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Mike Cohen
Netflix
on Sep 19, 2011 at 5:41:28 pm

The news today is somewhat expected, that Netflix is taking steps to get rid of its once successful DVD by mail rental program.
http://marketplace.publicradio.org/display/web/2011/09/19/am-netflix-announ...

Users have been complaining about rate hikes and lack of streaming content vs by-mail content.

Personally, I am more likely to stick with the by-mail subscription over streaming, if I have to choose - unless Netflix streaming offers everything currently available on DVD (RedBox is basically king of new movies).

The studios, it seems, have never liked video rental and assume consumers will simply buy movies. However a consumer who spends $18 to buy a movie they have never seen, and one like, say The Green Hornet, that one would likely never watch a 2nd time, is just silly.

Talk amongst yourselves.

Mike Cohen


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Stephen Smith
Re: Netflix
on Sep 19, 2011 at 5:54:04 pm

The problem with Netfix streaming is that the selection is super small. And they lost their contract with Starzzs which offered their best and newest movies. I hope they have an ace up their sleeve. I love streaming, it takes about 3 seconds for a movie to start on my TV and it looks great. I like streaming and I prefer that method I just hate the lack of options.

How much does HBO cost? I just got that for free for three months and I wold take Netflix over HBO. At least with streaming I can pick a film I want to watch and watch it when I want...if they have it :-). With HBO you have to wait until they play it which can be in a week.

I got Blockbusters for free for the next three months and I love it. I just got it so I don't know a ton but I get Bluray's and I can exchange it unlimited times at a blockbuster store if I like. They get new releases sooner then Netflix, but for popular titles like the new X-men movie it looks like they have it but you'll have to wait for ever to get it by mail. I think it might be easier to treat this like a unlimited rentals in store card or something. My first movie was Thor and it came in a package just like Netfix except it was blue.

Stephen Smith
Utah Video Productions

Check out my Motion Training DVD

Check out my Motion Tutorials


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Tim Wilson
Re: Netflix
on Sep 19, 2011 at 9:46:58 pm

[Stephen Smith] " With HBO you have to wait until they play it which can be in a week."

HBO On Demand my son. I'm pretty sure that every cable system that has HBO offers the programming on demand. The cool thing is that this exposes goodies like the HBO Documentary series -- really great stuff that you can easily miss because it doesn't have any teenage vampires in it.

(For me, as you know, it's not an either/or -- I love teenage vampires AND documentaries, but it's easier to find the former than the latter.)

You should also check HBO To Go. Most systems that carry HBO will ALSO allow you to stream on demand HBO shows, movies, specials, you name it -- to your phone or tablet (iPhone and Android for sure...don't know about others) or on your computer.

The Netflix price increase was enough for me to drop them altogether, but I TOTALLY get why they're spinning off the DVD business. When they announced that they were entering Canada as download ONLY, the CEO said that if the company were starting today, it would have nothing to do with DVDs. Strictly streaming.

Like you, Stephen, I think that their streaming-only selection is thin enough that I didn't consider keeping that for a minute. Maybe someday after they throw in hard with the studios to focus on building the streaming library, maybe....but I'm not thinking that that'll be anytime soon.

In the meantime, I'm using Redbox and on demand on TV, and watching for stuff for less money. If I ever sign back up for a streaming service, I suspect that it will be Hulu+ before Netflix. As the numbers show, they really blew this.


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Mike Cohen
Re: Netflix
on Sep 19, 2011 at 10:16:30 pm

Here you can read Reed Hastings being apologetic for dropping the ball on customer service, and why they are splitting up Ma Disc into two companies.
http://blog.netflix.com/2011/09/explanation-and-some-reflections.html

I'm with Tim - Netflix streaming is maybe worth $3/month on its own - assuming you like watching Anime and basically the three worst movies of a given actor or director. If it is tv series you like, prepare to watch only some seasons unless you really like watching 24 over and over again.

It is my understanding that Netflix has to make a separate contract for each and every streaming title which is why new movies ain't gonna happen (even redbox has to wait 30 days for new releases) and they can only afford movies that nobody likes.

There are exceptions. They have the JJ Star Trek, Toy Story 3 and other newer better movies. Their new interface is nice, but it simply lets you spend less time clicking and more time realizing there is still nothing to watch (ouch)!


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Tim Wilson
Re: Netflix
on Sep 20, 2011 at 8:11:47 am

Now THIS is funny: they picked the awful, awful name Qwikster without checking to see if maybe there's a Twitter account already with that name and already belonging to some foul-mouthed kid with an avatar of Elmo smoking a joint or something.

Well whaddya know, the name @Qwikster DOES belong to a kid with an avatar of Elmo sparking up, and he DOES have a pretty foul mouth.

Worth reading if you're up for a laugh at Netflix's expense.

And then I just saw this tweet from Reed Hastings. Not helping, bro.


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Mike Cohen
Re: Netflix
on Sep 20, 2011 at 11:00:33 am

Now that's funny. Let's see Reed get out of that one. @qwickster should be making some coin on this. Netflix...? Remember them? They were once this big successful company that helped put 50,000 local video stores out of business then they New Coked themselves out of business. Apparently success on the internet is not something that lasts forever. Pets.com anyone?


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Tim Wilson
Re: Netflix
on Sep 20, 2011 at 2:21:13 pm

From the LA Times:

In total, Netflix has lost 26% of its value, or about $2.8 billion in market capitalization, over the last two days.

After announcing a controversial price increase in August, Netflix had told investors to expect that it would gain 400,000 subscribers in the current quarter. Instead, chief executive Reed Hastings said yesterday that it expected to lose 600,000 by Sept. 30.


That was five days ago, when the stock was at $155. It has now dropped another $20, opening the day at $135, from a high of $305 in July. I don't know what the total market cap is now, but it's what, 45% of what it was in July? Down 30% in the last week, says Market Watch.

And I just noticed it's down another $2 since I started this post!

Admittedly, the swings over the course of the day don't mean much. It's not like they're going away today. Their market cap is still north of a billion dollars, and they still have 24 million subscribers. They're still entering new markets, and are installed on more devices than anyone else.

My opinion is that the ONLY thing stock price measures is the confidence that investors have that the company is on the right track. And look! They think Netflix is not on the right track!

The story is a long way from over, but it's hard to believe how thoroughly they messed up a brand that was so shiny just a couple of months ago.


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Scott Roberts
Re: Netflix
on Sep 20, 2011 at 2:44:44 pm

This is a really interesting thread. Never having used Netflix myself, I don't have much of an opinion on the company or its workings, but I am surprised that they are crumbling like this. Some things are better left untouched I suppose.

I used to be a heavy renter (when there was a non-abandoned Blockbuster across the street), but as of late I've mainly just been theater / cable TV on Demand movies/ purchasing Blu-rays I know I want / purchasing used DVDs for less than $5 of things I haven't seen.

I actually enjoy(ed) going to the video store and walking around and browsing, as opposed to looking at things on the internet. Maybe it makes you value your selection more? And in a day and age where I can get chicken wings delivered to my door in 15 minutes via online order, it's not all bad to leave the house for a few minutes from time to time. I guess Redbox makes you get of your couch, though.


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Mike Cohen
Re: Netflix
on Sep 20, 2011 at 4:02:14 pm

I mentioned New Coke, as I so often do. Over the years there have been just a few major screw-ups by ginormous companies.

Coke introduced a new taste which they were sure the world would love. They hated it. Obviously their market research vendor screwed up some data. This was after the Pepsi Challenge - a campaign in which tables were setup outside grocery stores so consumers could do a blind taste test to see which cola they liked best. Pepsi obviously scared Coke enough to make Coke do something drastic, and in hindsight, silly. Not sure how much Coke's stock price suffered at the time. But even after New Coke came and went, Coca Cola remained a huge company and now they offer so many non-cola products as well.

Remember the McDLT? Neither does anyone else. McDonald's introduced a new sandwich with much hype. But like Quickster, they picked a weird name. Everyone bought the sandwich and wondered where the bacon was. The idea was to keep the cold ingredients cold and the hot ingredients hot until ready to eat. Everyone knows that the best part of fast food is how soggy everything gets! Nobody cared about the McDLT and it too went away. But McDonald's is bigger than ever.

So maybe Netflix/Quixkster will get over this hump. Their new international customers may make up the difference of the lost US customers.

Reed Hastings may be booted by his own board - that happens to the best of CEO's Reed. Don't seat it. You have a lot of money. $500,000 salary plus $35 million in stock, even at a reduced value you are stinking rich.

I'll stay a member of both services because we like watching DVD's and the streaming selection, while not awesome, is there in a pinch on Roku and I use it on my laptop while traveling.

This too shall pass.

Mike Cohen


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Scott Roberts
Re: Netflix
on Sep 20, 2011 at 6:34:27 pm

Here's a small +1 for the theater goers like myself:

<a href="http://i1.creativecow.net/u/150514/zz40ccd55b.jpg"><img src="//i1.creativecow.net/u/150514/zz40ccd55b.jpg" border="0" /></a>

C'mon, admit it, there's some truth to it!


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Tim Wilson
Re: Netflix
on Sep 20, 2011 at 7:19:16 pm

This hasn't come up in a while, but I'm a big fan of Redbox. True on the website of course, but also with the app: you can look at all the Redboxes around you, and see what tasty tidbits are lurking. For example, the one at the local Walmart has Gladiator on Blu-ray.

And at any of them, you can reserve in advance. A buck a day for SD, buck fitty for Blu-ray - no problem.

The problem with watching movies in theaters is that you have to wear pants. At least most movies.


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Mike Cohen
Re: Netflix
on Sep 20, 2011 at 9:27:44 pm

The Twitterverse is now buzzing about the kid with the Quikster handle - will he have a big pay day? You get banned from Twitter for selling a handle, but I'd take 100 grand to never use Twitter again!

Some are suggesting Netflix created the Qwikster Twitter name in advance to get some free viral marketing. Doubt that.

Redbox is, by the way, not a franchise. All kiosks are owned and operated by the parent company. How is Redbox making any money is my next question.

Let's say the machines cost $10,000 each, plus the fee Redbox pays the grocery store to park it there, plus internet connection, plus cost of DVDs, plus paying the guy to service the machine one or two times a week, plus those acetate sheets they change out monthly for the lighted signs, plus machine breakdowns, plus the master server that communicates with the machines, plus the admin staff.

Hard to believe, but Redbox posted a $47 million profit in Q2 of 2011 against about $364 million gross. I guess the postage they save against the Netflix model is substantial.


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Tim Wilson
Re: Netflix
on Sep 21, 2011 at 3:56:47 am

[Mike Cohen] "Redbox is, by the way, not a franchise. All kiosks are owned and operated by the parent company. How is Redbox making any money is my next question."

My curiosity aroused, I looked it up.

While Redbox is NOT a franchise, there are in fact a number of companies who will sell you your own kiosk, as part of a franchise. Poke around the internet. It won't take long to find guys who'll charge $40 for your own DVD kiosk starter kit...which might not be as stupid as it sounds. The idea is to target independent groceries and specialty stores that might not generate enough traffic for Netflix, but could generate enough for YOU because of the lower cost.

I couldn't tell the exact price of a box, but these guys are typically looking for "individuals who can invest" $18-20K as a startup cost. This would include a lot of incidentals I assume, training, deposits and such. It also looks like you might have to buy your own disks...presumably from the company at the top of the franchise pyramid, so they make a fortune even if you make nothing. Given that, Mike, your $10K estimate for buying a box may be about right.

Interestingly, I found a franchise web forum where people are speaking frankly about costs, revenues, etc. Income is being reported in the $400-1000/mo range, which for a $20K investment, maybe not so bad....although you can find a lot of used machines out there, and many of the people who are most enthusiastic also have machines to sell. Hmmmmm......

Web forums. You just can't trust those sneaky bastards.

Here's the business model for Netflix: the average transaction is $2, which includes BD rentals at $1.50 and games at $2. Also, only about half of people return a movie on the first night. 500-ish disks per kiosk, disks viewed 15-20 times before being replaced (often, with the next new release), 28,000 kiosks, etc.

Even assuming no Netflix effect, and no growth in the market, multiplying that $364 million over the next four quarters, we're talking about $1.5 billion gross in the next year, with profits approaching $200 million.

I had seen several analysts predict in 2010 that Redbox would peak in 2011, and struggle for relevance in 2012. I'm thinking that that may have been premature -- not that anyone could have foreseen Netflix so thoroughly shooting itself in the weenie.

I'm not being much of a wizard to predict that there IS a Netflix effect, and that the market WILL grow. Not forever, which is why RB has branched into games starting this summer...and is rumored to be working on a streaming service!!! They're presumably taking careful notes right now...

Hey, and a tidbit: Redbox started as a McDonald's subsidiary. They were trying to come up with an idea to draw people into the stores, where they'd buy burgers and fries to enjoy with their movie. Or something, but the idea being that the movies would drive new traffic into McDonalds stores -- whereas the company found that the boxes were generating an independent revenue stream, which they then wanted to maximize: put the boxes where foot traffic already exists, rather than wait for people to drive to 'em.

Whatever else McDonalds is good at is, they're the world masters at studying traffic patterns to find the best place to set up shop. They're also good at buying in volume and minimizing distribution costs.

Coinstar then bought in a major interest, thinking (rightly, it turns out) that they could leverage their existing relationships with grocers to maximize efficiencies to place boxes in locations with the right amount of TRANSACTION volume, and not just raw foot traffic. As you can imagine, with 28,000 boxes, and several locations with two boxes (more? I've only ever seen two), finding the RIGHT 15-20,000 locations is a big part of the key. And indeed, Redbox is the largest part of Coinstar's revenue these days.

Anyway, I see these guys as potentially having a big bump in sales.


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Mark Suszko
Re: Netflix
on Sep 21, 2011 at 4:01:13 pm

I love Redbox. How do you go wrong for a 99 cent rental. And I'm sure at that price point, some renters are lagging a day or two to return it and not caring.

I've never joined netflix. I was interested in how deep and obscure their catalog was, because new releases, you can get anywhere. I really want oldies and indies and oddities. But I cringed at paying amonthly fee regardless of how often I rented. I'm just too frugal for that kind of deal.

I still won't mess with streaming movies, my connection speed and older computers just can't handle it. So for me it is Redbox and Family Video for cheapr rentals of the new releases, and Letting my DVR hunt thru all the channels I get on u-verse for the rest. And for really obscure, I find a used disk or VHS on Amazon.


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Stephen Smith
Re: Netflix
on Sep 21, 2011 at 4:12:48 pm

[Mark] I've never joined netflix. I was interested in how deep and obscure their catalog was

I signed up a year ago and their DVD catalog is amazing. They had everything I was looking for. If they didn't they at least had a place where you could put it in your list and when they got it you would get it. I rented Door To Door which is a movie no one has heard of. Lots of old Black and White classics. After a month my account has been on hold. Did I mention that I think that it is awesome that they let you put your account on hold. But yeah, I'm more of a rent a movie every once in a while, maybe two a month so the Redbox is much more affordable. But they don't have Black and White movies. As for the streaming side of Netflix which I guess is now the only side of Netflix, very small selection. A lot of it is crapy movies I have never heard of.

Stephen Smith
Utah Video Productions

Check out my Motion Training DVD

Check out my Motion Tutorials


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David Roth Weiss
Re: Netflix
on Sep 22, 2011 at 1:55:34 am

[Tim Wilson] "The Netflix price increase was enough for me to drop them altogether... Like you, Stephen, I think that their streaming-only selection is thin enough that I didn't consider keeping that for a minute."

Until I saw your words in print above I hadn't really though much about canceling NetFlix altogether, but I think you're right.

Now that I think about it, I spend hours perusing titles on the streaming side, just looking for something good to watch. So, if I can just find that one DVD of theirs I misplaced, Netflix may be history. Losing it on my Apple TV will be a bear, but that's life. Right?

Thanks for the idea Tim.

David Roth Weiss
Director/Editor/Colorist
David Weiss Productions, Inc.
Los Angeles
http://www.drwfilms.com

Don't miss my new Creative Cow Podcast: Producing Episodic TV with "24" Producer Michael Klick:
http://library.creativecow.net/weiss_roth_david/Podcast-Series-1_Michael-Kl...

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


Creative COW contributing editor and a forum host of the Business & Marketing and Apple Final Cut Pro forums.


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Tim Wilson
Re: Netflix
on Sep 22, 2011 at 3:52:38 am

[David Roth Weiss] "Losing it on my Apple TV will be a bear, but that's life."

Apple TV, hmmm? I confess I haven't seen the appeal since I don't rent or buy video from the iTunes store. How has that worked for you?


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David Roth Weiss
Re: Netflix
on Sep 22, 2011 at 4:45:49 am

[Tim Wilson] "Apple TV, hmmm? I confess I haven't seen the appeal since I don't rent or buy video from the iTunes store. How has that worked for you?"

An interesting topic actually, at least it is when you ask me to stop to think about it.

First, let me say, I did not personally seek out Apple TV; it was a gift. I actually had very little idea why it even existed when I initially received it.

When I first plugged it in and realized it was NetFlix enabled, I thought it was perfect for me, because I had a NetFlix account. However, I was pretty much relegated to the DVD side of things without a great way to view streaming movies, etc.

Well, it didn't really take long for me to realize that NetFlix streaming was okay, but really quite limited in terms of selection. And, as I said earlier, I'd spend hours searching for something good at times. But, it wasn't until I read your post that I really thought about getting rid of it. I weighed the balance, so to speak, and realized I'd never really got my money's worth out of NetFlix anyway.

BTW, Apple TV does make it simple to stream my work related video and audio files from my computer to essentially any HDMI equipped TV in the house, with iPhone control if desired. And, speaking of the iPhone, you can also play videos and audio from your iPhone wirelessly to your Apple TV. In that regard, that it's part of my home Apple computer web-based universe.

Bottom line is, it's possible that I won't be able to live once NetFlix is no longer part of my little Apple TV universe, so I may have to bring it back. But, who knows?

Also, BTW I have never once rented a movie from iTunes. Sorry Apple!!!

David Roth Weiss
Director/Editor/Colorist
David Weiss Productions, Inc.
Los Angeles
http://www.drwfilms.com

Don't miss my new Creative Cow Podcast: Producing Episodic TV with "24" Producer Michael Klick:
http://library.creativecow.net/weiss_roth_david/Podcast-Series-1_Michael-Kl...

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


Creative COW contributing editor and a forum host of the Business & Marketing and Apple Final Cut Pro forums.


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Mike Cohen
Re: Netflix
on Sep 23, 2011 at 7:49:12 pm

Once news like this jumps from web forums to mainstream media to a late night talk show, you know it is important culturally
http://teamcoco.com/video/netflix-apologizes


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Tim Wilson
Re: Netflix
on Sep 23, 2011 at 8:13:14 pm

[Mike Cohen] "jumps from web forums to mainstream media to a late night talk show"

Great stuff!

Don't forget that the Conan guys are big-time COWboys. They're here all the time, and have written some wonderful articles for the COW Magazine, and entries in the COW blogs, as well as other forms of participation.

In fact, it was just about 4 months from the time that we ran an article in the COW Magazine about Conan's transition to Final Cut Pro that the same guys worked on the famous video about FCP's new problems.

Besides, I think of Conan as a step away from the mainstream, and he probably does too. :-)


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Mike Cohen
Re: Netflix
on Sep 23, 2011 at 8:51:07 pm

While Conan was shooting in NY he lived about 10 minutes up the road from my office. He was often seen at the local grocery store or convenience store. Now our local celebrity in Rob Zombie who lives just off Main St near a cemetary oddly enough. Dustin Hoffman and Mia Farrow live within a stones throw though they don't do their own shopping :)
Mike


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Mike Cohen
Re: Netflix
on Sep 23, 2011 at 10:05:31 pm

Back to Netflix talk. Reed Hastings posted this amusing status on his Facebook page:

"In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them."

So the guy admits that he needs to hire a new PR agency. Oh well, certainly more interesting than following the Presidential race.

Mike C


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