Comments on: How the movie studios caused Netflix’s problems

By: LeighCaldwell

LeighCaldwell — Tue, 19 Jul 2011 12:29:37 +0000

I suspect the studios are quite keen to balance out their performance-based cinema revenue with revenue from other channels that is uncorrelated to whether anyone likes their films.

This must be one of the key benefits of TV deals for the studios – that it lets them use their market power and distribution control to guarantee revenue streams for films which might not otherwise get any. I assume this helps them sign stars (effectively by providing minimum guarantees) and maybe even to make films which might not otherwise get made.

By: spectre855

spectre855 — Mon, 18 Jul 2011 01:31:12 +0000

What a coincidence, the streaming service has been down for most of this evening. Way to show everyone why they should now pay 60% more.

By: TomWest

TomWest — Sun, 17 Jul 2011 18:34:31 +0000

I suspect that flat-pricing works rather better than a pro-rata model with respect to maximizing our enjoyment of our purchases. With a flat model, you swallow a monthly payment which is one ‘ouch’, but after that everything you use is ‘free’ allowing us to delight in it far more than if we paid for the individual item.

Of course, this is an irrational illusion, but that doesn’t make it any less real in terms of how happy it makes us.

By: MyLord

MyLord — Sat, 16 Jul 2011 16:49:04 +0000

I think the reluctance to change business models is mostly due to differing pricing expectations and uncertainty in their growth along with the fear of loss of control. It wants to maximize profitability more than profits, that is why it is more concerned with losses than gains.

By: y2kurtus

y2kurtus — Sat, 16 Jul 2011 03:23:41 +0000

I’m not sure that the studios caused netflix’s problems so much as netflix’s own success. Blockbuster and MovieGallery both went belly up due in large part to Netflix.

Studio’s have seen the physical rental market implode, and the physical dvd sales via retailers like WMT, TGT, & BBY dwindle. Also after comcast bought NBC you’ve got two of the largest content creators captive to cable companies who need to justfy their monthly fee to subscribers. For all the griping about NFLX’s increase it’s still what 1/4th the cost the basic family package for CMCS or TWX… that sounds like a deal to me!

MagicJack, DSL & NFLX streaming total = $45/month total and they work pretty well in my state, which is the most rural east of the mississippi. That’s 1/2 the cost of the cheapest promo rate on a tripple play bundle from any provider.

In the give and take battle between consumers and big media consumers are now winning in a rout.

By: Auros

Auros — Sat, 16 Jul 2011 01:14:17 +0000

I still don’t get why this is supposed to be such a terrible thing, that Netflix has done. I’m now paying $3/month LESS for my DVD service, since I no longer have to pay for their lousy streaming service, which even when I had reliable 6MB/s downloads in Mountain View, would have issues sync’ing audio to video, and frequent pixelization artifacts.

By: Adam_Hyland

Adam_Hyland — Fri, 15 Jul 2011 21:41:49 +0000

I'm skeptical, primarily because Netflix maintains the analytical firepower to split out streaming and DVD subscribers to a much finer degree than intimated here. It may be the case that contracts as written used top-line subscriber data for thresholds, but as those contracts get renegotiated I think Netflix would have moved aggressively to supply more fine grained data.

By: KenG_CA

KenG_CA — Fri, 15 Jul 2011 21:09:06 +0000

While the studios are certainly responsible for the poor streaming options available to everyone, I don’t think it’s fair to call them the villains in this case. Netlfix started with a totally unsustainable, unscalable, and unfeasible business model, and it was destined to fail when they signed up enough streaming subscribers. I don’t know if Netflix never did the math, or did and hoped they could continue to get great deals from the studios, but given the prices that the studios normally charge for viewing their TV shows and movies, there is no way that Netflix could keep them and the subscribers happy, and that is their own fault.

That being said, the studios have objected to and tried to block television, then VHS, then DVDs, and yet every one of those new technologies increased the size and profits of the industry. They are now at war with the Internet, demanding all kinds of special treatment from the government at the expense of the rest of society, because they are too stubborn/ignorant to look outside of the business models they have utilized for the past decade or so. They think they have a reliable revenue stream from Netflix, but that’s only because they are incapable of understanding the implications of technology and cannot grasp the always-morphing habits of today’s viewers. The canary in the coal mine for the studios on DVDs should have been the decline in sales of them, but they insist of sticking with a soon-to-be obsolete distribution system. The only thing that has saved them from the file swapping that almost killed the music industry has been the greed and incompetence of the management of the broadband industry, for if the US had internet speeds like, say, South Korea, every title that was available for rent on netflix would be on P2P networks within hours.