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Netflix kills Qwikster

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Re: Netflix kills Qwikster

#161

Post by erichocean »

erichocean wrote: post #159
macrael wrote: post #141

Earlier quoted context omitted.

I found the article I summarized here: http://www.outsidethebeltway.com/whats-really-behind-the-net... I think it explains the facts in the simplest way.

My take home is this: Netflix competes as a delivery pipe for content with Cable providers. Cable providers already get ~$50/month for your Internet connection, and spend (collectively) $32 billion/year on streaming content, aka "cable TV". Netflix wants to build on top of the network infrastructure of Cable providers while paying far, far less for the same content. This is their business strategy. Verdict? Sell your…

For those wondering why Netflix was allowed to stream content at low cost so far, here's the reason: marginal consumers.

Currently, the content industry gets $32 billion/year for content. There are still a few people ("marginal consumers") that aren't paying for content now, but at a much subsidized price, are willing to view it.

These are the customers Netflix has right now for streaming.

Now here's the problem: marginal consumers are only marginal when the represent an insignificant portion of users. When they grow numerous enough, the pricing terms have to change. That's why Netflix is jacking up prices.

Eventually, Netflix will have to pay the same price as Cable providers for content (and it's nowhere as close to as cheap as what Netflix is charging now).

Re: Netflix kills Qwikster

#162

Post by macrael »

erichocean wrote: post #159
macrael wrote: post #141

Earlier quoted context omitted.

I found the article I summarized here: http://www.outsidethebeltway.com/whats-really-behind-the-net... I think it explains the facts in the simplest way.

My take home is this: Netflix competes as a delivery pipe for content with Cable providers. Cable providers already get ~$50/month for your Internet connection, and spend (collectively) $32 billion/year on streaming content, aka "cable TV". Netflix wants to build on top of the network infrastructure of Cable providers while paying far, far less for the same content. This is their business strategy. Verdict? Sell your…

That sounds right to me. Honestly, worded that way, I'm a bit dumbfounded at their audacity.

I mean, on the one hand, the cable companies are tied up with the old "channel" model and many of their subscribers are paying for shows they never watch. But, if the content companies are going to charge Netflix customers for shows they don't watch too, it is going to be very difficult for Netflix to compete.

Re: Netflix kills Qwikster

#163

Post by josefresco »

code_duck wrote: post #134
redthrowaway wrote: post #101

Earlier quoted context omitted.

>Wouldn't market questionnaire testing of just 100 people saved them this expensive juggling act? Probably would've killed the ipad, too.

The iPad was not revolutionary... it is a giant iPhone with no phone. I would have said I wanted one beforehand, and believe probably 80% of the people who have bought one would have thought it looked awesome. So no, I disagree.

Today's numbers would seemingly contradict your statement about the iPad being revolutionary; http://www.comscore.com/Press_Events/Press_Releases/2011/10/...

Re: Netflix kills Qwikster

#164

Post by finnh »

erichocean wrote: post #159
macrael wrote: post #141

Earlier quoted context omitted.

I found the article I summarized here: http://www.outsidethebeltway.com/whats-really-behind-the-net... I think it explains the facts in the simplest way.

My take home is this: Netflix competes as a delivery pipe for content with Cable providers. Cable providers already get ~$50/month for your Internet connection, and spend (collectively) $32 billion/year on streaming content, aka "cable TV". Netflix wants to build on top of the network infrastructure of Cable providers while paying far, far less for the same content. This is their business strategy. Verdict? Sell your…

Your argument implies that when you pay ~$50 for an internet connection, you also get access to all the streaming content ("aka cable TV") from the Cable company.

This is not the case. Getting access to the content will cost you an additional 70-100 per month, depending on the content package. That's significantly more than Netflix wants to charge, and the delta is a huge part of Netflix's appeal.

Your "toll booth on a road they don't own" comment sounds alot like Ed Whitacre's "my pipes" argument, and could be applied equally accurately to any non-free service that operates on the internet ("road they don't own.")

Re: Netflix kills Qwikster

#165

Post by code_duck »

josefresco wrote: post #163
code_duck wrote: post #134

Earlier quoted context omitted.

The iPad was not revolutionary... it is a giant iPhone with no phone. I would have said I wanted one beforehand, and believe probably 80% of the people who have bought one would have thought it looked awesome. So no, I disagree.

Today's numbers would seemingly contradict your statement about the iPad being revolutionary; http://www.comscore.com/Press_Events/Press_Releases/2011/10/...

No, if I had said the iPad was not successful, perhaps the article would contradict that.
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