So many great things on the web cost less than a single cup of Starbucks. Yet, I myself am so hesitant to pay for them.
On my landing pages I design at work, I'm increasingly trying to communicate this via comparisons("less than a morning Starbucks trip"). Another one is showing a dollar bill to communicate that for less than a dollar a day, they will get _____.
For a service that we were charging $10, we had 3% conversion rate.
Then I showed an actual picture of a $10 bill to show how inexpensive this is and we doubled conversion to 6%.
I increased the price to $30 and showed a one dollar bill, an equal sign, and what they would get for a dollar a day. The conversion rate is 3%. Overall, we make $30 more per 100 uniques to that page than at $10 price(we make $60 at 10, $90 at 30).
It seems promising though not totally conclusive in terms of increasing conversion rates. The point is, spending a dollar on the web to me seems much more difficult than spending a buck on a Crunch bar. The efforts of my landing page experiments are to align online spend perception with retail.
(numbers rounded to nearest % for purpose of this post)
I've had it UP TO HERE with services that allow me to subscribe with one click and then make me go through a half-day long ordeal of phone calls to outsourced customer service people (who earn bonuses based on convincing you not to leave the service) in order to cancel.
Making it obvious that I can leave at any time just as easily as I joined is a huge greasing agent for getting me to actually put down money to try your service. It is a shame so few sites/services do this and most go with the short-sighted trap-em-in model which hurts the industry as a whole (since it makes people like me far less likely to use any non-essential services just to avoid the potential of a cancellation PITA).
Let me know and can click 'cancel' anytime, no strings, no hassle and you'll probably get me on impulse purchase. Don't : Good luck getting my money.
Tivo, on the other hand, will make you cry before they let you cancel their service. Can't do it online, and it's a minimum of 20 minute phone call. I've had to do it twice over the years and it makes me really reluctant to turn on Tivo ever again.
It was fun to that the same companies who made cancel-ling impossible would call me up to tell me that billing had failed.
I sent all of the calls to voicemail and I sent a letter to the collector (via certified mail with delivery receipt) that said "RE: account number XYZ; this bill is erroneous, do not contact me again." I haven't heard from them since.
My health insurance denied my coverage for a Dr's appointment ("pre existing condition") a month or two after the appointment. I had moved by then, and apparently the mail didn't get forwarded or something. The dr's eventually turned me over to some California collection agency who then wrote letters to the same address, with the same result. They did leave an incoherent, mumbling voicemail once, which sounded like a telemarketer (hence I ignored it).
To my eternal horror, my credit score dropped from 762 to 630 in June. Over 130 points, over an $80 bill. This means I went from "higher score than 86% of Americans" to "higher than 24%".
It has utterly destroyed me. I have no credit anymore. I've been too scared to even apply for another credit card (I only have one), even though "you're supposed to every N years", for fear it would drop my score even further. I have a wife, and our credit prospects went from "could not be better" to "completely, utterly screwed. Good luck if your car dies. Also, good luck getting any kind of AT&T service, Internet service, etc etc when you move again."
They showed no remorse at my situation. The lady assigned to my case even directly hung up on me when I expressed annoyance about her not attempting to contact me more... Thoroughly... Before she decided to ruin my family's financial life. I immediately called back, which rang and rang until reaching her voicemail. I contacted her manager, who said that the lady assigned to me was the final authority on my case, and had not acted inappropriately by hanging up. Nor did they care that the mail hadn't reached me. The worst part was, I had the money the whole time. I would have paid.
Don't take bill collectors lightly. They'll break your family's financial knees over $80, as they did mine. (Edit, clarification: they will report your bill as "seriously past due 90 days / account in bad standing" or some such, which will destroy your score at all 3 of the credit bureaus; hence, the whole system will break your family's financial legs.)
Depending on your situation it may be less expensive than what you would pay for a high-rate auto or home loan, etc.
I don't work for or know anyone that specializes in this but had a friend get 4 different claims removed over the course of a year this way.
(I'm not sure who the "they" is, hopefully not the credit bureau :(
It seems unlikely that the credit bureaus would listen to me over Cal Coast Credit (the collectors).
Also check out these:
http://www.bargaineering.com/articles/how-to-fight-debt-coll... (note that this site is now owned by Quinstreet so caveat emptor)
Since you're dealing with a small valid debt -- the first thing to try is the Right Thing. Call the Dr's Office -- not the collections agency -- offer to pay if they will take the bill back from the collections agency. Whether they can do that depends on their arrangement, but for a small Dr's office they probably can. After that, you may need to contact the credit bureau's again, but it should go much better.
If that doesn't work, then you need a VALID complaint for the bureau's. Any discrepancy between the truth and what's on your report is worth trying. If the date is wrong, or the name of the company, anything. Keep trying.
This last part is my opinion, but I don't think you should EVER pay to the collections agency. They will not remove things from your report because you paid. If you ask, then they know they have you over a barrel, and will try to get more money out of you. Pay the original company.
EDIT: Another great weapon is local state law. Collection agencies have to abide by the law of their state, and the law of your state. I'm in Texas -- our laws are very strict on collectors. Your agency is in California -- I believe their laws are strict too.
I haven't paid the collectors.. I've been so disgusted with the situation and their behavior.
Again, thank you so much for your time.
Collector offered to pay and clean up the records.
After going through some doubts (what if collector lie about clean up?) we did pay and within weeks credit score returned back.
If my car dies, I won't be able to get anywhere, because I can't get a loan for a new one.
When we move to a new apartment, they won't allow us to have Internet service. I am not exaggerating in the slightest. AT&T U-Verse already denied me once in the past, before I got my score to 760 --- they refused me service. Completely. No alternatives. It didn't matter to them whether I had $10, $1,000, or $10,000 in the bank. The computer told them "unknown risk", and so they would not do business with me. There were no alternative internet providers. I would have been completely screwed, but my wife (who was my fiancée at the time, thankfully; credit score of one person will reflect on both of you after marriage) was approved.
We will not be able to get a house, if we choose to. We might not even be able to live in a specific area we want --- apartment complexes check your credit before allowing you to live there.
All over $80, due to the messed up health insurance system. Blergh.
I sincerely hope you're able to get things sorted. Thanks for the explanation
Other places, like in Denmark for instance you are by default considered a trust-worthy customer and only if you start not paying your bills does it affect your ability to get a loan etc.
In the Netherlands we have the "Burea of Credit Registration" which registers most debts, storing:
- start date
- expected end date
- actual end date
- type of credit
- miscellaneous notes
Note that this only tracks loans to individuals with a duration longer than 3 months and over a certain minimum amount.
The basic idea is that everyone who has not failed to repay a loan is considered creditworthy, actual loans are based on the above info, income (plus certainty of employment) and collateral.
The idea being that Nigerians usually have vowels on both ends of their family names.
But, all I hear about this model from my customers is complaints. It's a pain in the ass for them to pay every month, or they hate paypal, can't they just give me a credit card, etc...
It's possible that most people feel the way you do and those people just sign up and don't say anything... but I dono.
I wouldn't think that a comparison like that would work.
For one thing there are
many people who feel they are pissing away
money on Starbucks, or feel
some guilt (I myself spend about $4.00 per
day and sometimes twice that.
That's at least $1500 per year. I don't want
to be reminded of that, especially when business
(So you are making a comparison to a potential
sore spot. You want a positive association. Comparing
to Starbucks but without mentioning price might
be an example but that wouldn't make sense
for your product, right?)
Now, to sell it's product, Starbucks (or any premium
brand) doesn't make comparisons to what other things
costs. They make you feel special in some way
by the product or by the experience or create
some value that justifies the price.
Making comparisons is good though if
you are saving people money.
Have you tried raising the price and offering an unconditional
money back guarantee?
"Cancel at any time and owe nothing".
That seems to work with many things I've seen that cause
people to be fence sitters as long as the price is high enough.
Seo book does that (p1 for seo and search engine optimization)
The reason that digital goods _seem_ more expensive is because the result we get _is_ less valuable to us as human beings. It's hard to pay money for things that leave you exactly as you were before - sitting in a chair, looking at a screen.
If that was true, you'd get paid to smoke and eat fast food, since they have a negative impact.
Or you may have less headaches from your finances.
We've literally turned pricing around: even $1.99 seem like too much for an iphone game... when you realize that too many $1.99s will turn into $20 or more dollars.
But I agree, money for services online feels very different from money for product, whether a good deal or not.
You know what doesn't have trouble selling online? Sex. Anything from escorts to live cam shows to porn. Why? Because that's another direct, physiological pleasure we've had for billions of years.
Now tell me, what kind of web services compete with eating and fucking in terms of what people really want?
It's the same thing where if you add up all the things you are supposed to do each day that only take 5 - 10 minutes, you end up with like three hours worth of stuff. Flossing, meditating, abs, showering, etc.
Also, with food, even if it is terrible you can still eat it. It's a no/little risk investment.
I see you've never been to Friendly's.
My $.02, but I think it's why it's easier to buy a big mac than Rdio.
Netflix perhaps should consider transitioning from a consumer-facing service to a white-label technology provider, developing things like the recommendation engine, rental and streaming platform, etc. and licensing to media companies as the basis for their several services. Unfortunately, I think the unified collection in services like Netflix is going to go away as media companies' greed drives them to try to take their own slice of the pie, probably resulting in fewer subscribers all the way around and potentially a resurgence of brick-and-mortar video rental, where, it appears, media companies still are not interested.
All that said, $300 was grossly overpriced for a company whose entire existence depends on the benevolence of a handful of major media producers.
Hmmm... because it's so easy to do that well? Their arrogance would be amusing if it wasn't so brazenly stupid.
How is it that Jobs and Apple could do iTunes successfully, but Netflix's neck is under Hollywood's boot?
Netflix can only offer a relative few movies without the approval of content holders, mostly only those that are older than my grandparents. They don't even have the option of reverting to classics from the 40s, 50s, 60s or 70s.
The hope is that the dramatic demise of Netflix will raise awareness and visibility of these issues, promoting IP reform.
I'm generally all for government regulation as needed but this seems absurd. Why would any film company produce movies anymore? People (un)happily pay a lot more for the content today in other mediums. We're going to force the film industry to charge them a lot less to prop up Netflix and other streaming video services? Again I have to go back to the simple fact that Netflix has always been selling a fantasy and their troubles today are totally self inflicted. They convinced people they could spend an insanely small amount of money to get a huge amount of value/content. Netflix is almost a ponzi scheme.
The problem is that the content holders don't realize who their friends and enemies are. They worry about the web, but when a solution to a lot of their issues arises, they want to charge them right out of business.
my 2 cents...
Compulsory licensing already exists for music. Something similar could be done for movies. It may not fit in an $8/mo streaming plan, but the change would allow anyone to set up a streaming site as long as they pay the compulsory licensing fees.
If this were true, those studios would go out of business and more cooperative studios would rise up to replace them within a few years.
> $300/share is certainly not something to shirk
The important metric is market capitalization (share price multiplied by number of issued shares). Netflix's market cap is an optimistic $5 billion. Apple is $377 billion, equal to 75 Netflixes.
What is going to really hit Netflix hard is the entire Starz library disappearing from Instant.
This is true, but the content providers are also between a rock and a hard place, but don't seem to realize it. A generation of kids are growing up knowing how to get content for free, but the low cost, convenience, and value add of netflix is worth it if you aren't poor.
I still find it much more convenient to head over to TPB (or another tracker of my choice), find a torrent of whatever I want to watch, download (and share) it, and then be able to play it with my favorite media player - as many times as I want.
I don't see what value a streaming service is supposed to add over a local copy. It's a waste of bandwidth as soon as you watch something more than once, and the quality will never reach that of a local copy.
By the way, I'm not exactly poor. Asserting that their financial standing has anything to do with the reason people pirate is a confusion of correlation and causation.
The interesting thing for Netflix as they raise prices will be finding out where people's threshold is for paying for the convenience and licitness of Netflix versus downloading a torrent instead.
That depends on your watching habits. I maintain a backlog of things to watch which I regularly refill. That also prevents me from wasting time on impulsive decisions - I plan ahead on what to watch. Besides, you can also use direct downloads to get the same advantages (almost instant playback) than streams.
>And if you have "unlimited" bandwidth, then the additional streams don't really matter.
I talking more about the big picture. The extended usage of streaming is, or at least will become, a burden on the infrastructure. It's unneeded traffic. It's the same as the push towards cloud storage - insanity, and not only from a security and privacy point of view.
(In addition there's all the petty stuff you have to deal with when it comes to the content industry. From branding requirements, to arbitrary limits in video resolution, to who can encode what how and where etc. There are too many lawyers, too many spoilt brats and not enough people who actually care about the product)
Starz will be going away in Feb 2012, a few months from now. Dreamworks will not be coming online until 2013. Thinking Netflix's stumblings have been completely contained within the last quarter may be a bit foolhardy.
Except I have netflix and I am paying no more than I used to, and I don't think that my situation is unusual. The percentage of people who were impacted at all by the price change that chose to discontinue service is some number larger than 4%.
Others seem all over the map:
Apple trades at 14.6x earnings
Amazon trades at 105x earnings
Microsoft trades at 9.87x earnings
So with Amazon, you have a denominator that's growing, and a numerator that's depressed by the investment in growth. That results in a very high PE.
MSFT and Apple, by comparison, are great companies but the market isn't expecting them to grow a lot (esp given how big they already are.) They're priced at a level where the market basically expects their earnings to stay steady going forward.
30X earnings is still not cheap for a tech company. It's in a spot where you'd have to look at the growth prospects, etc. to decide if it's a good deal.
PE makes the most sense if you're comparing very mature companies with similar size, growth and operating metrics. If that's not the case, it's not very useful.
Apple is spending a lot on infrastructure, but they're in a lower competition, high margin business. 38% margin IIRC. (yes, there's competition. But Amazon's competition is anyone selling anything, and Apple's is anyone who's managed to make a good smartphone.) The market hasn't been expecting Apple to grow for years now based on PE, they've been under 20 since the 2008 crash and growing their earnings like crazy. Their PE at the low point was 11ish, and now it's 14ish, less than the historical SP500 valuation.
For Comparison's sake, last quarter, Apple earned 6.8 billion. Amazon's net sales were 9.9 billion. Pretty soon, I'd expect Apple's profits to be bigger than Amazon's sales.
Something's not rational here. Might be me. Might be the market.
Amazon's gross profit ran north of 20% last quarter. (http://www.google.com/finance?q=NASDAQ:AMZN&fstype=ii) They're a dominant player in both online retail and cloud services, they're now providing cloud services to government entities, and they're growing like crazy. They're hiring like crazy and that's driving down their net income (I think they hired like 30% of their employees in the past year.) The market clearly believes they're on their way to double or quadruple their business over the next few years as more shoppers go online and more services go to AWS.
Apple is doing great, but they're 4X the size of Amazon in terms of market cap, and arguably at their "peak" in terms of everything going their way. They're going to keep growing, but they're already the largest company by market cap... are they likely to double? The market doesn't seem to believe that. Is that right? I don't know... it just seems to be what the pricing currently indicates.
Edit: It's also worth noting that spending on infrastructure does not have the same effect as spending on employees. Infrastructure costs are spread out over the life of the equipment, whereas payroll is expensed as incurred.
Amazon's cloud services are small, looking like estimated 750 million this year vs something like 40 billionish sales for the year. Their expenses look roughly consistent on a yoy basis, the last couple of quarters are pushing up the r/d spending, but that's possibly the difference between quarterly revenue (strong variation within the year) and a constant increase in r/d. That might be shaving a bit off, but it doesn't change the nature of their business. Amazon makes most of their money selling other people's physical goods. They mark them up. They are competing on price with WalMart, Target, and the wholesale club stores. On the other hand, they're competing well with local businesses by shipping stuff for free and providing a consistent customer experience.
They're totally different companies. My rational expectation is that Amazon would be a low PE stock, and Apple would be high. I'm not going to short things waiting for the market to come around to my sense of rationality.
There's an earnings quality argument here as well: As a consumer electronics company, Apple's long term value is predicated heavily on their ability to stay "on trend" and keep delivering hot new products. Amazon doesn't have that pressure - whatever's popular, they'll be selling, and earning from things like government contracting are fairly stable as well. You get more market cap per dollar of earnings if those earnings are more likely to persist long-term.
I'd like to own amazon stock for the long haul, I'm just not into spending quite the premium that the market wanted recently. If they get beaten down enough, it'll be time to buy.
Those two companies are quite the opposite from each other. One tries to lower prices as much as possible the other tries to charge as much as possible.
1. Content producers control Netflix's ability to succeed; they could either support significant fragmentation across multiple service providers (allowing many entrants/competitors and driving up prices for their content) or distribute directly (eliminate middle men altogether)
2. Multiple competitors are or could potentially price much lower than Netflix streaming based on totally different business models; Amazon subsidizes streaming to drive sales in their core business and Google could do the same using an advertising-based model
3. Last point here is pretty subjective, but I didn't think Netflix was a likely takeover target by the majors (i.e. key competitors), especially given that Hulu is also on the block; Google already has platform, users and device-level distribution through YouTube and Amazon has much the same, in addition to already profiting from Netflix's growth (through AWS)
I had problems making a long-term case for NFLX and the blunders of leadership further eroded my confidence. I'm not sure the stock is truly worth about 1/3 of what it was a few months ago, but I'm still not buying it.
That being said, the business model is doomed. They don't control the content, so they are essentially a technology company. Their technology is great, I had them for a few months, but unless they own the content they will continue to get gouged by content providers. It's a no-win situation for them.
The major players and insiders don't get out after the earnings release, they get out weeks before during the distribution phase. Most after-hours action is algo-bots and retail investors.
The real action starts tomorrow morning, so get your popcorn ready!
The way insiders work is like this... If they know they need to get out, but can't due to SEC insider rules (you can't sell a stock about to tank "just because", without getting in trouble later on), they take the first public opportunity to do so... On the release of any public bad news, that way their asses are covered.
If you grabbed 500 shares of NFLX in AH and it opens at 91 that could be an easy $2500. Super high risk though YMMV.
While Apple continues to defy the pundits, it _is_ difficult to see their profits become, say, 5x over the next ten years (since they already rake in $100B+ in revenue). Also, one could legitimately argue that Apple has real competitors in every business they are involved in (PC makers, Android, Samsung, HTC, etc), and that their markets are inherently saturated (of course, one can argue otherwise too).
Meanwhile, I suppose people see more growth potential in Amazon, because the ebook market itself is still growing, and their EC2 service is coinciding with the growth of hosted deployment of services. At the least, I can see how it's easier to trick yourself into thinking Amazon will have a stronger growth trajectory (it probably helps that Amazon's revenues are somewhat smaller at ~$30B). It also helps that Amazon has become a monopoly in their core business of online retail (with perhaps ebay being its main competitor), and application hosting seems (to me) a duopoly between EC2 and Rackspace.
I've long switched to itunes or Amazon when I want to watch movies because they tend to have the movie I want, when I want it, and I can download the whole movie before watching, thus not having to deal with netflix's lag-burdend craptastic streaming service.
As for his internet connection, that probably should be Netflix's concern. Most people aren't going to go through the hassle of changing their ISP for Netflix & it would be rather silly to expect him to continue paying for a service that doesn't work with his ISP or his viewing habits.
Netflix needs to be more aggressive with ISPs & content providers. They've seemingly rolled over time & again to ISPs & content producers while irritating their customer base.
Being a network-geek, and having been really bored one weekend, I took my macbook pro, and my girlfriend's macbook air (both of which have this problem) to a cage at equinix that I'd built out for a customer a few years ago. That network is equipped with a pair of cisco 6509's with sup2-msfc2s (old gear, but perfectly adequate for the task at hand). Each router has 3x 1gb uplinks to different providers (internap, time warner, and level3) running BGP. All of three ISP's peer directly with Netflix's AS. The problems persisted whether I was behind my routing, or statically routing by grabbing an IP on the /29 stub network each provider gives me to establish the bgp connection).
I tested both from behind my routing, and for fun, from my testing subnets (the stub networks) which statically route through their respective uplinks. Plenty of bandwidth, no mid-level ISP to insert QoS wankery. Same problems.
As for owning the movie, did that even come up in my previous comment? If so, then forgive me, it's not something I care about. In the rare instance (3-4x per month) where I want to watch a movie, I just want it to work. I don't want it to pause every few minutes to see a "buffering" screen. That's three steps backwards.
The commonality between both laptops is that they run os x( one on snow leopard, one on lion). I suspect silverlight is the real culprit, but I don't care. The solution would be to allow customers to buffer large chunks of the movie (20-30%) or download the whole movie before playing. Instead Netflix (probably due to being hamstrung by their agreements with content providers) tries to be too clever with variable bit-rate encoding and ruins the viewing experience. (even one pause is unacceptable in my book, let alone the 5-10 I often had per movie).
Whenever I discuss this with others, some people have similar quality problems, some people claim it works perfectly making me wonder if it's platform specific. Out of curiosity, are you running Mac, Windows, or Linux?
Also, the silverlight client has ridiculously bad volume control, I never quite understood why that is.
That said, I'll probably cancel because there's nothing I want to watch anymore.
So maybe I'm in the minority or maybe I'm not but I dropped netflix streaming and probably won't be going back unless cable or fiber internet comes to my area.
Contrary to the way people seem to act, entertainment is neither a right, or a requirement. I get by just fine without movies or television shows.
I ride more, play board games, and read more.
Essentially, I figured out that it was costing me $16/movie I watched, and that was before the price hike. So I cut it out, and given that I was watching on average, a movie every 2 months, I haven't noticed the difference. (and what's more, that's an average, and there was much more activity in a couple of bursts early one.)
Their big error for me was reminding me of the relationship between the monthly billing and how much I got out of it.
FWIW, this is the second time I've cancelled netflix. They'll probably get a third chance, if I ever feel like watching movies again.
I just use hulu.com and other similar sites; Mac Mini connected to my TV.
Paradoxically, the unlimited movie buffet might be their undoing. There is a limited number of movies that are truly excellent and worth watching. Once you go through those good ones, you're left with the crap. Having unlimited watching quickly moves you from the good stuff to the crap, and then you cancel your subscription. Neflix faces a scarcity disconnect: its unlimited model says there is no scarcity but out in the real world good movies are still scarce.
Maybe there's a ton of stuff that I don't "need" to watch, but I can always find something interesting. I really don't consider myself a huge movie lover either.
I watch about 2-3 movies and 2 TV shows a week though so it does take me a while to get through my queue.
It's not the same user experience as a TV, but for me it's better. It allows me to watch/listen to shows/movies in one tab while reading articles, instant messaging friends & other things within other tabs.
RedBox for Blu-Ray.
Netflix made the catastrophic mistake of reminding their customers how much they were paying for their service at the exact time new content was back on television ... then did it again a couple weeks later. They couldn't have executed any worse IMO.
In my case, it was so rare that I got DVDs that it wasn't worth the cost of continuing that. I've just dropped rented DVDs from my viewing all together (though there's also a Redbox that I go by every single day so that's an option).
As for streaming, most of what I want to watch I can also get for free via Amazon Instant with my Amazon Prime account, which I would be paying for anyway and the occasional movie or show that isn't included free evens out to no more than I was paying for Netflix.
I also realized that I would watch a lot of TV shows on Netflix and then buy them on DVD/blu-ray at a later date, so I just buy the DVDs/blu-rays, which requires a little more patience (box sets are expensive so I don't buy them everyday) but it turns out that waiting a month or two has no significant impact on my life. ;)
Shows that are currently airing, some documentaries, kids movies, etc. we watch on Hulu for free. They only offer the last 5 episodes of the season on the free account, but if you don't get behind, that's all you need.
Besides, I like having the physical media, even though it's not the most efficient, and I don't think I'm alone in that. I think it probably appeals to a lot of consumers.
Anyway, it doesn't really matter if they become obsolete in a year. The ones I've purchased aren't going to suddenly stop working because the technology has moved on and the players will be around for a long while for this reason. Heck, you can still buy a VCR for about $40 and VHS tapes have a much shorter life than a CD. When the players start getting hard to find or too expensive, it will be a simple matter to transfer the contents of said disks to a hard drive.
I can get a lot from my library. While I don't get to always choose the timing for inter-library loans, I can get a season of television for two weeks at a time. With Netflix, I just get individual DVDs.
Some of the things I want to watch are already online for streaming like South Park. There's a lot of content on Hulu as well and network sites can be overlooked as sources of content.
I think the price hike made a lot of people think about how they used Netflix. When it was a combined service, people thought "oh, I'm getting this interesting combined service" and ended there. Now people are seeing $16/mo for 3-DVDs at a time and wondering. In order to get to the $1/DVD level, you'd have to get 4 per week. I think a lot of people didn't have that high a velocity of DVDs. You get one shipped to you on monday, it arrives tuesday, I find that there's usually at least 2-3 days of it being at my house between finding the time to watch it and forgetting it in the morning, it gets into the post on thursday or friday, gets to Netflix friday or saturday, and basically you've got a week turn-around time. And if you're getting multiple out at a time, it's hard to watch that much content - and watch it consistently month-to-month. Likewise, I think that people ran through a lot of the streaming content. I also think that the on-demand streaming just doesn't allow me to find things well. It keeps showing me the stuff I've already seen and things it thinks I'm going to rate as 2-3 stars. I understand that Netflix went to this less-search, more-browsing interface because their streaming catalogue isn't complete, but it keeps showing me things I don't want to watch and on rare occasions I've had friends tell me about things I didn't know were on there.
So, I think people have been taking stock of Netflix. Netflix raised their prices a mere 9 months prior on them and then again. 3 DVDs plus streaming went from $17 to $20 at the start of 2011 and then from $20 to $24 at the end of summer 2011. For me, there's a genuine feeling that these price increases might continue. I mean, if Netflix goes up another 40% over the next year, that's getting pretty close to "$40 shitcable". Likewise, I surveyed my other options and found them better. I can get a whole season of TV at a time from my library for two weeks. No worrying about how quickly I get disks back into the mail or being annoyed by not having the next disk. New releases I can get from kiosks the night I want them and drop them off on my way to work the next morning and only pay $1. A decent amount of programming is streamable online. Maybe that isn't for you. It's working nicely for me.
I have no hard feelings for Netflix, but I find this works better for me while being cheaper. Their streaming collection held my interest for a while and then began seeming like the re-runs of shows in the 6-8pm time slot - sure, they could be good shows, but they weren't necessarily what you were looking for. For me, Netflix solved the problem of rental stores charging me $5 for a DVD. For basically that price, I could get 3-DVDs at a time. Now I'm finding that I can get a $1 DVD from a kiosk (and can often get coupons for those machines) and grab it when I want on my way home. My library can provide me with deeper selection and it costs me nothing (I have to pay the taxes whether I use it or not) and I don't feel as on-the-clock as I do with Netflix. If I return one I didn't watch, well, I can get it again some other time and haven't lost anything - which isn't the feeling I get from Netflix.
I'm not saying they're a bad service or it shouldn't work for you. I just think there's increase competition from cheap, kiosk-based rentals and that people have been taking stock of how they use their Netflix and finding it a bit lacking. I mean, if you've kept the same DVDs home for a month and haven't watched them, that isn't Netflix's fault, but it does mean that you aren't enjoying a lot of value there. A price increase simply brings that to your attention and makes you think about eliminating it from your expenses.
Is Netflix so at the whims of content providers that their model is so much different? It seems like a completely broken business if they can't find scalable ways to make their content providers money.
Netflix doesn't do that, though. There are no channels to speak of, so there is no middleman to negotiate with, there is only the content providers who see you as small peanuts when you're little and a looming, direct threat when you're big.
The way Netflix deals work (at least from what we can gather from public articles about the subject) is that Netflix pays a fixed cost for x streams of y content from z provider, with a time expiry for the overall deal. Once the collective user base has used up that streaming bucket or the time has expired, Netflix has to re-negotiate to fill it again.
In other words, in 2005 when Netflix only has 500k subscribers and online video is impossible to monitize, handing them a multi year exclusive deal with a 5 million streams for $100 million (pulling these numbers directly out of my ass, just to be clear) is no big deal, you just made $100 million on something that was formerly worthless, good for you.
However now it's the year 2011 when advertisers are paying better money for online ads, online viewing is exploding and eating into your traditional sources of revenue, and Netflix is riding their 2005-era deal all the way to the bank. Now letting them get away with that deal is viewed as tantamount to content theft in the eyes of the providers. Suddenly to secure the same deal you got for $100m, will now cost you $500m. Multiply that by every content provider in the industry, and you can plainly see why Netflix is stuck between a rock and a hard place right now.
I did notice that the ones who were really outraged are running tight on money. One of them works and goes to school full time so an extra $8/month after tuition, rent, even though it's marginal seems like a LOT and for no additional benefit.
It's so bad. Do they actually think that this UI is functional, or is there some kind of internal fear to question it?
That's when I hit the 'sell' button, personally.
In order to obfuscate the entire business model and tie up legal battles, content providers consider streams to an iPhone, an Android device, a PC, a Mac, a PS3, a blu-ray player, and an internet TV to be completely different services - and the content providers want different rates and pricing to each device.
A stream is a stream is a stream is a stream! (...imho)
This is the major reason that Netflix hasn't yet been able provide an open streaming API and the real reason TV hasn't seen the explosive changes that music and mobile phones have seen over the past 15 years.
Almost all video services feel ancient when you're watching them - the user experience is marginally better or improved over what our grandparents were watching 50 years ago.
Where is the bottom line streaming my Twitter lists relative to the genre I'm watching? Where is the onscreen chat with my wife when we're in different cities when our favorite show is on? Where are the annotations on movies from friends, celebrities, and critics? What did my favorite sports writer think of the last play?
Why is the biggest screen in the house so dull? Why can't I buy once and play anywhere?
TV can and should be so much more, but content providers would want $2/user for every incarnation of each feature I described above - because to them, a stream isn't just a stream isn't just a stream isn't just a stream.
I was lucky that my father did not follow my advice (otherwise he would have killed me, eheh) and now I see the problem. As a subscriber of their streaming service, it is always very difficult for me to find something interesting in their catalog. I am also a subscriber of Hulu and I use Hulu daily for all my TV shows needs. When I want to watch a movie, Netflix does not offer me anything interesting, Hulu does not have a big catalog and I end up getting DVDs from Red Box.
People always say that in an ideal world you'd have only one provider for streaming movies, but I actually see this going the other way...as in multiple providers (e.g. HBO) that stream their own content. I don't think this affects the user experience as meaningfully as people claim. I think people in general are used to multiple providers and are much more willing to accept it. Just look at how many apps people have on their iPhone. Plus it's just a lot easier to play with the content providers in a more vertically integrated model.
One path that I would wish Netflix to keep going down is becoming a distribution channel for foreign movies.
I have a subscription but am not really the person who uses it at home and for the fist time in ages tried using it last night and couldn't find the movie I wanted, the "instead of" recommendations were ridiculous, and all the "new releases" were just totally lackluster.
Have I missed something else beside the Qwikster debacle? Or is what it's showing me algorithmically based on what my wife and kids are watching?
If not, I can see why people are canceling in droves.
Given that the majority of the 'leaves' will do this right at the front the next quarter will give you an idea if this is going to be the end of Netflix or whether they just managed to substantially improve their margins.
I think it is too early to call.
Try cancelling your cable as fast as you can with Netflix.
The reality is that cable companies are starting to suffer from Netflix and the likes of it. Their slower decline will come to a surprise to many.
That said, my wife and I each have our own streaming accounts and I also have blu-ray delivery on my account, and Netflix is not losing our business: we really like the service.
Also, with their price increases, I don't understand why the stock took such a big hit.
While I don't fit in that category, I do expect to watch whatever the heck I want. I no longer have any tolerance for television commercials or waiting until next week for a new tv episode (might as well wait until its over and watch the whole season.)
I'd think settling somewhere between 30-40/shr. is a good premium. They have to have multiple pipelines of revenue aside from "streaming non-recent movies and tv shows."
Here's a strategy they can try: If they can score some day-after-airing TV shows a la Hulu and have them available for 30 days, then moratorium to let the studios "monetize" the episodes in reruns and in syndication, then "re-release" them in streaming the entire season, that will be something. They can angle it to subscribers as their own personal "Tivo". They can pay content owners per viewing, as Spotify does with music publishers.
$30-$40/share would give it a P/E multiple of between 7.5 and 10. Netflix has trailing 5-year EPS growth of around 35%. You may hate the company and the stock, but $30-$40/share would have it trading at a discount to other companies with similar growth histories. There's no case to be made for $40 being a premium for NFLX.
I do feel bad for Netflix and i hope they recover. it was just a one-time bad business decision behind a great brand name. what a costly learning lesson for the ceo!