Netflix Turns Focus Back to Disc

[pro-bassoonist]

Some important facts to point out:

1. Despite Netflix's bold proclamations in previous months that they have evolved into a "streaming company", it turns out that they actually are very much dependent on their disc-by-mail business. So much so that earlier today they announced a separate "DVD business unit". Talk about unsubstantiated hype.

CEO Reed Hastings says disc rentals have a ‘longer and bigger’ life than most people think

Netflix has created an internal corporate division that will solely focus on operating and marketing DVD and Blu-ray Disc rentals going forward.

The division, which will employ an undisclosed number of employees, was announced July 25 during a Q&A session with Netflix co-founder and CEO Reed Hastings and CFO David Wells. The unit is set to roll out a new marketing campaign in the fourth quarter in addition to updating the website going forward.

2. Obviously to skew subscription numbers, as reported by Home Media Magazine, the "streaming company" apparently quietly created a second disc-only site, DVD.Netflix.com, while on the "old" site the company would redirect new customers to sign for disc/streaming rental plan.

Indeed, to register for the $7.99 disc-only rental plan requires visiting a separate URL (DVD.Netflix.com), which Greenfield said isn’t listed on the Netflix home page or found when searching “DVD Netflix” on Google. Meanwhile, registering for the hybrid (and more expensive) streaming/disc rental plan is much easier.

“You simply have to ‘know’ the website,” Greenfield wrote. “While the website was mentioned in the Netflix corporate blog post on the price, we highly doubt anyone new to Netflix would know to read their corporate blog. [This is] not exactly making it ‘easy’ to find DVDs without streaming.”

Some serious backpedaling going on at Netflix to prove that their initial announcements about their new business model were actually justified.

http://www.homemediamagazine.com/net...ess-unit-24590

[rickah88]

Originally Posted by pro-bassoonist

Some important facts to point out:

1. Despite Netflix's bold proclamations in previous months that they have evolved into a "streaming company", it turns out that they actually are very much dependent on their disc-by-mail business. So much so that earlier today they announced a separate "DVD business unit". Talk about unsubstantiated hype.




2. Obviously to skew subscription numbers, as reported by Home Media Magazine, the "streaming company" apparently quietly created a second disc-only site, DVD.Netflix.com, while on the "old" site the company would redirect new customers to sign for disc/streaming rental plan.



Some serious backpedaling doing on at Netflix to prove that their initial announcements about their new business model were actually justified.

http://www.homemediamagazine.com/net...ess-unit-24590

Interesting article! Thanks for the info!
I believe I'll know Netflix is on the "BD ball" when I start to see my saved movies, that are only available on dvd, upgraded to BD in the near future. I can only hope that this, newly created, "disc branch" gives subscribers a way of actually requesting movies, that are listed on the site, in BD.
I've been saying this for years! As of now, to my knowledge, Netflix has no way of knowing who wants what in terms of blu-ray. If the movie is only available on dvd, short of adding it to your queue(or calling to complain) is the only thing you can do.
Moving forward, as blu-ray achieves more & more market saturation...I would think it would behoove Netflix to keep up with the title availability.
Even better it would be nice if Netflix actually gave a week by week listing of all movies newly added to the webiste, both BD & dvd.

[pro-bassoonist]

Well, Rickah, the thing is that they never really dropped the "disc ball" in the first place. Which is why I posted this article. What Netflix did, which is very obvious to those who monitor the market, including the studios, is this:

They tried to manipulate the market so that when the time is right they could have the biggest leverage as far as streaming is concerned. The big issue here is that an all-streaming market as the one Netflix desires is improbable; first, because the physical media/market isn't going away in the foreseeable future, and second, because their licensing agreements were done without a real pricing perspective. What this means is that, suddenly, when the content owners price their content right, Netflix becomes extremely vulnerable. This is the reason why Netflix have made bold moves to enter various international markets -- to collect much needed revenue to license A-grade content -- and this is the reason why they increased their subscription plans approximately 60% -- to drive away a good number of disc-only subscribers and cut costs (shipping, staffing, etc).

We will see how far they could go - since they are already backpedaling - but my feeling has always been that if streaming/downloading ever becomes an important segment of this new home entertainment market, the studios will simply introduce their own MOD-type streaming services, or create a unified platform for them similar to Ultraviolet. They would effectively kill off the middle man, which is what Netflix is. All these moves that you see from Netflix now are to prevent this type of scenario - have the market and content owners convinced that they are so big that they are indeed a "much needed middle man". It is an interesting plan, but at the end of day I believe that, as it always has been the case, the market will be controlled/restructured by the content owners (studios), not the middle man/men. It has always been that way

Pro-B

[Steedeel]

Pro, thanks for providing some common sense!

[rickah88]

Originally Posted by pro-bassoonist

Well, Rickah, the thing is that they never really dropped the "disc ball" in the first place. Which is why I posted this article. What Netflix did, which is very obvious to those who monitor the market, including the studios, is this:

They tried to manipulate the market so that when the time is right they could have the biggest leverage as far as streaming is concerned. The big issue here is that an all-streaming market as the one Netflix desires is improbable; first, because the physical media/market isn't going away in the foreseeable future, and second, because their licensing agreements were done without a real pricing perspective. What this means is that, suddenly, when the content owners price their content right, Netflix becomes extremely vulnerable. This is the reason why Netflix have made bold moves to enter various international markets -- to collect much needed revenue to license A-grade content -- and this is the reason why they increased their subscription plans approximately 60% -- to drive away a good number of disc-only subscribers and cut costs (shipping, staffing, etc).

We will see how far they could go - since they are already backpedaling - but my feeling has always been that if streaming/downloading ever becomes an important segment of this new home entertainment market, the studios will simply introduce their own MOD-type streaming services, or create a unified platform for them similar to Ultraviolet. They would effectively kill off the middle man, which is what Netflix is. All these moves that you see from Netflix now are to prevent this type of scenario - have the market and content owners convinced that they are so big that they are indeed a "much needed middle man". It is an interesting plan, but at the end of day I believe that, as it always has been the case, the market will be controlled/restructured by the content owners (studios), not the middle man/men. It has always been that way

Pro-B

Just to clarify, I never Netflix "dropped the BD ball", only that they were never fully "on the BD ball" to begin with. Which is why so many customers, who pay more for BD rentals, are upset that there is not a wider BD selection week in/week out. Although I'm not overly impressed with their BD selection, I'm not upset about it either. As I stated previously, I usually get about 96% of the BDs that I request. For the price I pay, that's not too shabby. I don't know of any rental business that has, absolutely every single title that is released, every week.
Netflix Streaming concerns me 0% as I dropped the service(rarely used). So whatever happens in 2012, when there studio deals run out it anyone's guess. Of course I'll be interested to see how it all shakes out, but for the foreseeable future I'll only be doing the BD rentals.
Now how this split in the company, between the two services(streaming & physical rentals) pans out is what has my curiosity piqued. As I said, the only way(for now) that I can tell there's been a change(for me) is if my saved titles actually start showing up as BD vs. dvd. I'll be sure to report back if that happens.
Again thanks for the article, and your insight on market analysis, I found both very interesting!

[raygendreau]

Time to buy Coinstar and sell Netflix. The reason netflix is holding on to mailed disc rental biz for dear life is the questionable viability of their streaming service 2012 and beyond. If this is anywhere near accurate:"One analyst predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012". Guess where streaming costs will go for the customer. Either costs become prohibitive or content quality will drop prohibitively. It is conceivable that Netflix will sell the streaming service and take refuge in mailed disc rental, where the competition is getting fierce. Red Box is opening 5000 to 6000 new locations a year. A quick search shows 10 locations within 2 1/2 miles of my residence. How about you? Billions and Billions served.

http://www.redbox.com/history

[pro-bassoonist]

Originally Posted by rickah88

So whatever happens in 2012, when there studio deals run out it anyone's guess. Of course I'll be interested to see how it all shakes out, but for the foreseeable future I'll only be doing the BD rentals.
Now how this split in the company, between the two services(streaming & physical rentals) pans out is what has my curiosity piqued. As I said, the only way(for now) that I can tell there's been a change(for me) is if my saved titles actually start showing up as BD vs. dvd. I'll be sure to report back if that happens.
Again thanks for the article, and your insight on market analysis, I found both very interesting!

I agree with you, it is anyone's guess where Netflix will head, but I don't think there are too many people who are guessing what will happen with the content Netflix need - it will cost substantially more. As I noted earlier, this is the reason why Netflix are making bold moves in Latin America and probing the markets in Europe.

This said, there is definitely some room on this new market for streaming, but the core business will remain the same for many years to come, especially in regard to A-grade/new content.


I will see you all around

[JuntMonkey]

Starting today, Netflix finally has A Fistful of Dollars and For a Few Dollars More on BD.

Is there an easy way to check updates of this in general?

[rickah88]

Originally Posted by JuntMonkey

Starting today, Netflix finally has A Fistful of Dollars and For a Few Dollars More on BD.

Is there an easy way to check updates of this in general?

Is there a way to check updates of certain movies being avialable on BD? To the best of my knowledge the only way is to keep checking the site. Usually on Tuesdays(moving day for media) they will update their lists, as best as I can tell.
With about 80 movies in my queue at any given time, I just bump the known BD releases over the movies that are "dvd only". I hoping this branching of the 2 Netfilx services(Streaming & Disc) actually shows an increase in catalog BDs. So far I have not seen anything upgraded, of the 40 titles I have in my queue, that have BDs available on the open market.

[ls35a]

After ten continuous years of disc rental service from netflix I've cancelled my account. I've switched over to blockbuster online.

Why?

Netflix blu-ray selection is fair to good for movies, but POOR for tv shows. I like House, Supernatural, Sherlock, etc.

Netflix can take their blu-ray upcharge and choke on it. I am SERIOUSLY pissed off at them.

Meanwhile Blockbuster has almost everything I want in blu-ray.

[rickah88]

So am I understanding this correctly: Blockbuster is more expensive than Netflix?

Blockbuster:

•1-out Unlimited - Unlimited Free Exchanges - $11.99 per month
•2-out Unlimited - Unlimited Free Exchanges - $16.99 per month
•3-out Unlimited - Unlimited Free Exchanges - $19.99 per month


Netflix:

1 DVD out at-a-time
$7.99 a month
$9.99 a month with Blu-ray

2 DVDs out at-a-time
$11.99 a month
$14.99 a month with Blu-ray

3 DVDs out at-a-time
$15.99 a month
$19.99 a month with Blu-ray

[rickah88]

Found this interesting...I actually had one of my saved dvds(Infernal Affairs) get upgraded to BD over the weekend. I hope this trend continues with the other saved movies that are out on BD, but Netflix hasn't upgraded yet.

[Dwayne]

Originally Posted by ls35a

After ten continuous years of disc rental service from netflix I've cancelled my account. I've switched over to blockbuster online.

Why?

Netflix blu-ray selection is fair to good for movies, but POOR for tv shows. I like House, Supernatural, Sherlock, etc.

Netflix can take their blu-ray upcharge and choke on it. I am SERIOUSLY pissed off at them.

Meanwhile Blockbuster has almost everything I want in blu-ray.

I myself told Net-Flix to go to hell. They suck for a number of reasons. To start with they stopped going after older catalog titles being transfered onto Blu-ray each Tuesday, " Blockbuster goes after them" . Because of this ignorant 28 day waiting period basicly the Flix has nothing but older BD movies that everyone has already seen on Blu-ray. So basicly they have nothing to offer each week on release day so why do I need them. I DONT and I will pay Blockbuster on-line whatever they want as long as they continue to steer away from this 28 day waiting period and continue to go after the catalog titles on Blu each week. NOTHING WOULD GIVE ME MORE PLEASURE THAN TO SEE NET-FLIX GO UNDER!!!!!!!!!!!!!!!

[rickah88]

Originally Posted by Dwayne

I myself told Net-Flix to go to hell. They suck for a number of reasons. To start with they stopped going after older catalog titles being transfered onto Blu-ray each Tuesday, " Blockbuster goes after them" . Because of this ignorant 28 day waiting period basicly the Flix has nothing but older BD movies that everyone has already seen on Blu-ray. So basicly they have nothing to offer each week on release day so why do I need them. I DONT and I will pay Blockbuster on-line whatever they want as long as they continue to steer away from this 28 day waiting period and continue to go after the catalog titles on Blu each week. NOTHING WOULD GIVE ME MORE PLEASURE THAN TO SEE NET-FLIX GO UNDER!!!!!!!!!!!!!!!

Alas, Blockbuster is much closer to financial ruin than Netflix...and it's 20+ million subscribers. Should be interesting to see what happens next year when all the exclusive contracts Netflix signed are up. When the big boys, like Verizon, Comcast, Amazon, etc jump into the streaming game.

[Rob71]

Originally Posted by rickah88

Alas, Blockbuster is much closer to financial ruin than Netflix...and it's 20+ million subscribers. Should be interesting to see what happens next year when all the exclusive contracts Netflix signed are up. When the big boys, like Verizon, Comcast, Amazon, etc jump into the streaming game.

What more than likely will happen is the higher demand streaming titles will be split among all the "big boys". Either that or expect to pay a lot more for Netflix streaming. I am actually surprised by some of the titles Amazon has, now if they would just team up with the PS3...

[AlexKx]

Um...I haven't read all eleven pages or what have you...why would they be going back to physical media?

[Anthony P]

Originally Posted by AlexKx

Um...I haven't read all eleven pages or what have you...why would they be going back to physical media?

they are not going back, they never stopped. But for some time their focus was too streaming centric and they where using too much of the money from members that want to rent disks to pay for the films from the people that want streaming. They where losing the disk clients and decided they needed to balance their spending a bit better and make sure that they have disk copies of the movies people want if they want to keep those customers.

[Justin83]

After initially being pissed about the price hikes, I had decided to still keep my service. Then today, on the eve of the hikes, I sit down to watch a disc and can't because once again I received a damaged disc (this has been happening to me a lot lately). That combined with the fact that I can't seem to get "new" releases that have been out for several months pushed me over the edge. Cancelled all my service tonight. Decided to give BB a shot with a free trial. May work out better for me anyway since I have BB very close to my home.

[atomik kinder]

Ouch for Netflix.
Comingsoon.net is reporting that Starz is ending its streaming contract with Netflix at the end of February.

[AreaUnderTheCurve]

Originally Posted by atomik kinder

Ouch for Netflix.
Comingsoon.net is reporting that Starz is ending its streaming contract with Netflix at the end of February.

Which is awesome because 4:3, shitty rips will now be gone.