
Netflix Secures Streaming Deal With DreamWorks - allending
http://www.nytimes.com/2011/09/26/business/media/netflix-secures-streaming-deal-with-dreamworks.html?_r=1&hp
======
stephenjudkins
While I'm rooting for Netflix to succeed in the short term, I have doubts
about its long-term viability. Currently, in the media-delivery industry,
Netflix is elbowing out the un-innovative rent-extracting cable TV industry,
which is unequivocally a good thing. Delivering better choices for lower
prices, while consigning cable companies to delivering commodity broadband
access can only help consumers.

In the longer term, however, I fail to see how Netflix can avoid having its
product turn into a commodity. Delivery of digital video to consumers will
only continue to get cheaper and easier. Obviously Netflix has gotten amazing
deals on bandwidth (see their recent spat with Comcast) but other the prices
it pays will only continue to converge with the prices for commodity CDNs.

The only major part of Netflix's business that's resistant to commoditization
is having a huge base of subscribers that allows them to cut deals directly
with studios like Dreamworks. Obviously Netflix is trying to position itself
as a cheaper, better middleman between consumers and content producers than
the combination of cable channels and cable companies. This could be very
attractive to studios in the medium-term, but ultimately why not cut out the
middleman? When (not if) quick, flexible, and easy online payment comes to the
internet, what's stopping Dreamworks from simply charging and delivering the
movie to consumers directly?

~~~
boredguy8
The exception to this was their movie suggestion algorithm. But lately it
seems to be pointing me to their cheapest-to-consume content, not the best
content given my rating history. (I say this primarily because of the
prevalence of old, old movies, of which I am pretty much never a fan.)

~~~
Klinky
Netflix often hid high demand movies from customers on the new releases page.

They would showcase new release movies on their main webpage & in marketing,
but if you actually signed in to your account & looked at the new releases
section you would find those movies either hard to find or missing altogether.

I would not find it surprising that they might tweak their algorithm to direct
people to lower cost content.

~~~
losvedir
Lower cost in what sense? I was under the impression that Netflix didn't pay
per viewer, but rather, licensed the content to stream as much as they want
for a certain time frame. Is that not correct?

edited to add: Here we go. From the Q2 investor conference call -- "For
streaming content, we buy like our industry and pay television and network TV
buys and cable networks, which is you have to commit upfront, and you have to
pay a fixed amount per time period, typically per year, for access to that
content on your network."[1]

[1]
[http://files.shareholder.com/downloads/NFLX/1414867676x0x485...](http://files.shareholder.com/downloads/NFLX/1414867676x0x485796/6a3cf0b6-e73a-4a35-a470-7d9e3ff2785c/NFLX-
Transcript-2011-07-25.pdf)

[Disclosure] I own a bit of NFLX.

~~~
Klinky
I am not sure if it's as clear cut as that.

"The disappearance of Sony’s movies resulted from a clause in the Starz
agreement. According to people familiar with the matter who spoke on condition
of anonymity because contract terms are confidential, it includes an
undisclosed cap, which has recently been exceeded, on the number of people who
can watch Sony movies online."[1]

So perhaps Netflix could tweak their algo to avoid recommending movies that
might have said caps. I have no proof they're doing this specifically though.
Though maybe this cap was on total users rather than on number of views per
title. I do know they would hide high demand new release DVDs in effort to
reduce the demand on the movie, which in theory would allow them to purchase
fewer copies.

[1]
[http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/0...](http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/06/netflix-
users-see-starz-over-disappearance-of-sony-movies.html)

------
kloncks
_Netflix will begin streaming DreamWorks films starting in 2013._

Lovely. See you in two years.

~~~
jonknee
2013 is about 15 months away. Not exactly around the corner, but not two
years.

~~~
jamesbkel
Well, it sounds like it starts sometime in 2013, not necessarily Jan 01. Also,
it sounds from the article like Dreamworks will be slowly rolling out past
titles, so it could be even longer.

------
mitjak
DreamWorks Animation, not DreamWorks. That's a much smaller subset of the
DreamWorks catalogue. Link bait.

~~~
felipemnoa
But it could potentially open doors to the bigger catalog if things go well.

~~~
viscanti
There's a lot of things that could happen before there are any meaningful
results from that. Even if it's initially a smash hit (however that might be
defined), they'd want to see how it does over a longer time span. A year would
be the minimum time before anyone else would be making decisions based on
that.

I also don't think it adds a lot of additional information that isn't already
there. They already have all the Starz content, which they'll likely be
losing. But content owners have a model they can see currently. Adding a few
additional animated films won't likely change much, and it will be at least 2
years before any meaningful results are out.

There's a much better chance that between now and 2 or 3 years down the road,
that something else more significant takes place. Netflix, upon losing the
Starz streaming rights, could be out of business. Individual studios could be
doing streaming on their own, and finding success with that.

------
swanson
Got excited for new content on Netflix Instant -- then read further and saw it
wasn't taking effect until 2013...I am now less excited.

------
antimora
I am still waiting when I can play Netflix on Linux.

~~~
bryanallen22
You can use the netflix extension for chrome. Look in the chrome app store.

Edit: According to rglullis, this is wrong. I have left it for context. Sorry
- I had read something about it, but it appears to not be true.

~~~
rglullis
I'm sorry, but I will have to call bullshit on that one.

I "installed" the app, which only took me to the website. I selected a movie
and got a page showing their requirements page. It mentions "PC", Mac and
Chrome OS.

No love for linux, at least not right out of the box.

------
icarus_drowning
Well, it certainly is nice to see that Netflix's promise of securing higher-
quality content is at least partially coming to fruition.

Also, it is nice to see a content creator finally start talking seriously
about internet streaming versus traditional cable as a means of content
delivery.

------
dafarian
Wow, they're still kicking!

