Netflix BD disc rental discussion thread - Page 278

Well, I just watch The Possession, a Lions Gate film, and the DTS Master audio track fared pretty well. So much for all the theories we've drawn around here.



Ian

I read this at http://www.tvtechnology.com/article/reality-trumps-digital-imagination/217260

"Although "The Men Who Built America" is destined to be repeated on H2 (the second History channel), it will also air in Europe this month. The episodes are available on Amazon, and the whole series will be released by Lionsgate on Blu-ray disc and DVD on Jan. 22. ..."

I thought I'd add it to my Netflix queue - and found yet another example where Netflix carries a title, but only on DVD, not BD. Nice of them to charge a BD premium and not carry the BD.

Another irritation: "Salmon Fishing in the Yemen" has been at the top of my queue as "Very Long Wait" for months. Maybe they should buy a second copy.
Edited by R Johnson - 1/22/13 at 11:53am

I've had several instances where I've added a DVD to my Q that NF ended up stocking the BD on a few weeks later .. it's always worth a shot ..

I caught "The Men Who Built America" on History HD .. it was really not that great ..

That's consistent with my Redbox rental of Expendables 2. Lionsgate put only the Dolby Digital audio track on it; no DTS-HDMA like the retail release.

The two top movies in my Que shows that they were shipped on Monday which was confirmed by email. I received them on Tuesday. This certainly wouldn't be unusual if it weren't for the fact that Monday was a federal holiday. US Postal offices were close.





Hmm............





Ian

NF routinely picks up their disk loads directly from the Post as well as delivering loads .. they do not rely on delivery or pickup to a dist. center .. thus, it's not unusual that shipments transit even during Holiday periods .. it's happened to me consistently and it's one of the nice features of the service, IMO ..

This is SOP. There's no mail delivery but the sorting centers are working, which is where the discs get handled. Most of the "bank holidays" are this way.

...which is exactly why the USPS complaining about "extra trouble" to deal with Netflix deliveries was complete BS. It's a big, obvious red envelope they throw into a big bin for Netflix to come along, pick up and sort themselves.

Yesterday, I met with a honcho from USPS to negotiate my rates .. one of my points during the negotiation was the incredibly low priced deal NF has .. based, I know, on them picking up and delivering loads themselves to USPS and eliminating the Post Man during those legs of the transit ..

Although I am unable due to privacy issues to disclose what NF pays per disk / contract .. I can tell you that I believe regular Postal Customers subsidize the rate .. if full cost were paid, my guess is the NF subscriptions would have to at least double in price ..

See, this is what I don't get....

Why would any company negotiate a rate they can't afford? If the USPS made the deal, that's on them. They should have demanded more.

Further, I can't possibly believe the subscriptions would double. I pay a little over $20 a month for a disc plan. I go through roughly 6 disc per week - 25 per month. There's no way they would need close to a buck more in postage to break even on what it costs to ship them to me, then pass them off to the large central postal centers when I send them back. They don't need to even look at the address on the way back. There's no way it's harder to manage than someone's hand-scrawled address on a typical greeting card. Further, I can mail 6 pages of paper for the current first class rate, which is still under $.50. Those 6 sheets of paper are about the weight of a DVD and I can use any number of different sized envelopes to send them.

I call BS on whatever data you've received from the very place complaining about how much Netflix pays.

If the full rate were paid per mailing, using your own example, the cost, if set the same as a one ounce letter, would be $22.50 .. that's 25 disks a month, back and forth .. as well, keep in mind that NF does eliminate the main pickup / drop off .. however, the carrier still delivers the disk to your mailbox and returns it to the Postal Center that NF uses for main pickup .. there is still routing along the way .. not all Post Offices are directly linked one way .. mail must be routed along the path ..

Even at half the standard rate, the cost would be $11.25 per month, leaving $11.50 to support the cost of content, employees, infrastructure, etc ..

I'll add that NF has also made it clear that they really want to move to full streaming .. which then makes the case for why would the Post cut a deal that's likely a loser that won't be made up in the future since NF wants to eliminate the Post altogether ..

If my math is correct, your cost per disk is 80 cents .. and mine is about the same .. although we may be the exception to the rule and even assuming the average NF customer does not churn disks that fast, it's fairly evident that mailing is not cost effective and if the content can be delivered in the stream, huge money can be saved ..

According to the recent financial report / investor letter at http://ir.netflix.com/

The 25.47 domestic (USA) streaming paid subscribers generated a 109M$ profit contribution in the 4th quarter. 109/25.47 = $4.28 per subscriber.

International streaming contributed a loss of 105M$....

The 8.05M paid disc subscribers generated a 128M$ profit contribution in the 4th quarter. 128/8.05 = $15.90 per subscriber.

Please remind me why Netflix wants to kill off disc rental.

As a stockholder, that's easy .. NF gained a good jump in streaming subscribers .. however, actually lost disk by mail customers .. the increase in streaming customers more than offset the loss in disk by mail .. they are headed in the exact direction they want to head, IOW ..I'm talking about number of customers, not the money ..

The thing is, no bulk rate system pays full price. Mailing in bulk carries a rather big discount.

In fact, 1st class letters are the opposite of that: when you mail out a rent rent check or a one or two page letter, you're over paying. Even for single letters, you could pay less by weighing the envelope and paying the actual rate by weight. That's how 1st class mail is able to support junk mail rates, along with large mailers like Netflix.

But, my point was that the rate wouldn't need to double the cost of someone's subscription to pay the cost of shipping because they shouldn't ever be paying full 1st class rates. No one that mails more than a couple dozen pieces of mail a day would ever pay that much per piece - and Netflix likely mails thousands a day. At minimum, they would get a 25-30% discount - and any bulk mailer can get that. So, seeing as Netflix sends out so many discs and the post office nevers goes to their place to pick up or drop them off, it's not unreasonable for them to get a 50% or greater discount without even trying to negotiate. Think about it: Netflix drops off the discs at the main office closest to the particular distribution center, so the post office doesn't pick up from them. Netflix also picks them up from that same center so they aren't being delivered to them. In the return phase, all the post office has to worry about is plucking out those red envelopes and putting them aside, unlike other mail that has to be run through the sorters. Finally, not all customers return a disc from their home box (I don't have mail pickup, so I have to drop my discs in a drop box or at the post office). So, the only "effort" for every disc is in making sure it gets to the customer's home. It's actually less effort for the USPS than even their own notices of PO Box renewals.

So, the result is, a 3 out plan with average useage (and you and I are actually above average on disc turnaround) should only require maybe a 15-20% increase to get them in the zone of other mass mailers, with a bit of a premium discount based on volume.

The fact remains, though, if the USPS made the deal they made, they have to live with that. The fact that the Post Office is hurting for cash has nothing to do with Netflix.

Somehow I thought stockholders liked money. And profitable customers. I must have missed the memo.

Yes, streaming "is the future", but Netflix seems to want to kill the cash cow a mite early.

Agreed.

Streaming started out cheaper for them, which is why it was included at first. The problem is, it got popular and the price for rights went up exponentially. As of last reports, the disc end is actually more profitable based on average customer useage. The likely reason is there's less ongoing acquisition costs as long as not too many discs are going out of service before popularity has a chance to die off for a title. Streaming will always get more expensive every time a renewal comes up.

Now, if the Post Office does succeed in getting more mailing money, then that might sing things the other way - especially since there's bound to be a streaming price increase coming down the pike. If Netflix is smart, they'll keep it at $8 for those that also have a disc plan to encourage those customers to stream more and have less shipped, but alone it will be $10.99 for a streaming plan.

Unfortunately, that's not the way it will be, so my recent re-sub to streaming to watch some items that aren't available on disc will likely end if I have to pay more to receive both services.

Netflix streaming margins are up to 11%, DVD margins are 52%. However, streaming net profit figures are a bit misleading due to the increase in investment. This includes more licensing agreements, producing their own media and contributing to production costs for content exclusivity. However, since their disc service has little competition, especially now that Block Buster is losing it's market share, it still remains a very good profit center, so I don't expect it to be going anywhere anytime soon.


Ian
Edited by mailiang - 1/24/13 at 12:55pm

^^^ .. the shift to full streaming is also very much contingent upon the ability to negotiate for the content .. and the profit margins on a full streaming catalog are projected to be substantially greater than disk by mail over time .. as well, the International roll out of the streaming catalog has impacted profit ..

Reed Hastings has said from day one that his goal is full streaming, no disk catalog .. and the Company continues to move in that direction .. won't happen overnight, of course, but it's where the money will be in the future .. it may seem bass akwards now, but foresight is required .. something Blockbuster did not have ..

Unfortunately that is becoming the trend, and regardless of the benefits of BD technology, in terms of data storage and PQ, Hastings has realized that in the long term, disc rental will have its short comings.


-Kevin C. Pohlmann Consultant, author and writer for S&V.Professor emeritus at the University Of Miami.



Ian

^^^ BD will be the last physical format that is mass marketed .. we may have 4K but it will be a tiny niche ..

I agree. It's all about cost verses value, and at this point, I don't see 4k ever being cheap.


Ian
Edited by mailiang - 1/24/13 at 3:09pm

and all the members here will have 4k br even if no one else does

Ian

I think it's about convienience, what Hollywood wants in order to control content, the proliferation of device apps, Joe Q not really caring that much about quality, and it's just the way of the World ..

So sad, so sad....



Ian

As I mentioned in reply to your post in the other thread on the subject, that's par for the course with Lionsgate. They only delete the lossless tracks on the big tent pole summer action movies - basically, stuff that goes "boom" a lot.

Too true.

First the discs will go away.
Next downloads you can own will go away.
Then all-you-can-eat streaming plans will go away.

What we'll be left with is pay-per-view streaming.

puke.

I pray pray pray it doesn't come to that.

You know, that's likely what the studios would love to see .. at my age, I don't think I'll see the full evolution in my lifetime and that's fine ..

Like I said, we'll see. I'll keep you posted on the BD's that I receive.



Ian