AVS › AVS Forum › Video Components › Video Download Services & Hardware › All ain't rosy at Netflix
New Posts  All Forums:Forum Nav:

All ain't rosy at Netflix

post #1 of 33
3/12/13 at 10:42am
Thread Starter 
http://www.homemediamagazine.com/netflix/analyst-netflix-worse-today-two-years-ago-29834

Basically article says that Netflix is in trouble. They gutted their DVD business and they are over leveraged with the contracts to get streaming content.

It doesn't take a rocket scientist to figure it out. Basically when they had the DVD business you had people willing to pay premiums for more discs at once and now they are $7.99 all you can stream buffet.

Not to mention that the streaming content is mostly a miss with respect to high demand titles.
Reply
Reply

AVS Top Picks

post #2 of 33
3/12/13 at 12:40pm
Yet the enthusiasm is still there apparently, up $1.74/share today, now trading at 182.19. I kinda wish I bought stock back when I became a subscriber but never have been a fan of their financial model.
Reply
Reply
post #3 of 33
3/12/13 at 1:22pm
I am by no means an expert in business. But, when Netflix divided the dvd+streaming business into dvd and streaming(separate), the market reacted negatively with Netflix losing a large chunk of market cap. However, the wall street community later came to see the wisdom in that decision and the stock recovered very nicely. That being the case, it will take some other kind of news for Netflix to be seriously affected. Further, people who subscribe to netflix know that they are not going to watch the latest movies or the tv series. Those who don't, still have a chance to understand the strengths and shortcomings of Netflix in the first free month. They have been steadily increasing their membership. Just my opinion.
Reply
Reply
post #4 of 33
3/12/13 at 1:45pm
Thread Starter 
Quote:
Originally Posted by lovinthehd View Post

Yet the enthusiasm is still there apparently, up $1.74/share today, now trading at 182.19. I kinda wish I bought stock back when I became a subscriber but never have been a fan of their financial model.

The stock is overvalued. They won't be able to keep the low priced subscription model up long term. I tired of the service after about a year and a half. Hollywood isn't going to give the content away.

Did you read the article? For them to be valued at the current prices they need to profit about $30 per subscription. Currently they are profiting about $2.50. IOW, either Netflix will have to raise prices or the walls are going to start crumbling. The graveyard of failed companies is littered with also rans that were first to market with a concept. Netflix is shaping up to be one of those casualities.
Reply
Reply
post #5 of 33
3/12/13 at 1:52pm
Thread Starter 
Quote:
Originally Posted by lovinthehd View Post

Yet the enthusiasm is still there apparently, up $1.74/share today, now trading at 182.19. I kinda wish I bought stock back when I became a subscriber but never have been a fan of their financial model.

The stock market and reality many times don't accurately reflect one another. The reality is Netflix slit their throat when they decided they wanted to switch to streaming only. Sure they have added subscribers but they have also lost or had subscribers downgrade to the cheap streaming only plan. Netflix was too quick to go 'all-in' for streaming. I have a feeling they didn't want BD to be successful like DVD so they could push their joke of all jokes HD streaming service.

This idea that a business has to keep evolving while true to a point shouldn't mean you eliminate ASAP what made you strong to begin with. Netflix should have kept the disc business going for at least another decade.
Reply
Reply
post #6 of 33
3/12/13 at 2:09pm
Quote:
Originally Posted by Toknowshita View Post

Quote:
Originally Posted by lovinthehd View Post

Yet the enthusiasm is still there apparently, up $1.74/share today, now trading at 182.19. I kinda wish I bought stock back when I became a subscriber but never have been a fan of their financial model.

The stock market and reality many times don't accurately reflect one another. The reality is Netflix slit their throat when they decided they wanted to switch to streaming only. Sure they have added subscribers but they have also lost or had subscribers downgrade to the cheap streaming only plan. Netflix was too quick to go 'all-in' for streaming. I have a feeling they didn't want BD to be successful like DVD so they could push their joke of all jokes HD streaming service.

This idea that a business has to keep evolving while true to a point shouldn't mean you eliminate ASAP what made you strong to begin with. Netflix should have kept the disc business going for at least another decade.

Quote:
Originally Posted by Toknowshita View Post

Quote:
Originally Posted by lovinthehd View Post

Yet the enthusiasm is still there apparently, up $1.74/share today, now trading at 182.19. I kinda wish I bought stock back when I became a subscriber but never have been a fan of their financial model.

The stock is overvalued. They won't be able to keep the low priced subscription model up long term. I tired of the service after about a year and a half. Hollywood isn't going to give the content away.

Did you read the article? For them to be valued at the current prices they need to profit about $30 per subscription. Currently they are profiting about $2.50. IOW, either Netflix will have to raise prices or the walls are going to start crumbling. The graveyard of failed companies is littered with also rans that were first to market with a concept. Netflix is shaping up to be one of those casualities.

Yes, I read the article. Yes, I am an investor in stocks as well. I've been a subscriber to Netflix from the early days (to disc service primarily altho I do stream quite a bit lately). I just wish I had bought stock in the beginning...but I didn't, wouldn't even consider it now as of course that kind of valuation is just silly. I do like their service, though, for the price and convenience it can't be beat (but it's not my sole source of home entertainment either). I will likely cancel my subscription if they cancel disc rentals.
Reply
Reply
post #7 of 33
3/12/13 at 4:15pm
All this talk about Netflix giving up disc rentals, but where's the beef? It will be quite some time before that happens. In the meantime, they have decided to bite the bullet and invest in international markets and streaming, which is replacing a replicated format that unfortunately will become a dying breed. Whether it works out for them in the long term remains to be seen.


Ian
Reply
Reply
post #8 of 33
3/15/13 at 10:11am
Quote:
Originally Posted by Toknowshita View Post

I have a feeling they didn't want BD to be successful like DVD so they could push their joke of all jokes HD streaming service.

Did I miss something? What part of their streaming service is a joke? You can't expect them to have the latest titles for $8 a month.
Reply
Reply
post #9 of 33
3/15/13 at 12:31pm
Quote:
Originally Posted by theslug View Post

Quote:
Originally Posted by Toknowshita View Post

I have a feeling they didn't want BD to be successful like DVD so they could push their joke of all jokes HD streaming service.

Did I miss something? What part of their streaming service is a joke? You can't expect them to have the latest titles for $8 a month.

Yep, if there's a better streaming service I'd like to know what it is. The HD they're playing some games with now with the open connect thing, but for the price I still don't know anything that rivals the selection.
Reply
Reply
post #10 of 33
3/15/13 at 1:36pm
Quote:
Originally Posted by theslug View Post

Did I miss something? What part of their streaming service is a joke? You can't expect them to have the latest titles for $8 a month.

Good point. Also, if it's such a joke, why do many new streaming deices have a Netflix button? And how about their original series, like House Of Cards? Not to mention that there are more to come:

http://en.wikipedia.org/wiki/List_of_original_programs_distributed_by_Netflix


Ian wink.gif
Reply
Reply
post #11 of 33
3/17/13 at 9:41am
Netflix has been dying of the same heart attack for 20 years.
Reply
Reply
post #12 of 33
3/17/13 at 12:34pm
Hmm, I thought Netflix came into being with the DVD which was around 1997. I saw a preview presentation of DVD at a Philips booth at E3 in 1996. They were still fussing with the encoding then. I was an early Netflix users until more of the local rental shops got DVDs. Went back when the Hollywood Video nearby closed.
Reply
Reply
post #13 of 33
3/17/13 at 12:40pm
Quote:
Originally Posted by Dstone001 View Post

Netflix has been dying of the same heart attack for 20 years.

Maybe it's just been a long 16 years for you...
Reply
Reply
post #14 of 33
3/25/13 at 10:18am
As an investor now for at least 40 years, I'm going to refrain from going into any lengthy discussion / explaination on Netflix value / viability .. and I am a stockholder in the company and have done very well with it during the cycles ..

I will mention, however, that the trend since 2008 on Sales/Revenue goes from 1.36B in 2008 to 3.61B in 2012 .. that's billion ..

Bottom line is NF continues to revolutionize content delivery, is expanding Internationally, now creates it's own content, is a ubiquitous name, is embedded on about any device you can think of .. etc ..

Although it's not a buy at the current price level, I can find you more analysts that recommend the stock than don't .. or recommend a hold ..

They said Amazon was overvalued, they said Google was overvalued .. the list is long .. there is some sort of Shakespearean quote that goes something like "The rumors of my demise" .. or some such ..
Reply
Reply
post #15 of 33
3/25/13 at 10:30am
Thread Starter 
If everything is going to streaming... Netflix will not be able to maintain the $8 all you can eat buffet. Initially studios gave NF content cheap to see if there was interest in the model. Studios are no longer interested in giving content away. Netflix made a splash about how much they paid for Disney. If NF has to continue to bid $$$$ to get decent content it gurantees increased prices. The reality is they tried to kill the disc medium too soon. It was still generating a good portion of their revenue stream. Now most subscribers dropped to the $8 plan.

Just because they were first doesn't mean they are going to win.

WOW they produced their own content.... in reality the content will only be worth how good the quality is and producing good content costs $$$$.

And if I was an investor in the company I would be questioning how smart of a move it was in dumping the entire series at once. I bet in the future if smarter heads prevail they release their own content fast enough to keep interest but slow enough to get a few billing cycles.

I think one of the major reasons there was a lot of good spin around HoC is because most of NF streaming content is garbage.
Reply
Reply
post #16 of 33
3/25/13 at 11:19am
Bottom line, the future of Netflix's success may be promising, but it will be dependent on the quality of it's original programing and how much consumers will be willing to pay for it.

http://gigaom.com/2012/04/17/netflix-original-programming/



Ian
Edited by mailiang - 3/25/13 at 11:32am
Reply
Reply
post #17 of 33
3/25/13 at 11:35am
If I had a crystal ball, I'd be spending my time in Bali with a cocktail in one hand and a cigar in the other ..

Since I don't have a crystal ball, and I don't think anyone else does either, my money says check NF in 5 years ..

I thought the purpose of the thread was to discuss NF financials and viability .. If I had known that it was a vehicle to slam NF content, I would not have bothered posting as AVS has plenty of the negative (and positive) spin on content ..

I'll end with simply stating that Reed Hastings has always said, from day one, that the concept of NF is streaming, thus the name "Netflix" .. what he does to steer the company toward that original goal should not come as a surprise to anyone ..
Reply
Reply
post #18 of 33
3/25/13 at 2:45pm
Quote:
Originally Posted by Toknowshita View Post

If everything is going to streaming... Netflix will not be able to maintain the $8 all you can eat buffet. Initially studios gave NF content cheap to see if there was interest in the model. Studios are no longer interested in giving content away. Netflix made a splash about how much they paid for Disney. If NF has to continue to bid $$$$ to get decent content it gurantees increased prices. The reality is they tried to kill the disc medium too soon. It was still generating a good portion of their revenue stream. Now most subscribers dropped to the $8 plan.

When they add the disney content I doubt they will but even if they go to $9.99 a month they will still be giving users incredible value. They have a pretty good library of new content with the epix content (although they do need to get them to start doing 5.1 audio).
Quote:
Originally Posted by mailiang View Post

Bottom line, the future of Netflix's success may be promising, but it will be dependent on the quality of it's original programing and how much consumers will be willing to pay for it.

http://gigaom.com/2012/04/17/netflix-original-programming/



Ian

I always saw netflix trying to be a better hbo where everything is on demand and playable at anytime. Now with the focus turning to original content that is even more direct and they are doing some interesting things by releasing the whole season at once turning the traditional idea of how content is consumed on its head. Netflix is doing what most want hbogo to do in sell directly to the consumers w/o needing the cable subscription.
Edited by jagouar - 3/25/13 at 2:52pm
Reply
Reply
post #19 of 33
3/25/13 at 3:14pm
Quote:
Originally Posted by jagouar View Post

I always saw netflix trying to be a better hbo where everything is on demand and playable at anytime. Now with the focus turning to original content that is even more direct and they are doing some interesting things by releasing the whole season at once turning the traditional idea of how content is consumed on its head. Netflix is doing what most want hbogo to do in sell directly to the consumers w/o needing the cable subscription.

Based on recent numbers they may be on to something here.


http://www.theverge.com/2013/2/25/4029208/netflix-ceo-reed-hastings-says-house-of-cards-not-center-of-company



Ian wink.gif
Reply
Reply
post #20 of 33
3/25/13 at 3:50pm
Quote:
Originally Posted by jagouar View Post

When they add the disney content I doubt they will but even if they go to $9.99 a month they will still be giving users incredible value. They have a pretty good library of new content with the epix content (although they do need to get them to start doing 5.1 audio).
I always saw netflix trying to be a better hbo where everything is on demand and playable at anytime. Now with the focus turning to original content that is even more direct and they are doing some interesting things by releasing the whole season at once turning the traditional idea of how content is consumed on its head. Netflix is doing what most want hbogo to do in sell directly to the consumers w/o needing the cable subscription.

This is exactly my point in a previous post .. NF is revolutionizing the way content is consumed .. love them or hate them, the CATV premium market suppliers need a competitor that is doing just what NF is doing .. and we CATV subscribers have wanted it for years .. a la carte programing ..
Reply
Reply
post #21 of 33
3/25/13 at 4:06pm
Quote:
Originally Posted by mgkdragn View Post

.. there is some sort of Shakespearean quote that goes something like "The rumors of my demise" .. or some such ..

Mr. Clemens would be amused to be mistaken for Willie S. It was Mark Twain: "The report of my death was an exaggeration."
Reply
Reply
post #22 of 33
3/25/13 at 5:28pm
Quote:
Originally Posted by mgkdragn View Post

and we CATV subscribers have wanted it for years .. a la carte programing ..

I had this with Dish Network a few years ago, my only programming was HBO, Showtime, Starz/Encore and the music channels. Dropped all linear subscription programming in 2006 because we only viewed boxing and original programs and that was not worth $65.00 a month. I doubt they will do this type subscription anymore.
Reply
Reply
post #23 of 33
3/26/13 at 7:06am
Quote:
Originally Posted by Wendell R. Breland View Post

I had this with Dish Network a few years ago, my only programming was HBO, Showtime, Starz/Encore and the music channels. Dropped all linear subscription programming in 2006 because we only viewed boxing and original programs and that was not worth $65.00 a month. I doubt they will do this type subscription anymore.

I don't know how Dish defines a la carte, but in the case of my post it means : a menu of items ordered separately
Reply
Reply
post #24 of 33
3/30/13 at 7:55pm
Quote:
Originally Posted by mgkdragn View Post

This is exactly my point in a previous post .. NF is revolutionizing the way content is consumed .. love them or hate them, the CATV premium market suppliers need a competitor that is doing just what NF is doing .. and we CATV subscribers have wanted it for years .. a la carte programing ..

I don't think people really want a la carte programming. I'd rather get 200 channels for $100 a month, than my 15 favorite channels for $150 a month. The good channels are subsidized by the bad channels, with bundled packages. I suspect when people say they want a la carte, they are thinking it would be cheaper. The math I've seen (EngadgetHD has done some analysis) doesn't work that way.

It will be cheaper for some small segment that really only watch a small number of channels. For households like mine, where we watch more than a dozen channels, it would probably cost us more to go a la carte.

That said, I would REALLY like to see all TV services offer purchasable DVRs, instead of holding people hostage for $250/year for a rental... It almost enough to make me choose my subscription TV service based on that one factor.

Back on topic: Netflix's streaming service, while it may not be sustainable at current price/revenue/cost for them, is the one of the stronges examples of why bundled services are great and no one complains about the price -- because the price is low. Here's hoping there's a way that can continue.
Reply
Reply
post #25 of 33
3/31/13 at 6:07am
Many of us had ala carte on C-Band before the pizza pan dishes and sats became available and it was always cheaper to buy a package that included your channels than it was to purchase them separately.
Reply
Reply
post #26 of 33
3/31/13 at 9:17am
Quote:
Originally Posted by nathan_h View Post

That said, I would REALLY like to see all TV services offer purchasable DVRs, instead of holding people hostage for $250/year for a rental... It almost enough to make me choose my subscription TV service based on that one factor.


I'm not sure where you got your figures from, but I have 4 DIRECTV DVR's in my house, which are free, except for an additional $6.99 monthly DVR service fee. That's 83 dollars and change, total, annually. Even if you own a TIVO, you would still have to pay a monthly service fee.



Ian wink.gif
Edited by mailiang - 3/31/13 at 3:21pm
Reply
Reply
post #27 of 33
4/2/13 at 7:36am
Quote:
Originally Posted by mailiang View Post

I'm not sure where you got your figures from, but I have 4 DIRECTV DVR's in my house, which are free, except for an additional $6.99 monthly DVR service fee. That's 83 dollars and change, total, annually. Even if you own a TIVO, you would still have to pay a monthly service fee.



Ian wink.gif

That's a great deal! On Dish I have one Hopper (10/month) and one Joey (8/month) and was glad it was less than Comcast for the same setup.

I didn't realize I could lease 4 DVRs from DirecTV for 7/month! That's extraordinary. When I checked with DirecTV, it was 15 a month for the main box, and 6 for each additional one -- so it would have been 21/month for the setup equivalent to what I got from Dish. And the programming package was a few dollars more, as well.
Reply
Reply
post #28 of 33
4/2/13 at 7:54am
You can't. He forgot to tell you about the DVR fee, whole home fee, HD fee, etc. After discounts expire, you end up paying about $20/month for DVR service plus $7 or so per additional box, just like everybody else. And unlike Dish, DirecTV charges $10 just for HD.
Reply
Reply
post #29 of 33
4/2/13 at 11:49am
Quote:
Originally Posted by mdavej View Post

You can't. He forgot to tell you about the DVR fee, whole home fee, HD fee, etc. After discounts expire, you end up paying about $20/month for DVR service plus $7 or so per additional box, just like everybody else. And unlike Dish, DirecTV charges $10 just for HD.

Not true. I have 4 TV's. Two SD and two HD. When I switched to HD, over three years ago, they replaced my 2 SD DVR's for 2 free HD's. They swapped my 2 standard boxes with my SD DVR'S, which were also free. I still pay the standard monthly $6.99 additional box fee. I have never paid extra for a DVR except for the one $6.99 monthly DVR service fee. I also refuse to pay extra for HD, which they wave, since I'm a long time customer and they don't want to lose me. I receive better service and more channels then I ever had with Dish Network, which doesn't even cover any of my local teams, including the YES channel and the New York Yankees.



Ian wink.gif
Edited by mailiang - 4/2/13 at 12:05pm
Reply
Reply
post #30 of 33
4/2/13 at 12:28pm
Quote:
Originally Posted by mdavej View Post

You can't. He forgot to tell you about the DVR fee, whole home fee, HD fee, etc. After discounts expire, you end up paying about $20/month for DVR service plus $7 or so per additional box, just like everybody else. And unlike Dish, DirecTV charges $10 just for HD.

Just 2 weeks ago, I priced Dish and DirectTV since my Charter contract was up for renewal .. although there would have been a short term savings, the scenario you outline is pretty much nails it after the teaser rates expire ..
Reply
Reply
New Posts  All Forums:Forum Nav:
  Return Home

AVS Top Picks

AVS › AVS Forum › Video Components › Video Download Services & Hardware › All ain't rosy at Netflix