

How the movie studios caused Netflix’s problems - jfruh
http://blogs.reuters.com/felix-salmon/2011/07/15/how-the-movie-studios-caused-netflixs-problems/

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protomyth
I still think Netflix is one of those transitional businesses not unlike Red
Box. It will probably survive to be the place for indies and second tier
studios, but I believe that Disney, WB, or Fox have the amount of content
needed to create their own On-Demand internet service.

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jerf
At which point they'll be bitten by a low-grade network effect; the value of a
streaming service to me goes up as its content goes up. I'm much less likely
to use the Disney streaming service, the WB streaming service, and the Fox
streaming service (and the HBO and Showtime and Discovery and...), than I am
to join one that has them all... and the studios are smoking crack if they
think I'm going to _subscribe_ to all of them, or even just manage user
accounts for all of them. This needs to be _easier_ than what we have now, not
harder, and we're sure not going to pay more for less (in absolute dollar
terms, anyhow).

Not to mention each of the studio streaming services will suck compared to the
one created by a company living and dying on the streaming itself.

Oh, and I haven't even mentioned DRM. The studios have demonstrated a certain
inability to judge the DRM tradeoffs when left to their own devices. Maybe the
studios could get away with running their own download-of-not-DRMed-files, but
if they've also got to create their own DRM and make it work on all the
rapidly-multiplying number of streaming devices out there, it'll be even
worse. TVs that can receive ABC but not CBS... hooray for the 21st century!

They may try... I don't deny they may try. But it won't go well.

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jfruh
I agree that "a TV that gets ABC but not CBS" sounds ludicrous. But look at it
another way. Isn't one of the longtime geek rallying cries about cable "I just
want to pay for the channels I want, not the whole bundle?"

Plus, with the gradual move to an on-demand model for entertainment, it
strikes me that "channels" as we know them (where something specific is on at
any given time and you don't control that) will become meaningless. Why
shouldn't we be buying content direct from the creators (or from the company
that funded its creation, more accurately) rather than worry about what
"channel" it's on? It seems weird to think about paying Disney directly for
Disney content but that's only because we're used to paying for channels.
Maybe in the future we'll have choices to buy either unlimited streaming or
individual shows from the companies that make them -- and your monthly bill,
taking inflation into account, will probably be roughly what you'd pay for
cable today. (What, you didn't think things would get cheaper, did you?)

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revorad
_Why shouldn't we be buying content direct from the creators (or from the
company that funded its creation, more accurately) rather than worry about
what "channel" it's on? It seems weird to think about paying Disney directly
for Disney content but that's only because we're used to paying for channels._

I prefer buying hand blenders from Amazon, instead of from Braun, because when
it comes to the online shopping experience, price, delivery and customer
service, Braun will not come near Amazon's quality in a hundred years.

As content creation is further accelerated, aggregators will have a more and
more important role. The internet is creating more specialisation in commerce
overall, not reducing it.

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jerf
"I prefer buying hand blenders from Amazon, instead of from Braun, because
when it comes to the online shopping experience, price, delivery and customer
service, Braun will not come near Amazon's quality in a hundred years."

That is exactly what I was trying to get at, only your explanation actually
successfully conveys the idea. Thanks.

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mkramlich
On a related note: I have an idea/vision for a next generation movie theatre,
but I decided to put it on the backburner for a while, perhaps forever, due in
part to all the legal & bureaucratic obstacles related to the MPAA and
studio/theatre system. But there are so many obvious ways to make theatres
better than what we have today.

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sliverstorm
I dunno, I kind of like movie theaters as they are. You'd really have to wow
me to sell me on "next-generation movie theaters"

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nitrogen
How about being able to get a group of people together to watch a new movie of
your choosing on demand, in relatively small private rooms, on equipment far
better than you could afford?

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sliverstorm
How will you address the large jump in showing costs brought about by "small
private rooms"? I don't want to pay $500 for a movie ticket.

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nitrogen
Via digital projection on smaller screens, with movies stored on a very large
high-speed NAS. If, and it's an insanely huge if that I have no intention of
actually trying to address, Hollywood studios would be open to a licensing
model that preserves their per-ticket revenue, it should earn them the same
amount of money, and save theaters the expense of showing a movie to an empty
auditorium with a power-hungry high-brightness bulb. Hence, ticket prices
should be roughly the same.

You could further appeal to discerning consumers and directors by building in
an automated calibration system that adjusts for changes in the projector bulb
and matches specifications before every showing.

Note: I'm not the top-level poster.

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xbryanx
Can anyone back up his claim that Netflix is paying the studios based on
subscribers? This seems really unlikely. Surely they are tracking watches and
paying a fee based on that. I am pretty sure this is how streaming music
services work.

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sp332
I don't think that's true in this case. It looks like Netflix negotiated a
very low, flat license fee, with the condition that not too many people were
going to have access to the videos. Once the number went above a certain
point, a new kind of contract had to be drawn up to track the number of
viewers and pay more.

