

Netflix Isn't Doomed - grellas
http://online.wsj.com/article/SB10001424052970204644504576653182551430322.html?mod=WSJ_Opinion_LEADTop

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sirclueless
The fact that media companies are unwilling to let any one company have a full
listing of all movies is one of the major failings of the industry. The
videogame industry has the same fundamental problem but the near monopoly of
the Steam service actually does them some good in my opinion.

The problem I think is rooted in piracy, at least as it is practiced in first-
world countries where convenience is worth more than price. Piracy has several
built-in practical issues, because it is frankly inconvenient to be conducting
illegal business, and DRM provides another inconvenience. But despite these
endemic problems with piracy, it does offer a huge convenience: universality.
The legal movie market is fragmented and therefore a pain to deal with, where
the black market is very universal, with mirrors of content on all the major
distribution channels (torrents, rapidshare/HTTP sites, and USENET are the big
three).

The interesting thing to me is that all three of these distribution channels
have successful paid services springing up around them. There are private VPN
services you can pay for to torrent from a foreign IP. Almost every HTTP
distribution site such as rapidshare has a premium service you can pay for to
get more volume. And USENET has several news servers that retain data for
years and offer direct encrypted downloads. So it is clear to me that people
are willing to pay for the benefits these services offer.

If you line up the pros and cons, I would say that legal services win out on
almost every count except two: price and universality. The success of grey
market services and nearly-universal services in other industries (iTunes,
Steam) tells me that price is not the real blocker, if only movie studios
would get their act together and let distributors license everything in the
world.

I would love to see a world where cable TV providers, digital streaming
services and physical retail services all had access to the entire catalog of
movies and competed on price and convenience. The current world where services
compete with content catalogs and exclusivity just seems unsustainable because
it is worse for consumers in the long run.

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hugh3
_The problem I think is rooted in piracy, at least as it is practiced in
first-world countries where convenience is worth more than price. Piracy has
several built-in practical issues, because it is frankly inconvenient to be
conducting illegal business, and DRM provides another inconvenience. But
despite these endemic problems with piracy, it does offer a huge convenience:
universality. The legal movie market is fragmented and therefore a pain to
deal with, where the black market is very universal, with mirrors of content
on all the major distribution channels (torrents, rapidshare/HTTP sites, and
USENET are the big three)._

I think you're overestimating the effect of piracy, because you tend to hang
out with young, tech-savvy folks. The average Netflix customer would have no
idea how or where to pirate a movie even if they _did_ want to (not to mention
there are _some_ people in the world who aren't completely amoral and as such
wouldn't).

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slowpoke
>(not to mention there are some people in the world who aren't completely
amoral and as such wouldn't)

You're implying that everyone follows the same code of ethics. You might not
agree with it but for some people it's not in the slightest bit amoral to
pirate a movie.

~~~
jahmed
This is the long term problem for content creators. The current generation of
sub-30 year olds have grown up/will grow up in a culture of free things. That
idea is flourishing and is what really should scare content creators.

~~~
slowpoke
>That idea is flourishing and is what really should scare content creators.

The only one scared by this is the content industry, aka the publishers, and
the unfortunate people who believe their propaganda and lies. Free culture is
a good thing. The internet, for the first time in human history, has made the
dream of unlimited sharing possible. Creators will not die out because the
industry that imposed copyright on them in the first place is no longer
needed.

~~~
jahmed
Thanks yes true creators well be fine. Its the content publishers and
packagers that will feel the pressure as consumers find ways around them to
the source.

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wanorris
Honestly, Amazon may have the best streaming solution right now.

I have a Roku box that gets both, though I usually stick to Netflix. I got an
episode that glitched the other day, so I flipped over to Amazon Prime, which
turned out to have it, so I watched it there. I then flipped around a little
bit to see what was new.

The great thing about Amazon is that their streaming library is way, way more
comprehensive. Want something that isn't a part of a Prime subscription? Just
pay a rental or purchase fee and watch it right away, without waiting for a
disk, running down to Redbox, or whatever. Don't have a Prime subscription at
all? Try it for cash for a few times and see whether the subscription fee is
worth paying. And since it's Amazon, they probably already have your credit
card on file, so there's not much to fiddle with.

If they can get the Kindle Fire in a lot of people's hands (and apparently
they can, if the rumors are true), this could be a huge opportunity for them
to leapfrog Netflix and Apple.

~~~
erickhill
Another good thing about Amazon is that, via Prime, you also get awesome
shipping. So for the cost, it is hard to beat.

But, UX-wise, Amazon has a lot of issues.

With their streaming movies, if you leave a program half-way and come back
later, you have to search for it all over again to find it and resume the
program. There isn't a "recently viewed" section or any of that.

The site is also very static (pretty lame content discovery). Not nearly as
compelling as the actual Amazon stores, oddly. It's as if it isn't hooked into
your search history or viewing preferences. At. All. The experience is
painfully mimicking the store experience, but without the typical Amazon
recommendations. It's disappointing, to say the least.

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thematt
I couldn't agree more. The current experience of watching movies on Amazon is
_horrible_. They basically bolted a substandard YouTube like player onto the
existing Amazon storefront UI. It's a horrible combination for watching movies
and I tend to avoid it when possible. I'll check Netflix and see if they have
what I want before I ever go to Amazon.

~~~
w33ble
I just became a paying Prime member, so I got the streaming included now. I
agree, it doesn't feel like a "premium" service. Your description of bolting a
crappy player to the storefront is dead on. If it wasn't included with my
Prime membership, I don't know if I'd pay for access at any level. Hopefully
that experience gets better, having more players in this field sure wouldn't
hurt.

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tomjen3
He may be right that no company will get all the movies/series/etc and the
market will continue to be fragmented.

But if that happens then piracy will kill the industry and nothing will be
able to save them. This doesn't mean that they can survive only if there is a
single company you can buy from -- I believe there is space for a number of
different companies much like there is Spotify, Last.fm, iTunes store, etc
each with a different model for how to provide value to customers -- but that
each company must have all, or substantially all, the movies people want.

Because as long as it is easier for people to find what they want on a torrent
site or on rapidshare or on usenet they will do that. The movie industry is in
competition with the pirates and have no way to beat them on price so they
will have to fight on the basis of convenience (which is a battle they can
will, as illustrated by iTunes).

If they don't, they are doomed.

And if anybody out there is looking for a new startup, may I suggest that you
make a recommendation engine like netflix has but for tv series. The channels
(and especially the bundles of channels) belong to the past. But there is good
value in recommending good quality tv shows to people who may be interested in
them. If Netflix had focused _massively_ on that, they would be in much
stronger position against the rights holders.

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mgkimsal
A bit OT, but what about the concept of "movies" in general going away? This
is something that we've only had for around 100 years - as part of mainstream
society's expectations, it's only a few generations old.

Might we see a major transformation of what we consider 'movies' (both in form
and in content) due to delivery constraints, IP issues and such?

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Shengster
I'm not long on Netflix, and here's why:

1\. Netflix is at the mercy of media companies that control the content. Media
companies can basically charge whatever they want for their content on
Netflix. If Netflix can't afford it, they'll let their contracts expire and
people will no longer get to see the movies and shows they want to watch.
Unfortunately, the pricing hikes made consumers realize that it was extremely
expensive to spend $16 a month to rent 1 DVD a week with streaming, whereas
before at $10 they could justify the cost.

2\. Netflix is in a crowded market with Amazon, Hulu, Apple, Google, and the
media companies themselves. Sooner or later Starz, HBO, Warner Bros, and all
these other media companies may decide to start their own version of "Netflix"
and cancel all their existing contracts entirely. This would be more
profitable for them, and would essentially kill Netflix.

3\. Poor customer relations. The Qwikster snafu significantly hurt their
brand, and a lot of customers (800k so far) have already left their service.
Not only are they going to have to convince their existing customer base to
stay, they need to convince more customers to join, as to drive revenue
growth.

4\. Netflix is predicting that its combined loss of customers and European
launch will push it into the red next year where it may stay for all of 2012,
according to a letter to its shareholders. <http://goo.gl/3VdED>

~~~
nobody3141
I doubt that anybody 'doubled up' and now pays for both the DVD and streaming
option. The reason for the DVD service to exist at all is to do with Hollywood
accounting and the way the licenses are counted - the idiocy of this has been
discussed here before.

The studios can't start their own streaming service simply because they do not
have the branding they think they have. This isn't the 1950s, nobody thinks "I
must sign up for MGM's service they have all the best action movies". HBO and
BBC might manage to make separate pay-for services but are more likely to
simply agree an extra cost deal with Netflix in the same way they sell an
extra cost package to cable. Does HBO really want to get into the writing and
supporting software player business?

Then the studios have a problem that they are in direct competition to their
main customers - the cable companies that would be delivering these shows over
IP. Can we say serious throttling?

Sooner or later somebody in Hollywood is going to manage to get the childproof
top off their Lithium tablets and realize that iTunes hasn't quite destroyed
the music industry.

~~~
zacs
Isn't HBO already in the "writing and supporting software player" business
with its HBO Go apps? It's already circumventing business like Netflix today.

~~~
dailyrorschach
Kinda. In order to get HBO Go you need to be a subscriber, through your cable
company. And not ever cable network is providing access to HBO Go, though I
hear Time Warner Cable, is close to doing so.

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jeffool
Doomed? No.

Doomed to be TBS/FX instead of the cable giants that they were initially
pitted against? Quite possibly.

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DrHankPym
If I can't find the movie I want on Netflix, I torrent it. So yeah, I don't
think Netflix is doomed either.

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rhplus
I'd like to see a live comparison of content available on Amazon Prime (free
streaming) versus Netflix, Hulu and any other subscription services. Has
anyone built such an interface? Am I just describing something that Boxee/XBMC
arleady does?

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rkudeshi
It's not exactly what you're looking for, but Clicker.com is probably the
closest.

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sethisa
Netflix's biggest issue in my mind is it's content licensing costs. They have
gone from under $200M to nearly $2B in just a year. These costs will become a
greater proportion of their overall cost structure, especially as competitors
vie for the same digital content. The real winners here are the Sony's and
Warner's of the world.

Distribution eventually gets commoditized, content is king.

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chimeracoder
Despite the recent downward spiral of NFLX, I'd agree that Netflix isn't
doomed - it just has to seriously re-evaluate its branding and messaging.
Their success as a company will hinge on their success in shifting the meaning
of the Netflix brand (Qwickster was clearly one attempt at that).

Netflix is down, but not out, and I wouldn't be surprised to see it bounce
back (maybe not to quite the same peak, but still much higher than it is now).

