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NetFlix: America's Most Underestimated Company

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Re: NetFlix: America's Most Underestimated Company

#61

Post by mmorris »

aresant wrote: post #9

The killer app in this space is studio catalog - that's the competitive advantage. Distribution for NFLX is strong - but given the move for most new hardware devices to include "Apps" integration, distribution is going to be a waning advantage. It's going to be an interesting battle, for instance what does the paperwork look like in Netflix' studio agreements - can they sell to Apple?

I think Netflix is aware that their advantage with regards to distribution isn't going to last forever and that they need to focus on getting more (and newer) movies.

They seem to be making headway in expanding their catalog - e.g., the $1 billion deal with Epix (Paramount, Lionsgate, and MGM) to increase the size of their "Watch Instantly" portfolio. From what I've read, this is a big deal, as they're paying a bit more (relative to the premium cable channels) for the same rights.

More info on the Epix deal: http://www.hollywoodreporter.com/hr/content_display/news/e3i...

Re: NetFlix: America's Most Underestimated Company

#62

Post by jat850 »

igrekel wrote: post #18
MikeCapone wrote: post #13

I just wish the would come to Canada.

Actually, Netflix is supposed to be available in Canada soon. http://www.netflix.ca/ Mind you there are existing similar services.

Zip.ca is existing, similar... and awful. Which parallels a lot of tech-oriented services in Canada (cell phones are a great example).

Hopefully the Netflix service in Canada nails it.

Re: NetFlix: America's Most Underestimated Company

#63

Post by danilocampos »

pmichaud wrote: post #60
danilocampos wrote: post #42

I love Netflix. They're a role model for other companies, and for me as a person. Netflix has succeeded on the strength of two things: integrity and ambition. They genuinely care about their customers. They work extra hard to make sure people who give them money are happy to do it. In their call centers, CSRs are friendly and empowered. They're instructed to err on the side of doing things that are most likely to mak…

I wasn't so lucky with them. I was a good customer, but they started silently throttling my account, and they wouldn't admit to it either. It's since come out that that's exactly what they were doing. If it's too expensive to send me that many disks, fine, but don't lie to me about it.

I didn't know about this. So much for my remark on integrity. Do you know if they still do this throttling?

I personally never ran into this -- I've never been more than a light-to-medium user, except in spikes. Like when I when I discovered 24 six years ago.

edit: Here's something straight from the horse's mouth:

http://money.cnn.com/magazines/fortune/fortune_archive/2007/...

"I stopped my subscription to your service because of your well-documented "throttling" of frequent renters. How can you say you are focused on customer service when you alienate your customers in this way? Bill Greenstein, Seattle

When we are short on new releases, which we try not to be, we believe it's fairest to allocate those new movies to subscribers who have not rented much recently. This upsets heavy users because they are not in the front of the line for new releases. We are straightforward about how it works, but not everyone likes that policy."

Eh, okay, assuming it begins and ends there, I can see the argument for doing things this way.

Re: NetFlix: America's Most Underestimated Company

#64

Post by Goosey »

joe_the_user wrote: post #15
tomjen3 wrote: post #10

Earlier quoted context omitted.

The problem is that you have to take account how unlikely a given prediction would be in comming true - a person who predicts one in a million things but only gets it right one out of a thousand is still way better than somebody who predicts the results of coin-flips with 51% accuracy but in your system the latter would be ranked far higher.

Indeed, You would have to give each prediction an "audacity factor", how unlikely it seems . The system would work in fashion where a 50% accuracy rate and a 30% one would actually be considered the same accuracy. Either you get higher than a 50-60% rate OR you get some of your predictions rated as having a high audacity factor.

There is a very good system for handling this type of thing: Prediction Markets (http://en.wikipedia.org/wiki/Prediction_market)

The basic idea of a prediction market is like a stock market for outcomes with an end point. If you make good predictions you will make 'money' and if your predictions are correct but go against the common idea your rewarded even more handsomely. Of course a true prediction market has a shifting price point where you can choose to sell your 'shares' at any point, yada yada, but I think the concept applies.

The trick is you have to have the pundits participate in order to make it work. I suppose there could be some third-party that pulls their articles and 'ghost trades' for them?

However I think the truth is that pundits DON'T WANT to be held accountable. Even if they are shown to be 'the most correct' they are still going to be wrong some of the time and those will always be used as examples to attack them and their views.

Just look at another comment in this thread that tears into this pundit for his poor job predicting the Sony vs MSFT vs Nintendo war over this console generation. This is a SINGLE data point being used to try and dismiss his views.

edit: For anyone interested in prediction markets check out Inkling (http://inklingmarkets.com/). I don't work for them, but I just think they have done an awesome job of creating some useful software. I am trying to push for this to be adopted internally for creating 'confidence metrics' of how stable a build is going to be, or if a deadline is going to be hit.

Re: NetFlix: America's Most Underestimated Company

#65

Post by frossie »

chadgeidel wrote: post #56
blizkreeg wrote: post #27

This is a tangential pricing-related question: Why does Netflix, which is solving some hard and interesting problems both on the technical (delivery/algorithms) as well as business side (licenses etc) only charge $9-$15 a month whereas online services like dating sites and project collaboration SaaS tools that are arguably much easier to build get away with charging anywhere from $30 to $60 a month? If pricing is abo…

Here's my take. A recent blog post at OkCupid ( http://blog.okcupid.com/index.php/2010/07/07/the-biggest-lie... ) indicated that most people use dating sites for 6 months. I would estimate Netflix users are multi-year users. Just using those numbers you need to charge more per user. Obviously this isn't a really deep analysis, but it's perhaps one reason.

It's a pretty big reason. I've been a Netflix customer continuously since 1999. There isn't a single subscription service I have signed up online or offline (magazines etc) that comes close to that kind of longevity.

And I pay them a hell of a lot more than 9.99, too, being that I have a fondness for HD/BluRay and a modest broadband connection.

Re: NetFlix: America's Most Underestimated Company

#66

Post by deadmansshoes »

On a recent visit to the states I got to try out Netflix, and on being told you could watch any film you wanted was very impressed.

Turned out there are only certain categories of film (i.e. the ones that would be on daytime tv..) you can watch on "freeplay" and anything good you have to wait for a DVD in the post.

No wonder its cheap. Was still better than the adverts every 8 mins while watching Rambo on a cable channel though.

Re: NetFlix: America's Most Underestimated Company

#69

Post by trunnell »

duck wrote: post #57
nuclear_eclipse wrote: post #52

Earlier quoted context omitted.

Anecdote: I have multiple relatives, including a police officer, who are dumb as a rock about how computers work, but through their friends have managed to pick up on how to use BitTorrent + Pirate Bay to pirate not only movies but music. And they see nothing wrong with this behavior, in an extremely conservative portion of Ohio; the same people who insist our President is a Muslim Kenyan. If this sort of use case ha…

That is what I was wondering since I hadn't really seen anyone outside of the tech world use it. So with that I can see it being a competitor, but then I wonder how do you compete with something that is illegal and not really an entity?

I wonder how do you compete with [BitTorrent]

Netflix competes by being more convenient than BitTorrent. BT might be free, but it doesn't deliver TV shows and movies directly to your HDTV.

Re: NetFlix: America's Most Underestimated Company

#70

Post by smartrly »

blizkreeg wrote: post #27

This is a tangential pricing-related question: Why does Netflix, which is solving some hard and interesting problems both on the technical (delivery/algorithms) as well as business side (licenses etc) only charge $9-$15 a month whereas online services like dating sites and project collaboration SaaS tools that are arguably much easier to build get away with charging anywhere from $30 to $60 a month? If pricing is abo…

Let's look at a couple factors:

1) Customer Acquisition Costs. I'd be surprised if NetFlix pays more than $20-30 per customer. Dating websites have a lot more competition and are probably closer to $50/customer.

2) Lifetime Value. Customers of dating websites are transient, there only for a matter of months. As such, their lifetime value is not particularly high (I'd guess something in the $150 neighborhood). Netflix customers have long lifetimes (I've been a customer since 2000, with no intention of quitting) which adds up to a LOT of value.

3) Customer Price Elasticity. Dating websites are catering to people who will spend many hundreds of dollars on dates in their pursuit of happiness. $30/mo is a drop in the bucket if it helps increase your odds of finding that somebody. Netflix charges between $10 and $30/mo, depending on your plan, which is comparable to the cost of a few premium channels on cable, which is a cost their customers are accustomed to paying.

4) Price as value. If Netflix is more expensive, it does nothing to help you, it just costs more. If Match.com is more expensive, then the people on the site are likely to treat it a bit more seriously, which can make it a better product for some.

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