Archives For Netflix

As much as people like to hold Netflix up as a competitor to cable TV, the truth is it’s much more akin to HBO in both value and price. The one big difference between the two is HBO’s steadfast determination to tie its distribution to cable subscription packages. On that front, the company got another boost today with the official launch of the HBO Go and MAX Go (Cinemax) apps for Charter subscribers. These Internet apps mean authenticated users can get HBO and Cinemax shows virtually anywhere. And with Charter on board now, the only big players without mobile HBO on the docket are Cablevision and Time Warner Cable.

HBO is following in ESPN’s footsteps, proving that good content can dictate carriage in the online world as much as it can in the traditional pay-TV space. However, the more HBO expands its online content, the more it sets itself up as a direct rival to Netflix. Both are roughly the same price, and offer a mix of great content along with some middling stuff. HBO distinguishes itself in the original content domain, but even there, Netflix is looking to make its own waves. So the question becomes, are people more likely to pay for something separate from cable, or for a bundled cable add-on? And if we want both, just how high do we think we can we stretch the monthly entertainment budget?

As most customers have read by now, Netflix announced price hikes yesterday for subscriptions that include both unlimited digital streaming and unlimited DVD/Blu-ray rentals. Realizing my existing Netflix plan would increase by 60% come September, I went ahead and preemptively canceled service. It’s not solely the cost, as there are frequent occasions where I blow more than that $6 differential at a single Starbucks sitting. Yet, it’s the perceived value… which is now significantly diminished. Geoffrey’s comment hits the nail on the head:

I think the main thing that makes this increase hard to swallow is there’s no attempt to show us where the added value is as the consumer. If they were going to announce a massive  increase in the streaming selection, then I could accept the argument that the service needs to be unhooked from the DVD rentals. But, as it stands, Netflix hasn’t attempted to show us any value for us paying around 60% more (in many cases).

Look, we know Netflix’s expenses are rising and it’s their responsibility to deliver value ($) to the shareholders. But the reality seems to be a stagnant or even weakening online streaming service for customers. Netflix can’t afford new releases beyond low definition Starz content… with titles now possibly subject to extended release window delays or downright missing in action. On the DVD front, Netflix’s disc-only plan pricing is not unreasonable. However, Netflix’s physical media customer experience may also be on the downswing, as we see reports that suggest Netflix purchases fewer discs these days resulting in longer waits. Additionally, the $2 Blu-ray surcharge rubs me the wrong way. Again, it’s perceived value. And I’ve got enough alternatives to easily move on when provoked. Who sends out an email saying service can be “easily” canceled? Done!

Unfortunately for Netflix, they’ve probably misread the situation. The heavy users, who incur the most costs, will remain. Whereas the revenue-generating folks like me, who stream very little and have held onto the same DVD for months, will depart.

No surprise here. Netflix is to become a victim of their own success… and they’re gearing up to pay the content industry piper. Not to mention dealing in physical media (and the postal service) adds up. With that in mind, Netflix is introducing new rates today – plans that break out unlimited streaming from unlimited DVDs. New customers are subjected to the new (higher) rates as of today, whereas existing customers will be grandfathered at their current rates. But only until “your next billing period on or after Sep 01, 2011.”

My current plan runs $10 a month for unlimited streaming with a single DVD out at a time. I’ve been meaning to upgrade to Blu-ray, for another $2/month. And, so come September, my new rate would be $18/mo. But the truth is, I don’t watch much Netflix instant streaming these days. I prefer the Hulu Plus content, UI, and reliability with Amazon or Apple sufficiently satisfying my new release HD VOD needs. Plus, oodles upon oodles of cable channels to browse amongst and Redboxes all over the place.

So, given the imminent price hike and my limited usage, I’ve taken this opportunity to cancel Netflix. And it appears I’m not alone. Yet I imagine for heavy users of the service and/or those with interest in online streaming only ($7.99/mo), Netflix will remain valuable.

(via Hacking Netflix)

Netflix Shipping Center

GigaOm has proclaimed that Netflix streaming and the cable industry are clearly in competition – vying for the same eyeballs and the same dollars. Yet, I’m not seeing it. Sure, there’s some overlap… of on-demand television content and back catalog films. But amongst the vast majority of my peers, and within my household, Netflix provides suplemental entertainment. And most of us choose to carry on with pay television services. We may bitch and moan about price hikes, billing problems, or customer service letdowns. But premium television remains quite compelling. Without live news, sports, or current, first run movies Netflix will remain largely a supplemental service. Netflix knows this. In fact, the GigaOm crew cites CEO Reed Hastings regarding the cord cutting mythos, “It’s not happening, it’s not anything we are causing, cable and Netflix are complementary.”

As evidence, GigaOm suggests that cable companies RCN and Suddenlink neutered their TiVo deployments by removing the Netflix app: “The logic? Netflix could get people to ditch their premium channels and ignore cable VOD.” However, RCN is very clearly on the record in its desire to offer Netflix streaming and Suddenlink is would “gladly” consider it. This is purely a licensing issue involving Netflix, TiVo, distributors, and studios. Rather than threatened MSOs blocking the (perceived) competition. Amazon Video on Demand, of course, is another story entirely.

As for me, I’m streaming very little Netflix these days. I’ve either already seen the content or just don’t find it compelling. In fact, between Amazon Prime, Hulu Plus, and HBOGo, I’m considering dropping Netflix altogether. Unless, I upgrade to more (Blu-ray) discs per month – reverting back to physical media to catch newer releases at bargain prices.

As digital licensing negotiations heat up, it’s heartening to see Netflix pull another big win from a new deal with Miramax. Netflix announced the multi-year agreement today, which includes instant streaming of a number of movies in the Miramax library, from Academy Award winners like “Shakespeare in Love,” and “The English Patient,” to cult favorites like “Chasing Amy” and “Pulp Fiction.”

The win for Netflix is important for a number of reasons. First, as Will Richmond points out, it shows how big a role movies still play in the Netflix model, even though TV series have gotten more attention of late. Second, the VOD company noted that the deal with Miramax marks the first time Miramax titles have been made available through a digital subscription service, showing that Netflix carries significant clout as a distribution partner. And third, although terms were not disclosed, the agreement shows Netflix can and is willing to compete financially even now that content owners understand that digital delivery doesn’t mean giving away licensing rights for pennies on the dollar. [UPDATE: paidContent is putting the financial terms at likely more than $100 million.]

Miramax films will be available on Netflix starting in June, with titles added on a rotating basis. Streaming access will be available across TVs (presumably through Rokus, game consoles, and more), tablets, computers, and smartphones.