Originally Posted by Wendell R. Breland
I assume this was in response to my post. Do you really believe Netflix cares what you or I think?
I'm sorry if that wasn't clear. I posted that late in the evening and I knew that it would be the very next post, so barring a quote, the previous post is what I'm talking about.
And no, I don't think that Netflix cares about what you or I think, and reading my post, I don't think that I said anything to imply that I did
I believe Netflix has throughly investigated PPV for new titles and for them the $$&¢¢ just does not add up to being profitable. If it were profitable then Netflix most likely would already be there.
Have you ever been involved in any kind of R&D? I'm a software engineer and I can tell you that all of the companies for which I've done product development over the past 30 years keep roadmaps of what new products they want to introduce to the market and what features they want to add to the products which they already sell (for products that are readily upgraded, like PC applications and network connected devices). Even the largest companies (of which Netflix is certainly not) have limited resources and can't do everything they'd like to do all at once; they have to concentrate on the things they think are most important and those which need to be introduced in near term windows of market opportunity. To this point I think that Netflix has concentrated their streaming development efforts on helping their OEM partners to expand the group of devices which have access to their service (they report having recently shipped Wii discs for Netflix streaming to a beta group). Some effort has had to be made to repair the many streams which won't play on all platforms. I'm sure that they knew last year that they weren't going to be able to add 5.1 sound and closed captions to streaming titles until sometime this year. Contrary to what you or I believe or don't, Netflix could
be planning pay-per-viewing-period premium streaming VOD to be added sometime in the future. It's possible that things have been delayed by the need to set up agreements with their content suppliers for that sales model. As I said before, there is a marketing problem, since there are many people who believe that they should be getting new release streams from the no-extra-cost service.
As of now the profit center for Netflix is DVD & Blu-ray-ray disc rental by mail. Netflix is trying to turn streaming into a profit center but as of now it is a cost burden (their words, not mine).
(I believe you, but where did they say that? I can't locate anything googling "Netflix 'cost burden'"). First, renting discs is also Blockbuster's profit center, both by mail and from their B&Ms and now kiosks, yet they delve in premium VOD as well. Netflix's no extra cost, low-to-medium quality streaming service is a totally different thing from a premium high-quality VOD rental service ($4 to $6 per 24-hour viewing period like all of the competition in that space). And there is plenty of competition, some from much larger companies who've considered the business case and think that it can be profitable. It shouldn't be considered as the same business as the no-extra-cost thing.
They do state that streaming has helped increase their member ship. It would appear advertising has helped increase their member ship because they sure are doing a lot of it (even national spots during the winter Olympics) but adds & streaming are still cost burdens.
I'm not sure how you would separate the effects of the two, and again, it's only your opinion that streaming has a lesser effect on their increased membership than advertisement. Remember, every one of their current ads speaks of the availability of instant streaming. Their slogan is "Get movies 2 ways for 1 low price; DVDs by mail plus watch instantly on your TV". That or a variation thereof is in all of their ads. The ads that I've seen most recently all (but one) demonstrate streaming and a couple of them are completely about streaming, only mentioning DVDs in a voice-over at the end. (They all involve the very strange "Wrightnow Family" and you can see them all here
. "The Wrightnows Peanut Brittle" and "Instant Wrightnows" only talk about streaming; "The Wrightnows Mom" and "The Wrightnows Treehouse" are only about disc rental and "The Wrightnows Uncle Hector" is a mixture, with some family members watching discs while one watches a stream. In most of those with streaming they're using PC streaming and in "The Instant Wrightnows" they have one of the embedded UIs on their TV screen).
Many people have bought or are buying televisions, BD players and new retail DVRs with Netflix streaming players embedded; some of them, as well as some owners of Xbox 360s, PS3s (and soon Wiis) are trying Netflix just for the streaming because they see that their equipment has the capability and many are keeping the service. Some don't care about the discs at all. Many people have reported dropping their multi-disc plans since streaming was introduced on embedded devices and going to one-at-a-time-unlimited, a drop in profits which I suppose is offset by increased membership and decreased churn.