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xGasPricesx



Joined: 23 May 2008
Posts: 1521
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Just came across this on reddit, and although no one is really complaining about Netflix here, I thought it was a nice reminder.

http://imgur.com/4FRxU

Edit: Somehow I forgot how to embed pictures. Isn't just supposed to be [img]link[/img] ?


Last edited by xGasPricesx on Mon Oct 10, 2011 4:40 pm; edited 1 time in total
Post Mon Oct 10, 2011 3:17 pm
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Neuro
A champion of Kurtis SP


Joined: 19 Jul 2002
Posts: 7758
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i stream netflix on my computer,on my 360 when i have xboxlivegold, stream it on a blu ray , my phone , anywhere thats possible

love netflix

wish they could somehow get a plan for streaming new movies or all the movies they have available, alot are dvd only even if they are not new releases

canceled the dvd with that horseshit of a price hike, totally not worth it

also

when streaming from a computer the picture quality seems to be kinda shitty even if you click that hd button, whats up with that
Post Mon Oct 10, 2011 3:47 pm
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futuristxen



Joined: 01 Jul 2002
Posts: 19356
Location: Tighten Your Bible Belt
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Self Conscious wrote:
use it almost everyday, get the dvds by mail too. people always complain about everything, if they didn't bump the price up they couldn't stay afloat. id rather pay a higher price then not have netflix. the service with the price hike is well worth the value.


I think the price hike was half so they could price people off of the DVD thing, so they could save money on postage.

I think they'll phase out the DVD side of things sooner than later. I wonder what the numbers are on people who still do the DVD stuff and not stream only? It has to be like less than 25 percent. Just going anecdotally.
Post Mon Oct 10, 2011 3:57 pm
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redball



Joined: 12 May 2006
Posts: 6870
Location: Northern New Jersey
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I'd like to make the case for why some of the decisions that management at Netflix made are not as bad as they seem on the surface, but I don't have the time now, so it will come later.

For now, I think this will be informative, futuristxen. It's a Q3 projection showing the revised projection after the price hike, but this is from before the whole Qwikster business:
http://www.hackingnetflix.com/2011/09/netflix-lowers-subscriber-forecast-investors-react.html
Post Mon Oct 10, 2011 4:40 pm
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icarus502
kung-pwn master


Joined: 01 Jul 2002
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I first came to Netflix because they had so much stuff, especially indie and foreign stuff. And cheap. I felt guilty about that money not going to my local, incredibly awesome indie video store (founded and run by one of the guys from Slint, so it has tons of cred) but I was saving money. And anyway, on days where I couldn't wait for the shipping turnover, which was often enough, I still went to my place. Then streaming became the thing about Netflix and I was able to stream movies, usually finding something that I wanted to watch, but lots of things that I'd wanted were unavailable on streaming and, somehow, streaming had gotten me so accustomed to instant that the 2-3 days turnover became untenable (esp. since I liked streaming so much, I went down to the 1 DVD plan). So I started going back to my local shop more often, getting the movie that I want (and also browsing their excellent collection) for that night. Eventually, my actual DVD Netflix queue, since I only got one at a time and they weren't impulse adds, became full of aspirational films with a degree of difficulty and vestiges of my lapsed directorial completism (I no longer care if I die without having seen every Bresson) things that I wanted to watch but also things that I should watch. So, when life was hard enough without hard movies to watch, those envelopes just sat on the mantle for weeks. Then the price hike and I decided to go to streaming-only after this month (stuck it out for a month). Hopefully I get through Incendies in time to get one more shipment out of them before the 16th.
Post Mon Oct 10, 2011 4:40 pm
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futuristxen



Joined: 01 Jul 2002
Posts: 19356
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haha yes that is pretty much what happened on my netflix journey too, especially about ending up with films you SHOULD see, rather than wanted, that sat on the shelf while I streamed dumb shit I was in the specific mood for at that time.
Post Mon Oct 10, 2011 5:02 pm
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Neuro
A champion of Kurtis SP


Joined: 19 Jul 2002
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that even happens to me on the streaming queue, ill add a bunch of stuff i want to watch but always end up watching other things while they sit in the queue
Post Mon Oct 10, 2011 5:07 pm
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anomaly
Loserface


Joined: 22 May 2008
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xGasPricesx wrote:
Just came across this on reddit, and although no one is really complaining about Netflix here, I thought it was a nice reminder.

http://imgur.com/4FRxU

Edit: Somehow I forgot how to embed pictures. Isn't just supposed to be [img]link[/img] ?





don't forget the extension for the image
Code:
[img]http://i.imgur.com/4FRxU.png[/img]

Post Mon Oct 10, 2011 5:11 pm
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mattarl



Joined: 03 Jul 2009
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Location: north cack
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thats funny.
but true
I stream on the wii.
My roommate uses a PS3 in the living room for it.
I would like to hear more on this debate with Khill, as well.
Post Mon Oct 10, 2011 5:28 pm
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tommi teardrop



Joined: 12 Apr 2007
Posts: 2215
Location: Las Vegas
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Yeah my streaming queue is filled with important documentaries, artsy foreign films, and classics.

I end up watching Larry Sanders instead. I think The Wonder Years will be my new go to show.
Post Mon Oct 10, 2011 5:30 pm
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redball



Joined: 12 May 2006
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First, in response to what Icarus and Futuristxen just said, read this:
http://youarenotsosmart.com/2010/10/27/procrastination/

Second, my thoughts on the Netflix split and subsequent coming together:

In order to understand the split you first have to understand that Netflix was formed to be a streaming movie company, and that was always the goal. The company started out with attempts to stream movies but had to reorganize when they realized that movie streaming wasn't viable in the early 00's. The result was a revolutionary idea of centralized distribution. As that graphic points out, it all but put Blockbuster out of business, and the world is better for that because Blockbuster was a far shittier organization. Still, the important part of this is that the idea was to leverage DVD-by-mail to build a streaming service. This was always the plan. If it wasn't in the charter, it was certainly a stated goal of the business before they ever went public or even had a million customers.

After understanding the corporate goals, we should look at the business decisions behind recent moves. Of key interest is the viability of the DVD-by-mail service. Of note here is that this service is tied to a lot of overhead. There is the cost of acquiring and keeping the stock of DVDs, including having shipping centers near postal hubs in pretty much every state. Those are costs do not greatly fluctuate, aside from the odd Weinstein film where the studio plays games with distribution. Less predictable is what will become of the USPS, and whether their discounted contract with Netflix will last much longer. Even with the discount, it's estimated that each disk costs around $0.50 to ship. It's a low margine business, one that they don't want to be in for the long run.

Their streaming service has its own costs. All of their excess funds in recent years have gone to content acquisition for the streaming service. Once Netflix streaming began to pickup, now rivaling large cable operators, the content owners and their licensees realized what a mistake their early and cheap contracts were. Netflix made billions on the $50 million contract with Starz. The renewal for that was expected to be on the order of a billion dollars, until it fell through due to studio pressure. The biggest complaint that Netflix receives about its streaming service is lack of content, so they wanted to dedicate even more money to acquiring content. This is something they polled, and people said they would pay more for more content.

The costs for DVD-by-mail are nearly fixed, but are very high, the costs for streaming are rising rapidly. Thus, they needed to raise prices. The decision they made was to raise prices and split the plans in such a way to allow for a separation of revenue and cost streams. This allows them to pay for DVD-by-mail with money from subscribers to that specific service, meaning that it will never be underfunded unless for lack of demand. It also allows for the profits from streaming to go directly to new content acquisition, which helps to bring that service in line with value expectations. The money was required for both purposes, and it was split for clarity and continuity. It also brings things closer to a point where the two services can begin to truly diverge.

Divergence is good for both services. While it is true that the streaming service was built on the backs of DVD-by-mail subscribers, it is not clear that streaming subscribers would continue to appreciate the value of their service should the price be increased to try to shoulder the overhead costs of a dwindling DVD-by-mail service. What is more clear is that two distinct companies are emerging, one with a much higher margin and lower overhead costs. Basic microeconomic principles dictate that in this situation you will focus as much of your profit as possible on the high margin business. This means: the DVD-by-mail service will be phased out, will be ignored, and will become second rate in comparison. You prevent such a slide by... separating the two business models as much as possible.

This allows for the one unit, preferably a completely separate business, to operate on the lower margin, with its lifeblood being that low margin operation, while the other continues to run higher margins for more profits. This is good for the high margin business because profits and investments will be focused on increasing revenues and serving profitable customers. It is also good for the low margin business because that business will have all of its resources, it will not need to fight for resources that would otherwise be allocated to higher profit acquisitions. Under this model the DVD-by-mail business will last as long as it is possibly viable. With the two businesses together, especially if they are conflated together by package pricing, the DVD-by-mail side of the business will die a quicker death.

That's the long argument, but it boils down to this: Splitting the business would, in many ways, better serve the customers.

Now, that's not to say that this was handled correctly. First, it was too soon. The price hike had to happen when it did. Sorry if that doesn't satisfy you, but it's true. However, when backlash to this hit and the reasons for some of the changes were either poorly communicated - or completely misunderstood by a consumer base that is not business-savvy, or both - the reaction by management was the mess we have today. I think their logic was probably along the lines of, "well, let's just get all the bad will out of the way at once." They didn't stop to think that this was maybe too much for some customers. The name they chose for the new company was crap. When they saw the reality they changed their minds, which is maybe good or maybe not. I think they were doing what was best for the customers and they should have continued with it, with minor changes.* They are a company that does listen to its customers, though, so I believe them when they say that's why they canceled the plans to spin off DVD-by-mail. It's a PR nightmare, but it is what it is.


That brings us to today, and my twitter conversation with kHill, which spawned this thread. He mentioned that Netflix fucked up. I said they didn't fuck up that badly (which was basically my tweet but is a summation of the above). He said that he thinks that Netflix will be in trouble when XBox releases their streaming service. I said that's not true, because Netflix is on tons of other devices. He believed that most people use XBox to stream Netflix. He and I initiated informal surveys in various venues to test this. I think this thread is fairly representative of the findings.

Also, he argued that Netflix has lost subscribers due to the price increase. There is currently no available information stating that Netflix has lower numbers of customers than before the announcement. Rather, there is evidence that the number of people who canceled service is only offset by the number of people starting service, current estimates show that Q3 will end with a few hundred thousand more subscribers than Q1.

http://www.hackingnetflix.com/2011/04/netflix-hits-236-million-subscribers-706-million-in-revenue-in-q1-2011.html
Post Mon Oct 10, 2011 7:02 pm
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poopsnack



Joined: 15 Jan 2004
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I stream netflix in my living room on my ps3. I also have a ps3 in the bedroom for streaming. On the road I stream on my laptop.
Post Mon Oct 10, 2011 7:08 pm
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Neuro
A champion of Kurtis SP


Joined: 19 Jul 2002
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what i dont like is how you have to have xboxlivegold in order to watch on your 360 yet on every other system and device its free as long as you have a netflix account
Post Mon Oct 10, 2011 7:34 pm
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anomaly
Loserface


Joined: 22 May 2008
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Neuro wrote:
what i dont like is how you have to have xboxlivegold in order to watch on your 360 yet on every other system and device its free as long as you have a netflix account


yet another example of how the Wii kicks the Xbox's ass.

Other than the obviously better graphics, larger game choice, cooler controllers, and the Wii has more legless people floating. Oh yeah, and the Wii Fit is great for your self esteem when you do the fitness test.
Post Mon Oct 10, 2011 8:50 pm
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3flip



Joined: 30 Dec 2003
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informative read redball, thanks.
Post Tue Oct 11, 2011 4:59 am
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