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Discussion Starter · #1 ·
I know a lot of you are bullish on Netflix's long term potential but I'm a little more skeptical. The more quality content they want the more they're going to have to pay which has been my assertion from the start because of the huge revenue streams that studios get from Cable, VOD, etc. Content costs money and they got a free ride onto CE devices but they're not going to get content for bargain prices.

Why Netflix Won't Be the HBO of the 21st Century
 

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I don't want them to be the next HBO, I want them to be the next Ebay, Dell or Google.


They will continue to do well with the free movie offerings for a low monthly fee. And the costs of streaming blu ray movies will come down as it continues to be more popular. I would not be surprised to see SD movies stop being produced in another 2 years or so.


The movie studios have a lot riding on every movie. Only about 1/5 ever make a profit from the movie houses. And they cost about 60m for a major motion picture. They will use every resource to get new revenues. HBO, Redbox, blockbuster and Netflix.


This may not be everyone's idea, but I would also like to see them start offering online books like they do at some libraries now. And perhaps offering audio books to download.


I don't see them in the movie business as much as I do in the entertainment industry. They may not make much more money downloading books but it gives people another reason to return to their site.
 

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Ummm..... Where does the article have a negative view on Netflix's long term potential?

Quote:
Netflix has brilliantly carved out for itself a niche audience who largely enjoy the convenience of receiving older movies, which accounts for about two-thirds of its revenue. It will no doubt continue to satisfy and expand this audience via mailing and streaming. But what it lacks is the wherewithal to do is to replace HBO.

And even HBO realizes that streaming access is where it is at:

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It's in the process of rolling out an Internet service called HBO Go which will allow all HBO subscribers to get, as the executive puts it, "anything they want to see, anytime, anywhere, over their laptop, Iphone, tablet, Playstation." Bolstered by its exclusive content, HBO will initially offer some 800 hours a month of programming a month. Its 40 million subscribers can get at no additional charge over the Internet the linenew titles HBO acquires through its output deals with Warner Bros, Fox, and Dreamworks, past and present original series, HBO boxing, and even so-called "late night" fare such as Alien Sex Files.
http://gawker.com/5471943/why-netfli...e-21st-century
 

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And something to consider... HBO get's $6 a month of revenue per subscriber. Netflix's ARPU is higher.


And although First Sale Doctrine does not apply to streaming movies (from Netflix), it also does not apply to HBO. That mean that if Netflix is able to pay studios MORE than HBO can, then the studios will NOT walk away from that money. Even if it can't pay more, the revenue stream from Netflix is simply too large for any studio to ignore.
 

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Discussion Starter · #5 ·
You always ignore the fact that to get premium content Netflix is going to have to pay more and make it seem like everyone will bow to Netflix.

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Disney, according to a top executive involved in the dispute, has warned Starz that it will not renew its output deal (which expires in 2012) unless it either cuts Netflix out or pays Disney a rich premium.
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Despite this well-meaning new-age talk, what is really at stake here is old-fashioned money. The most profitable part of Hollywood's "ecosystem" is the output deals through which studios license movies to Pay TV channels, cable networks and broadcast stations. According to the studios's internal all-source revenue numbers, the six major studio took in $16.2 billion from pay-TV and television licensing of their movies in 2007, which was almost all profit. So the threat of sub-licensing for Internet circulation involves a good more than studio paranoia.
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But competing in this game, in which the licenses for a slate of two dozen movies can cost in excess of a quarter of a billion dollars, could prove prohibitively expensive. Last year Netflix reportedly spent $100 million on licensing just non-exclusive rights to movies for streaming from Starz and studio libraries.
 

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Quote:
Originally Posted by lakers42 /forum/post/18141942


You always ignore the fact that to get premium content Netflix is going to have to pay more and make it seem like everyone will bow to Netflix.

I never said any of those things.


What I am saying is Netflix (like HBO, broadcast TV, etc) has money to spend that the studios cannot and will not ignore. Their model is popular and growing exceedingly fast (30% growth if phenomenal). As their revenue base increases, their influence and ability to get content increases. Likewise, as studios provide more streaming content, the studios will actually see an INCREASE in revenue percentage from Netflix as the very expensive USPS costs are decreased.


Netflix has a model that resonates well with consumers. As a result, they have money to spend. The studios will work with them to try and get as much of a cut of that revenue as possible.




Kudos to HBO for realizing that to remain competitive they will have to provide streaming services to their customer base. Like every company in the home video business, they are adapting to stay relevant.


Major kudos to Netflix for having a vision and delivering the hybrid service that is fueling their tremendous growth, now and in the future. That vision has not only secured their future, but put them ahead of the curve and driven record growth for them in an otherwise tough home entertainment market.
 

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Discussion Starter · #7 ·
Netflix will be stuck showing old movies unless they step up and acquire fresher content.

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Of course, whether or not the Starz deal is renewed, Netflix can exclusively license programming through output deals. But competing in this game, in which the licenses for a slate of two dozen movies can cost in excess of a quarter of a billion dollars, could prove prohibitively expensive.

Thus far, they haven't shown any inclination that they'll pay for newer movies. They're happy offering some new TV shows, documentaries, and old movies.
 

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Quote:
Originally Posted by lakers42 /forum/post/18142860


Netflix will be stuck showing old movies unless they step up and acquire fresher content.




Thus far, they haven't shown any inclination that they'll pay for newer movies. They're happy offering some new TV shows, documentaries, and old movies.

It is all about money. Netflix continues to grow like gangbusters with their current offering. As their revenue goes up, they will be able to offer more and more $$ to the studios.


And sooner or later some wise studio exec is going to recognize that there is more revenue for the studios, at a lower cost to satisfy Netflix' customers with Digital Delivery versus physical media. Why author, manufacture, ship (and ultimately destroy) all that physical product when it can be delivered electronically, with 2/3 of Netflix revenue going to the studios rather than that cut of the pie being split by the studios and the United States Postal Service.


Right now they are concerned about how it will impact the existing window structure. But studios are already tweaking those windows to deal with the current customer climate.
 

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Discussion Starter · #10 ·

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Originally Posted by PSound /forum/post/18143011


It is all about money. Netflix continues to grow like gangbusters with their current offering. As their revenue goes up, they will be able to offer more and more $$ to the studios.

They only have 12 million customers and only half that stream. Of that half, there is a large number that stream minimal amounts of video and sees the streaming as a free add on to the DVD by mail service. Studios are going to make Netflix pay. Up to this point, they haven't been offering studios more $$ or value than others.
 

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Quote:
Originally Posted by lakers42 /forum/post/18146910


They only have 12 million customers and only half that stream. Of that half, there is a large number that stream minimal amounts of video and sees the streaming as a free add on to the DVD by mail service. Studios are going to make Netflix pay. Up to this point, they haven't been offering studios more $$ or value than others.

Can you post the data regarding the large number that stream minimal amounts?
 

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As a fan of classic movies, I'm happy having many of the older films available through Netflix , but I'd be the first to admit there is a lot of questionable stuff mixed in to make their 'impressive' total number of streaming programs. That said, the Roku box /netflix selection was a godsend during the recent blizzard -- the three dvds we had out were done in a couple of days and the streaming movies and podcasts helped fill the void.


I also like the idea of the audio books mentioned above- it would be a limited audience, I imagine, and maybe a one time only listen vs download to keep would differentiate it from companies like audible.com. Wonder what the licensing fee for something like that might be? Netflix would have to hammer away at that pricing structure before it would be a viable option - current audio books are pretty pricey, but that's for a transfer of the file for long term use. This would have to be for ... maybe a month? Apple may be diving into that market more enthusiastically with the pending release of the ipad tablet -magazines and books might be the perfect add-on (reading vs watching vs listening) for the itunes store. But Netflix has such customer loyalty and a built out infrastructure, I can definitely see them branching out and adopting a more robust streaming delivery model.
 

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Quote:
Originally Posted by lakers42 /forum/post/18146910


They only have 12 million customers and only half that stream. Of that half, there is a large number that stream minimal amounts of video and sees the streaming as a free add on to the DVD by mail service. Studios are going to make Netflix pay. Up to this point, they haven't been offering studios more $$ or value than others.

As Netflix has stated (repeatedly), streaming is driving their growth. Their new customers are streaming at a higher rate than the existing customer base, but that base is embracing streaming and moving closer to the new customer usage pattern (more streaming). Their growth is massive and is significant enough to be something that the studios cannot ignore.


Studios are not going to make Netflix do anything. Netflix has stated time and time again that they want to pay the studios more for their content instead of paying a huge chunk of cash (1/3 of Netflix revenues) to the USPS.
 

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Discussion Starter · #14 ·

Quote:
Originally Posted by PSound /forum/post/18146993


As Netflix has stated (repeatedly), streaming is driving their growth. Their new customers are streaming at a higher rate than the existing customer base, but that base is embracing streaming and moving closer to the new customer usage pattern (more streaming). Their growth is massive and is significant enough to be something that the studios cannot ignore.


Studios are not going to make Netflix do anything. Netflix has stated time and time again that they want to pay the studios more for their content instead of paying a huge chunk of cash (1/3 of Netflix revenues) to the USPS.

They haven't paid anyone so far. They've just sub-licensed the content that Starz paid for and Disney is threatening to cut Starz off if they don't cut off Netflix or Netflix doesn't pay a fair share for the content. Netflix is looking for bargain rate deals for premium content but they don't have the leverage to pull it off.
 

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Quote:
Originally Posted by lakers42 /forum/post/18147413


They haven't paid anyone so far. They've just sub-licensed the content that Starz paid for and Disney is threatening to cut Starz off if they don't cut off Netflix or Netflix doesn't pay a fair share for the content. Netflix is looking for bargain rate deals for premium content but they don't have the leverage to pull it off.

Wow! That is some pretty big misinformation.


They have worked with Starz to get content, but they also have direct agreements with studios for their streaming content.


Those agreements are expanding, with Warner being a recent studio where they were able to strike a deal for expansion of streaming content in exchange for the 28 day physical media sell-through window.
 

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Discussion Starter · #19 ·

Quote:
Originally Posted by PSound /forum/post/18147568


Wow! That is some pretty big misinformation.


They have worked with Starz to get content, but they also have direct agreements with studios for their streaming content.


Those agreements are expanding, with Warner being a recent studio where they were able to strike a deal for expansion of streaming content in exchange for the 28 day physical media sell-through window.

Netflix admits that the biggest challenge to get better content is money. Other services, networks, etc are willing to pay more than Netflix.

Quote:
Mark Mahaney - Citigroup


Currently what is the biggest obstacle to getting more streaming content?


Reed Hastings


Money.

That's a quick answer with lack of details from Reed.
 
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