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Netflix Is Bluffing

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Re: Netflix Is Bluffing

#41

Post by sriramk »

jasonwatkinspdx wrote: post #26

This article makes a couple good points, but the assumption that competitiveness can only be measured in capitalization is stupid. Anyone who believes that need simply review the proportion of acquisitions by fortune 500's that are still competitive in their markets 5 years later. In annoying MBA language: cost of goods for cinematic content is falling rapidly due to technological and social progress, and this is red…

Is this really true? If you look at the top grossing movies, they're all studio blockbuster vehicles. The cost of star salaries, huge marketing splashes, etc are still as bad as ever.

I don't see any evidence that the COGs for producing the head revenue generators are any lower than what it was, say, 5 years ago.

Re: Netflix Is Bluffing

#42

Post by duaneb »

jerrya wrote: post #3

Netflix's problem is that there are no switching barriers to keep viewers loyal to Netflix. Even they admit that their vaunted queue is worth much less in the streaming world than it was in the DVD by mail world. Their strength would be the content deals they have, and their ability to obtain future content. But that right now is notoriously bad. Most of the current or best movies of any star or franchise are not ava…

> Netflix's problem is that there are no switching barriers to keep viewers loyal to Netflix.

Sure there is. Nobody else has Netflix's library. If I bought the shows I watch on netflix from iTunes or amazon, I would probably sink 10x the money in. I've probably spent around $300-400 on netflix over the years, and I've watched many times more content than that. Ad-free, subscription, with lots of content.

Let's look at the competitors: Amazon prime, which is cheaper but has only a few titles that set it apart (West Wing is the one that caught my eye). Of course, prime is worth it even without the video library, so perhaps it's not the best comparison.

Hulu has a much smaller library, and its paid model has ads (which renders it unacceptable for me). As a free service for watching recent TV, it's alright, but that's not really the same market as Netflix.

iTunes, Google Play, etc etc, are only worth it if you watch And, of course, let's all remember the biggest competitor in the room for the generation that's most likely to consume internet content: piracy. It has the best selection, best price, best quality- it really only fails on a convenience level.

I also think that the download-the-drm-video is destined for failure. People want large collections, and anyone building that collection with video you don't own for that much money is either stupid or has a lot of money.

Re: Netflix Is Bluffing

#43

Post by duaneb »

CamperBob2 wrote: post #36
SoftwareMaven wrote: post #33

Earlier quoted context omitted.

If the price is right, producers couldn't care less about platform lock. If Google, Apple, Amazon or anybody else is willing to pay the right number of dollars, they can throw the bits into /dev/null for all Hollywood cares.

I don't know about that. Nothing like a major motion picture or TV series has ever been platform-locked, has it? Video games, yes, but not traditional "mainstream" entertainment.

NFL is locked in. Should be interesting to see when they make the move to online. There is currently no way to watch NFL online in the US because networks pay a LOT of money for exclusive rights. With the amount of cash Apple has on hand, for example, we could see some huge shifts.

Re: Netflix Is Bluffing

#44

Post by gamble »

jerrya wrote: post #3

Netflix's problem is that there are no switching barriers to keep viewers loyal to Netflix. Even they admit that their vaunted queue is worth much less in the streaming world than it was in the DVD by mail world. Their strength would be the content deals they have, and their ability to obtain future content. But that right now is notoriously bad. Most of the current or best movies of any star or franchise are not ava…

Nobody can buy Netflix because the content licensing deals are broken by a change of control. I'm sure they'd have been picked up by someone years ago were that not the case.

Re: Netflix Is Bluffing

#45

Post by Jach »

The reason I got rid of my Netflix subscription is because I have lost the time for the imaginary quota of movies/tv-shows I wanted to see each month to make the monthly payment worthwhile. I have my Prime membership and sometimes I watch stuff on there, but it's always been about the free 2-day shipping, and that's why Amazon will have my business indefinitely (i.e. until I don't need to buy physical things) whereas Netflix lasts only as long as my availability/desire to watch passive entertainment does.

Re: Netflix Is Bluffing

#46

Post by joe_the_user »

lazerwalker wrote: post #24

This article is predicated on the argument that he who owns the content gets the revenue. Let's keep in mind that in the first part of 2013, Netflix is going to be premiering both House of Cards and new episodes of Arrested Development. If they both do well, and Netflix can get more high-quality exclusives in the pipeline (admittedly both rather large 'ifs'), there's a real possibility that Netflix might find themsel…

Or, perhaps equivalently, the article is predicated on the supposition that there will be a single Big Content monopoly/oligopoly that will eventually just translate over to the digital realm.

Re: Netflix Is Bluffing

#47

Post by jasonwatkinspdx »

sriramk wrote: post #41
jasonwatkinspdx wrote: post #26

This article makes a couple good points, but the assumption that competitiveness can only be measured in capitalization is stupid. Anyone who believes that need simply review the proportion of acquisitions by fortune 500's that are still competitive in their markets 5 years later. In annoying MBA language: cost of goods for cinematic content is falling rapidly due to technological and social progress, and this is red…

Is this really true? If you look at the top grossing movies, they're all studio blockbuster vehicles. The cost of star salaries, huge marketing splashes, etc are still as bad as ever. I don't see any evidence that the COGs for producing the head revenue generators are any lower than what it was, say, 5 years ago.

You can't expect to understand a broad shift if you're only looking at the top grossing movies. That's like predicting the US economy by only looking at Bill G and Warren Buffet's asset sheets.

The Crank movies are a good example of something you couldn't really do 10 years ago. They were filmed on budgets with 10mm to 20mm. Typically a movie involving so many stunts would be far more expensive. Compare to say the Fast and Furious movies which have budgets in the 100mm range.

And while the current financial picture for the studios is hit driven, that's largely because of the high minimum cost to get a production done. As production costs fall films don't have to sell as well to be profitable, creating more of a long tail to the market.

Re: Netflix Is Bluffing

#48

Post by ebrenes »

sriramk wrote: post #41
jasonwatkinspdx wrote: post #26

This article makes a couple good points, but the assumption that competitiveness can only be measured in capitalization is stupid. Anyone who believes that need simply review the proportion of acquisitions by fortune 500's that are still competitive in their markets 5 years later. In annoying MBA language: cost of goods for cinematic content is falling rapidly due to technological and social progress, and this is red…

Is this really true? If you look at the top grossing movies, they're all studio blockbuster vehicles. The cost of star salaries, huge marketing splashes, etc are still as bad as ever. I don't see any evidence that the COGs for producing the head revenue generators are any lower than what it was, say, 5 years ago.

To add to what jasonwatkinspdx has said already, it seems to me that this follows the typical pattern of disruption. First you'll see the bottom markets being let go by the big studios and you'll start seeing other independent bodies picking up those lower markets. Until finally the big studios only make up the top segments, if anything the polarization seems to indicate just this type of shift.

I think you're also seeing some breakthrough into the middle areas where players such as HBO are able to compete with big block buster movies in terms of mind share. Series like Game of Thrones for example opted to be produced in the "lower echelons" instead of being fit into block buster movies. In a way it seems obvious, the material fits better in a series format, etc... but the fact that it is possible should make it clear that 50-60 million budget can compete and in some cases excel that which is produced by a multiple hundred million dollar blockbuster.

That to me is a significant change, hopefully one of many to come.

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