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Discussion Starter · #1 ·
By : Erik Gruenwedel | Posted: 05 Aug 2009
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Subscriptions for online video downloads generate 20 times the revenue and three to five times the monthly fees of comparable pay-per-download (PPD) business models, according to content aggregator Versaly Entertainment.


The Seattle-based company, which operates video clip site Vmbc.tv, said monthly subs download 25 times more clips than PPD consumers. The same cannot be said for mobile phone consumers who Versaly said could be paying less with an a la carte system.


Versaly said monthly views to Vmbc.tv increased about 60% in the second quarter, compared the same period last year.

http://www.homemediamagazine.com/ele...pay-view-16639


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Analyst: Redbox Undermining DVD Value



By : Erik Gruenwedel | Posted: 05 Aug 2009
[email protected]



The weed-like emergence of Redbox's $1-per-day DVD rental kiosks across the country could render DVD movies below commodity-priced status, according to Pali Capital analyst Richard Greenfield.


Greenfield, in a research note, cited an online banner ad from Albertsons that offered five free one-day Redbox rentals in addition to a $5-off Albertsons coupon with the purchase of more than $25 worth of Proctor & Gamble products.


Movie studios rely on the sale of DVDs, yet it would appear increasingly difficult to sell DVDs at $15-$20 a piece, if consumers believe movies are only worth $1/day, let alone free' with some groceries, Greenfield wrote.


The analyst said studios and cable operators banking on increased margins via day-and-date video-on-demand (VOD) offerings (including iTunes) on new release titles priced from $3.99 to $4.99 could create the impression among consumers that other forms of home entertainment (notably sellthrough) are terribly mispriced.


Worse yet, both VOD and iTunes often do not even have movies available the same day they hit Redbox, Greenfield wrote.
 

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Quote:
Originally Posted by hdnola /forum/post/16967205


By : Erik Gruenwedel | Posted: 05 Aug 2009
[email protected]



Subscriptions for online video downloads generate 20 times the revenue and three to five times the monthly fees of comparable pay-per-download (PPD) business models, according to content aggregator Versaly Entertainment.


The Seattle-based company, which operates video clip site Vmbc.tv, said monthly subs download 25 times more clips than PPD consumers. The same cannot be said for mobile phone consumers who Versaly said could be paying less with an a la carte system.


Versaly said monthly views to Vmbc.tv increased about 60% in the second quarter, compared the same period last year.

http://www.homemediamagazine.com/ele...pay-view-16639


also


Analyst: Redbox Undermining DVD Value



By : Erik Gruenwedel | Posted: 05 Aug 2009
[email protected]



The weed-like emergence of Redbox's $1-per-day DVD rental kiosks across the country could render DVD movies below commodity-priced status, according to Pali Capital analyst Richard Greenfield.


Greenfield, in a research note, cited an online banner ad from Albertsons that offered five free one-day Redbox rentals in addition to a $5-off Albertsons coupon with the purchase of more than $25 worth of Proctor & Gamble products.


Movie studios rely on the sale of DVDs, yet it would appear increasingly difficult to sell DVDs at $15-$20 a piece, if consumers believe movies are only worth $1/day, let alone free' with some groceries, Greenfield wrote.


The analyst said studios and cable operators banking on increased margins via day-and-date video-on-demand (VOD) offerings (including iTunes) on new release titles priced from $3.99 to $4.99 could create the impression among consumers that other forms of home entertainment (notably sellthrough) are terribly mispriced.


Worse yet, both VOD and iTunes often do not even have movies available the same day they hit Redbox, Greenfield wrote.

Except that NF isn't a subscription based service. So much for the premise....
 

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Discussion Starter · #4 ·

Quote:
Originally Posted by fpconvert /forum/post/16967336


Except that NF isn't a subscription based service. So much for the premise....

how so? its 8.99 a month for unlimited streaming + 1 dvd at a time, thats a subscription much in the same way as hbo showtime etc are on cable.
 

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Quote:
Originally Posted by fpconvert /forum/post/16968459


how many of those accounts rent 0 dvds per month?

Only Netflix knows for sure.


Analysts who track Netflix earnings believe that the surge of people subscribing via the 360 are doing the 1-at-a-time option since they are really signing up for streaming.


Netflix has also stated that users with the lower discs out at a time plan offer provide the highest profit margin. That would make sense as if they are primarily streaming, then Netflix is not sending buckets of money to the USPS to support those users.
 

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There is also no way to determine if people are using the DVD-by-mail portion of the service. Of course, making any assertion based on not being able to prove a negative is rather pointless... especially when there is data to make a reasonable hypothesis.


Netflix does not offer a physical media only subscription... and rightly so. The physical media management and shipping is very costly, and they have already stated seeing the trend of people renting out less physical discs once they activate streaming.


Either way, I don't think Netflix cares. As long as they can grow by getting people to sign up for the 1 disc-at-a-time level.


Based on how people are signing up, them activating their hardware for streaming playback and the service level trend (1 disc at a time), you can make a reasonable hypothesis that streaming is now a major attraction for a large number of their recent surge of new subscribers. Add in that Netflix has repeatedly stated that streaming is driving their growth and the reasonable conclusion is obvious.


Of course, someone could try really hard to be in denial and go the route of asking for someone to prove a negative. I would be more impressed with any data or analysis that supported the idea that streaming was not driving growth. After all, a counter-argument without supporting data is hardly a discussion worth having.
 

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Hows about just providing proof for the opening line:

"Sub services like Netflix WatchInstantly generates 20x the revenue of ppv download"


I don't see anything in the original article linking NF, revenue or PPV.


I do see something about video clips, revenue, PPV clips and mobile phones.


If you know anything about NF and vmbc, you know they are entirely different concerns.
 

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Quote:
Originally Posted by PSound /forum/post/16968530


Only Netflix knows for sure.


Analysts who track Netflix earnings believe that the surge of people subscribing via the 360 are doing the 1-at-a-time option since they are really signing up for streaming.


Netflix has also stated that users with the lower discs out at a time plan offer provide the highest profit margin. That would make sense as if they are primarily streaming, then Netflix is not sending buckets of money to the USPS to support those users.

They are always asking me to move up to the next level. "Upgrade to x number of disks for only $1.00 for the rest of the month." Why would they do that if it loses them money?
 

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If they asked you to pay $1 more per month and get the same amount of streaming titles you wouldn't upgrade your membership.

$1 for 1 dvd is a value, however, the $1 increase is only for a partial month. Depending on the time of month and the next upgrade level, it might double or triple.

Money spent on mailing is reflected in your subscription rates. There is no reason to feel bad for NF.
 

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Quote:
Originally Posted by PSound /forum/post/16968690


There is also no way to determine if people are using the DVD-by-mail portion of the service. Of course, making any assertion based on not being able to prove a negative is rather pointless... especially when there is data to make a reasonable hypothesis.


Netflix does not offer a physical media only subscription... and rightly so. The physical media management and shipping is very costly, and they have already stated seeing the trend of people renting out less physical discs once they activate streaming.


Either way, I don't think Netflix cares. As long as they can grow by getting people to sign up for the 1 disc-at-a-time level.


Based on how people are signing up, them activating their hardware for streaming playback and the service level trend (1 disc at a time), you can make a reasonable hypothesis that streaming is now a major attraction for a large number of their recent surge of new subscribers. Add in that Netflix has repeatedly stated that streaming is driving their growth and the reasonable conclusion is obvious.


Of course, someone could try really hard to be in denial and go the route of asking for someone to prove a negative. I would be more impressed with any data or analysis that supported the idea that streaming was not driving growth. After all, a counter-argument without supporting data is hardly a discussion worth having.

Nobody asked you to prove a negative.


I don't know where you got that.




Warning: "This graph is based on a small sample of netflix customer, like all graph on this site so you may take it with a grain of salt. But for the purpose at hand it will do."

http://feedfliks.com/plan_type


According to this graph about a 3rd (32%) are on the 1 disc plan but 2/3rd are on the 2, 3 and 4 disc plan. 3 disc at a time being the most popular plan at 33%.


You must also account for the fact that people may have downgraded their account to the 1 disc due to the economical incertitude or because it is summer or they don't watch that many movie in a week (not all people are like us you know). You can't really assume that they are ALL going to the 1 disc at a time just for streaming. Some do but other may not.


Nobody is saying that streaming isn't a good bonus to the services that netflix renders to its customer. It is a popular option for some. But to jump the gun and say that the vast majority of 1 disc at a time are there only for the streaming is a bit much unless you have the number or proof to back it up.
 

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Quote:
Originally Posted by joed32 /forum/post/16969273


They are always asking me to move up to the next level. "Upgrade to x number of disks for only $1.00 for the rest of the month." Why would they do that if it loses them money?

First, I am guessing that the $1 for the rest of the month is pro-rated....



It doesn't lose them money to have people on the higher disc out plan. In fact the net revenue and profit certainly goes up (they price it with that in mind).


But the profit margin (%) is still higher for those on the lower plan. And that has been discussed in earnings calls because that is where much of the growth is coming. The Netflix execs point out that seeing growth in the lower plans is not a concern for them because even if the average revenue and net profit is lower, the profit MARGIN (%) is higher.
 

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Quote:
Originally Posted by Nosferax /forum/post/16969521


Nobody asked you to prove a negative.


I don't know where you got that.




Warning: "This graph is based on a small sample of netflix customer, like all graph on this site so you may take it with a grain of salt. But for the purpose at hand it will do."

http://feedfliks.com/plan_type


According to this graph about a 3rd (32%) are on the 1 disc plan but 2/3rd are on the 2, 3 and 4 disc plan. 3 disc at a time being the most popular plan at 33%.


You must also account for the fact that people may have downgraded their account to the 1 disc due to the economical incertitude or because it is summer or they don't watch that many movie in a week (not all people are like us you know). You can't really assume that they are ALL going to the 1 disc at a time just for streaming. Some do but other may not.


Nobody is saying that streaming isn't a good bonus to the services that netflix renders to its customer. It is a popular option for some. But to jump the gun and say that the vast majority of 1 disc at a time are there only for the streaming is a bit much unless you have the number or proof to back it up.

I really can't disagree with what you stated in this post.


I don't think I ever said that the vast majority of 1 disc at a time is there only for streaming. What I said is that the combination of the growth of the plan AND the fact that many are coming in attached to streaming hardware (like BD players and the 360) strongly suggest that streaming is indeed a major drive for growth. The supporting data makes this more than as assumption.... I think anyone with an open mind who understands the subscriber trends can make a reasonable hypothesis that streaming is a major catalyst for Netflix growth. Add in the fact that Netflix has repeatedly stated the same in SEC filings and earnings calls and people asserting that streaming is NOT the major catalyst for growth look downright silly.
 

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Quote:
Originally Posted by PSound /forum/post/16970124


I really can't disagree with what you stated in this post.


I don't think I ever said that the vast majority of 1 disc at a time is there only for streaming. What I said is that the combination of the growth of the plan AND the fact that many are coming in attached to streaming hardware (like BD players and the 360) strongly suggest that streaming is indeed a major drive for growth. The supporting data makes this more than as assumption.... I think anyone with an open mind who understands the subscriber trends can make a reasonable hypothesis that streaming is a major catalyst for Netflix growth. Add in the fact that Netflix has repeatedly stated the same in SEC filings and earnings calls and people asserting that streaming is NOT the major catalyst for growth look downright silly.

But we don't know that for sure since we don't have the data to back it up. We assume that the growth is from people who use streaming but it could also be by people who downgrade from 3 to 1 due to economic or change in lifestyle or that the growt is fueled by people who want to try out that cool dvd by mail services that we hear so much in product placement, news or advertising these day.


Media streaming device sold /= netflix streaming or any other streaming service either. People buy the xbox360 first and foremost for the gaming. People may buy a streaming enabled BR player but they don't necesseraly have a connection for it in their living room and may just want to use it for BR playing.


Now, does the 1 at a time deal membership is increasing: Yes!


Does that mean that people are getting it for the media streaming capability: Maybe... We don't know and Netflix could answer the question by just rolling out a streaming only deal.
 

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Quote:
Originally Posted by Nosferax /forum/post/16970244


But we don't know that for sure since we don't have the data to back it up. We assume that the growth is from people who use streaming but it could also be by people who downgrade from 3 to 1 due to economic or change in lifestyle or that the growt is fueled by people who want to try out that cool dvd by mail services that we hear so much in product placement, news or advertising these day.


Media streaming device sold /= netflix streaming or any other streaming service either. People buy the xbox360 first and foremost for the gaming. People may buy a streaming enabled BR player but they don't necesseraly have a connection for it in their living room and may just want to use it for BR playing.


Now, does the 1 at a time deal membership is increasing: Yes!


Does that mean that people are getting it for the media streaming capability: Maybe... We don't know and Netflix could answer the question by just rolling out a streaming only deal.

If the profit or the market were as good as some claim, you would think someone would do it by now.
 

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Quote:
Originally Posted by Nosferax /forum/post/16970244


But we don't know that for sure since we don't have the data to back it up. We assume that the growth is from people who use streaming but it could also be by people who downgrade from 3 to 1 due to economic or change in lifestyle or that the growt is fueled by people who want to try out that cool dvd by mail services that we hear so much in product placement, news or advertising these day.

The overall Netflix growth is NEW subscribers who are starting with the 1-at-a-time plan and attaching it to streaming hardware. Take a look at Netflix's growth before and after adding the streaming service to 3rd party hardware. And AGAIN.... Netflix has repeatedly cited streaming as the catalyst for the jump in growth.

Quote:
Media streaming device sold /= netflix streaming or any other streaming service either. People buy the xbox360 first and foremost for the gaming. People may buy a streaming enabled BR player but they don't necesseraly have a connection for it in their living room and may just want to use it for BR playing.

Of course... but people with the 360 are helping Netflix grow.


And Netflix has already stated that the attach rate for Netflix enabled BD players is higher than they expected. Streaming IS valuable and people like and use it.

Quote:
Now, does the 1 at a time deal membership is increasing: Yes!


Does that mean that people are getting it for the media streaming capability: Maybe... We don't know and Netflix could answer the question by just rolling out a streaming only deal.

Why would they? They know what is driving their growth, and they are quite happy. That would be like saying Blockbuster has no idea how valuable BD subscription rentals are to them because they do not offer a BD-only plan. Why would they? They obviously consider it a strategic decision to offer it as one service. Netflix is doing the same with streaming. The market will ultimately show which offering consumers decide to embrace and grow.
 

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Quote:
Originally Posted by PSound /forum/post/16970800


The overall Netflix growth is NEW subscribers who are starting with the 1-at-a-time plan and attaching it to streaming hardware. Take a look at Netflix's growth before and after adding the streaming service to 3rd party hardware. And AGAIN.... Netflix has repeatedly cited streaming as the catalyst for the jump in growth.




Of course... but people with the 360 are helping Netflix grow.


And Netflix has already stated that the attach rate for Netflix enabled BD players is higher than they expected. Streaming IS valuable and people like and use it.




Why would they? They know what is driving their growth, and they are quite happy. That would be like saying Blockbuster has no idea how valuable BD subscription rentals are to them because they do not offer a BD-only plan. Why would they? They obviously consider it a strategic decision to offer it as one service. Netflix is doing the same with streaming. The market will ultimately show which offering consumers decide to embrace and grow.
Some people with xbox360 and some people with streaming enabled BR player are helping netflix. Not all of them. Many aren't even hooked to the net.


This is circular reasonning and it brings us back to the fact that Netflix isn't making any money on streaming. Since they are a business and they are in it for the money the only factor that matters is revenue. Since they don't offer a streaming only you can only assume that people are subscribing to the one disc at a time for the streaming option. You have no real data to support that except for a few citation that read more like sales pitch than fact. Show us the money please Mr. Netflix.


The market will ultimately show what the consumer decide the day streaming can stand on its own legs and not use DVD as a crotch. Until then streaming success is only asumed to be and is not a fact.
 

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Quote:
Originally Posted by Nosferax /forum/post/16970852

Some people with xbox360 and some people with streaming enabled BR player are helping netflix. Not all of them. Many aren't even hooked to the net.


This is circular reasonning and it brings us back to the fact that Netflix isn't making any money on streaming. Since they are a business and they are in it for the money the only factor that matters is revenue. Since they don't offer a streaming only you can only assume that people are subscribing to the one disc at a time for the streaming option. You have no real data to support that except for a few citation that read more like sales pitch than fact. Show us the money please Mr. Netflix.


The market will ultimately show what the consumer decide the day streaming can stand on its own legs and not use DVD as a crotch. Until then streaming success is only asumed to be and is not a fact.

Netflix offers a hybrid service of DVD-by-mail and streaming. That is their business. Read their SEC filings. Read the comments from the executives who set and run their business. They are very clear that they are selling a hybrid service, and hence are making revenue off of the combination of DVD-by-mail and streaming services. It is that simple.



As far as needing a "crutch"... Right now streaming and Blu-ray are both emerging and growing markets. Neither seems to have enough content to be a stand-alone subscription service yet. I don't recall how many titles Blu-ray has, but Netflix alone has ~ 15,000 streaming titles available. Blockbuster has decided to embrace Blu-ray as a value-add as a way to drive growth. Netflix has embraced streaming as a value-add as a way to drive growth. We can take a look at the growth of each to at least see which has relatively more value to the consumer.
 

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Quote:
Originally Posted by PSound /forum/post/16971611


Netflix offers a hybrid service of DVD-by-mail and streaming. That is their business. Read their SEC filings. Read the comments from the executives who set and run their business. They are very clear that they are selling a hybrid service, and hence are making revenue off of the combination of DVD-by-mail and streaming services. It is that simple.



As far as needing a "crutch"... Right now streaming and Blu-ray are both emerging and growing markets. Neither seems to have enough content to be a stand-alone subscription service yet. I don't recall how many titles Blu-ray has, but Netflix alone has ~ 15,000 streaming titles available. Blockbuster has decided to embrace Blu-ray as a value-add as a way to drive growth. Netflix has embraced streaming as a value-add as a way to drive growth. We can take a look at the growth of each to at least see which has relatively more value to the consumer.

First, why are you bringing Blu-Ray media or Blockbuster in this conversation. Except for streaming enabled player nobody talked about BR media here.

And Blockbuster is irrelevent in this discussion.


And again this is not proof. You are reading too much into the SEC filling and those commentary and are losing your objectivity in the process. Those are sales pitches. The guy has a business to sell. He's not going to say anything negative in any of his commentary or filling. Same goes for any company.


Do you always believe CEO when they post commentary. Do you believe every SEC filling content. Did you invest in Enron, AIG, GM...


They don't make money from their streaming business. They only make money from their DVD renting. You can only assume that if there was a streaming only option it would be as profitable as the disc rental plan.


I would really like to see how much it cost (real solid data not comment) them in bandwith, infrastructure, toc, architect, analyst, MIS, DBA, programmer, etc... Are they outsourcing? Do you have those figure? I would like to know when those figure are amortized and calculated into the cost of your subscription, how much people who don't stream have to pay to subsidized that "bonus" feature? Do you have a detail list of those cost? And how those cost compare to the USPS fees. And if they amount to next to nothing, then why not spin it off into its own plan?


Also streaming seems, as you are saying, to be tied with the 1 disc at a time plan. What about those that rent more than 1 disc? They represent 68% of the customer of netflix. Do they have to subsidized the streaming of those on the 1 disc plan if they are less inclined to use it or not at all? Do you think it is fair? Do you think it is a customer oriented practice?


If streaming is such a panacea then it should be able to survive on its own. It would also serves to prove your point that streaming is really the future. Maybe you should ask them to go ahead and make such an option available.
 
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