

While Its Streaming Service Booms, Netflix Streamlines Old Business - danso
http://www.nytimes.com/2015/07/27/business/while-its-streaming-service-booms-netflix-streamlines-old-business.html

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WalterBright
My Netflix dvd queue is full of titles that are not available on streaming by
anyone. I'm certainly not going to drop that service - I've seen a ton of
movies via it that I've wanted to watch for decades but couldn't find.

Just because something is not a growing business does not mean it is not
highly profitable and valuable.

But I am sad that Netflix's dvd selection has declined substantially. It's no
longer "if it's on dvd, Netflix has it". If they continue shrinking the
selection, I may wind up dropping it.

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asimilator
> I've seen a ton of movies via it that I've wanted to watch for decades but
> couldn't find

It blows my mind how much stuff (old stuff! especially non-blockbusters) isn't
available anywhere streaming. I can't imagine why you wouldn't release a lot
of that stuff and make a bit of extra money on those old titles.

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jfb
There's the obvious reason -- that digitization is expensive, relatively
speaking -- but even more so, the rights to a lot of those older movies are
not well defined. Many of those older movies are under contracts that have no
provision for digitization, and in many cases the rightsholders who could
grant a license are unknown. It's a mess.

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e12e
> There's the obvious reason -- that digitization is expensive

Um, if it's on DVD it's already digitized.

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jfb
It's unfortunately not that simple. Nobody uses DVD as a mezzanine format,
partly because 4:2:0 MPEG-2 at DVD data rates is unsuitable for further
manipulation, and partly because the DVD rights holders may not hold the
rights to republish. It's a mess.

~~~
e12e
I just meant that in the process of producing a DVD, all the material would
have to have been digitized. I'm sure for some releases the production
companies have gone bankrupt and/or the files are lost -- but I'd think that
once digitized the masters would be kept around?

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jfb
You'd like to think so, but for the most part, the digitization and prep work
is done by post houses or specialist digital distribution services, and the
intermediates, which cost money to preserve, are almost always discarded.

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extra88
"'If you cut back on service, you are going to lose your subscriber base,'
said Hank Breeggemann, general manager of Netflix’s DVD division[...]"

I wonder what it cost them in subscribers when they ended Saturday deliveries
a year. They arguably reduced the value of their disc subscriptions by 16-17%
without altering the monthly fee.

It's not surprising it's still profitable, based on some back of the envelope
math, they're number of subscribers is only 26% (20 million to 5.3 million) of
their high but their employee headcount is 17% of its high (50 hubs x 100
employees vs. 33 hubs x 25 employees). Not accounted for is how many of those
subscribers has, like me, opted for a cheaper plan (e.g. 2 at a time from 3 at
a time). My hunch is the costs of adding discs (and replacing damaged ones)
have gone down (fewer subscribers need fewer discs plus disc costs have
remained steady or even gone down) while adding streaming titles has probably
gone up as there are more competitors including ones who will pay for
exclusives.

I hope it survives pretty much as-is, at least until the total streaming
market can compete in terms of catalog size. 93,000 DVD titles is about an
order of magnitude greater than any one streaming service's catalog and most
of what's in one streaming catalog is available in another.

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dexterdog
So of the 93000 say about 80K of them are not currently streamable. At
reasonable compression for streaming those would take about 160TB to store.
Are they just not ripping them because of legal issues? Does piracy just get
to win every argument? Hell, Netflix could write a client and let people rip
them and upload them back to Netflix for some kind of Netflix points.

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chadgeidel
Yes, legal issues. They (Netflix) do not have the rights to rip or stream
these movies.

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sdenton4
I like to hope that a couple of the massive companies that have run against
these kinds of legal problems have gone ahead and secretly ripped everything
anyways, and sent it off to a secret Foundation, to weather the onset of our
new intellectual property dark ages...

------
skmurphy

        “Never mistake a clear view for a short distance.”
        Paul Saffo
    
        “We tend to overestimate the effect of a technology in the short run 
        and underestimate the effect in the long run.”
        Roy Amara
    

I looks like they have mastered funding the transition to the next generation
--yet to be profitable according to the NYT article--by preserving the DVD
business as a cash cow. See also

[http://www.skmurphy.com/blog/2011/10/11/learning-from-
netfli...](http://www.skmurphy.com/blog/2011/10/11/learning-from-netflix/)

[http://www.skmurphy.com/blog/2011/10/14/learning-from-
netfli...](http://www.skmurphy.com/blog/2011/10/14/learning-from-netflix-
lenny-greenbergs-response/)

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WalterBright
"Only about 10 percent of the companies that appeared on the original Fortune
500 in 1955 remain on the list today."

The conventional wisdom is that companies in a free market grow until they
dominate the planet. The reality is that larger companies tend to become
dinosaurs, too big to adapt, and fade away.

~~~
adevine
That statistic is misleading. Much of that change is the result of mergers.
Just take a look at the list from 1955:
[http://archive.fortune.com/magazines/fortune/fortune500_arch...](http://archive.fortune.com/magazines/fortune/fortune500_archive/full/1955/)
. Just looking through the top 25, the vast majority still exist in some form
in the Fortune 500 today. Only a few have flat out gone out of business (e.g.
Bethlehem Steel) or been booted from the Fortune 500 because the overall
industry shrank (e.g. pretty much the rest of the steel companies).

Being in technology, which changes so rapidly, it's easy to think that "small
companies overtaking big companies" is the norm, but if you look at more
"static" industries, the leaders back in 1955 (e.g. Exxon Mobile, Kraft,
Proctor and Gamble) are still the leaders today.

~~~
WalterBright
Few companies actually go bankrupt. They just fade away, and then the remains
get bought (although such are technically called 'mergers'). I don't think
that is the same as continuing and expanding dominance.

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superuser2
The DVD business may stay around for a long time, if only because it's the
only cost-effective way to rent a great deal of content. Movies that want $6-7
for rental on Amazon or iTunes can be had on DVD for a fraction of the
$7.99/month subscription.

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nimos
As competition for streaming rights heats up it seems like a good way for
Netflix to offer a large selection and differentiate itself in the market.

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dexterdog
When I see people talk about competition for streaming rights all I can think
of is a future of fragmented distributors that mimics the broken past. In that
future piracy continues to be the sensible choice.

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arh68
I cancelled Netflix a while ago. When I go to netflix.com to browse the plans,
there's almost no mention of DVD! It's streaming to either 1, 2, or 4 screens.
The _Add DVD plan_ is found under Your Account, not on the front page.

The upcharge for Blu-Ray delivery is still there. I don't know who still
watches DVDs, but I suspect it's the same people paying for AOL.

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tedunangst
I watch DVDs. I don't pay for AOL.

~~~
rasz_pl
You steal AOL service? Shame on you.

