I worded my post was misleading. We have a nice Sony TV we got especially for playing movies.
We don’t subscribe to Cable or fool with tuning in to broadcast television. There is nothing there we want to see that isn’t available on the internet. We use the internet to keep current with the world, and we use a laptop to stream Netflix. The quality is excellent. We have a DVD player for the discs. We watch about five films a week. It’s a huge bargain.
We quit cable years ago because we found the content and the presentation 98% disgusting and massively expensive. The fee went up nearly every month! Likewise we don’t watch broadcast because it’s so much of it is corporate media punctuated by asinine quick-cut commercials showing $40,000-cars we’ll never have, or sloppy middle-aged people choosing a fast-food treat and acting like 14-year-olds. I used to love TV, but to me it’s truly a wasteland I can do without.
@alhutch: I’m the same way, I’d take Speed and dump every version of ESPN. It’d be way cheaper for me, but the folks that would choose the other way round would be outraged at how much ESPN cost. And there’s a lot more of them than there are of us.
I’m not advocating for one model or another, just pointing out that whatever model we’re stuck with will, in aggregate, preserve revenues. No matter what happens – a la carte cable, Netflix, whatever – at the end of the day at least $32B in affiliate fees will need to be generated, and probably more if the result is a significant shifting in revenues from one affiliate to another (ESPN to Nick, or whatever) because anyone that stands to lose in this change will fight it tooth and nail. There may be some savings in the middleman, by getting more efficient distribution, etc, but by and large if you feel that you individually will come out ahead on pricing, then realize you’re going to cost someone else at least what you save, and realize that change may prevent the whole thing from happening. Remember, the content providers have more power than consumers here. They know that consumers won’t opt-out entirely, so they can force models that consumers don’t like. And they can do it for a LONG time. Hell, just look at the cell carrier market. Everyone hates them like Hitler, and yet everyone reliably signs up.
Twas the twit of Elmo smokin’ a doob done did it in.
I had no streaming or DVD interruptions, so I’m good. Investors don’t think so tho as stock has dropped by half over the past several months.
@Arclite: Sure, their business model looks truly fucked. They’re not big/critical enough to bully the affiliates, and the affiliates are pushing against the model – publicly in some cases. Without them, Netflix has no business, even if they have happy, loyal customers.
@alhutch: All ala carte cable offerings would lead to is dozens of channels going under. Without forced bundling the economics of cable/satellite break down rapidly. The shopping channels/religious channels cost you nothing. They pay the cable company to carry them.
In an ala carte system how would shows like Mad Men, Breaking Bad or The Shield come about?
Who’s going to subscribe to channels like AMC or FX when they have no track record in scripted drama, on the off chance that their first forays into it might be good?
There are plenty of cable channels that I would have to think long and hard about paying for in an ala carte system that I’m glad I get as part of my cable package. Would I pay for SyFy when I all I watch on it is Alphas? Probably not. Ditto USA and Burn Notice.