Netflix Splits DVD And Streaming Businesses • Hacker News Board

Re: Netflix Splits DVD And Streaming Businesses

#61

Post by omarchowdhury » Mon, Sep 19, 2011, 6:13 AM UTC

Jun8 wrote: post #59

It seems I'm in the minority who thinks this is an over the top reaction to Wall Street pressure. It was clear for a number of years now that Netflix saw streaming as the future. But cutting off the DVD business like that... it's extreme. A lot of the movies are not available for streaming. Yes, their streaming portfolio is probably still the best (and has excellent children's content, my son watches it every night)…

Another thing. Not all users have a device connected to their TV that works with Netflix (like an Xbox).

Nor do those same people want to watch a movie or a TV show on their computer.

Those people request DVDs.

I don't see the issue with keeping everything under one brand.

Netflix became popular because of their DVD-in-the-mail service. It's a shame to spin that off into a sub-par seeming brand. Just keep it all under one house but emphasize the streaming service.

It's not like they can't design their one site to give users an option on what they want (streaming or DVD-in-the-mail).

Keep it simple, stupid.

If they are doing this because of the economics of the DVD and streaming service, then nevermind.

Re: Netflix Splits DVD And Streaming Businesses

#62

Post by foobarbazoo » Mon, Sep 19, 2011, 6:16 AM UTC

Qwikster is a terrible name, and this is a terrible move.

Hastings is now in competition with that guy running HP to see who can destroy their company first.

Maybe Ballmer will get in the game and spin off Windows/Office from Microsoft, and rebrand them "Facetown", while proclaiming Bing to be the future of the company.

Unbelievable.

Update: I predict Qwikster is dead and buried within 5 years, and someone else pushes past Netflix on the streaming side to be the leader there.

This move is unbelievably stupid. Any trust I had in Netflix over the long haul is gone.

Re: Netflix Splits DVD And Streaming Businesses

#63

Post by loso » Mon, Sep 19, 2011, 6:17 AM UTC

beagledude wrote: post #39

has everyone forgotten how limited the streaming service is? They should have waited until they at least have a selection. I'm going DVD service, and Amazon for streaming.

And that is my main problem right there. Netflix streaming is good for finding old niche content but for general mainstream content, not so much. And now with Starz leaving....

The blog posting by the CEO was good but he still didn't answer questions about the content problem with streaming. He gave it a one liner at the end as if it was an afterthought.

I am going to keep Netflix for now but I am on the edge. I know one thing, I'm far from an enthusiastic customer.

Re: Netflix Splits DVD And Streaming Businesses

#64

Post by jexe » Mon, Sep 19, 2011, 6:18 AM UTC

cek wrote: post #57

That Netflix needs to keep making these changes is simply a symptom of a brutal endemic problem: In general, subscription business suck. Most subscription businesses suck because they are dependent on CAC (customer acquisition costs; the cost required to land a new sub) and churn (the percentage of subs that leave the service). For example, a typical gross CAC for a business like netflix is $200. At $10/mo the subscr…

Interesting, I would have argued the opposite: well thought-out subscription businesses are goldmines. Once you have a customer, you aren't billing them a single time -- often, you're billing them repeatedly for the option to use your service, whether or not they actually use your service. A customer has to take an additional action to stop paying you.

Are you arguing that non-subscription businesses don't have customer acquisition costs? Or just that CAC for subscriptions are higher?

"Name a few successful subscription businesses. Successful (in my mind) means PROFITABLE. Revenue does not mean sh. Come-on, name 'em. (Those that you do name will have some sort of monopoly or exclusive right to a physical asset)."

What about most SAAS businesses? Or most magazines? Hosting providers? World of Warcraft?

But I totally agree with you about the content providers like Starz calling the shots and ultimately deciding whether Netflix lives or dies.

Re: Netflix Splits DVD And Streaming Businesses

#65

Post by BrandonWatson » Mon, Sep 19, 2011, 6:19 AM UTC

cek wrote: post #57

That Netflix needs to keep making these changes is simply a symptom of a brutal endemic problem: In general, subscription business suck. Most subscription businesses suck because they are dependent on CAC (customer acquisition costs; the cost required to land a new sub) and churn (the percentage of subs that leave the service). For example, a typical gross CAC for a business like netflix is $200. At $10/mo the subscr…

Oh dear...where to start: * 37Signals * Salesforce * of the month club (you said profitable - not Fortune 500) * membership * Does Amazon Prime count? * Costco - you need to pay to be a member, whic his, by definition, a subscription business * Successful hosting providers - I myself use the great Bluehost.com

Though you could argue that paying for and building a gym gives you exclusive right to a physical asset.

Out of hand rejection of subscription businesses is your prerogative, but there are businesses which charge monthly rates that have surperior proritary products or services, or which use the membership as a means to incent more purchases, that can be very successful.

Re: Netflix Splits DVD And Streaming Businesses

#66

Post by trunnell » Mon, Sep 19, 2011, 6:21 AM UTC

cek wrote: post #57

That Netflix needs to keep making these changes is simply a symptom of a brutal endemic problem: In general, subscription business suck. Most subscription businesses suck because they are dependent on CAC (customer acquisition costs; the cost required to land a new sub) and churn (the percentage of subs that leave the service). For example, a typical gross CAC for a business like netflix is $200. At $10/mo the subscr…

In Q2, Netflix SAC was $15.09 and churn was 4.2%. [1]

Netflix has been profitable for several years.

[1] http://files.shareholder.com/downloads/NFLX/1290701144x0x485...

Re: Netflix Splits DVD And Streaming Businesses

#67

Post by muhfuhkuh » Mon, Sep 19, 2011, 6:22 AM UTC

cek wrote: post #57

That Netflix needs to keep making these changes is simply a symptom of a brutal endemic problem: In general, subscription business suck. Most subscription businesses suck because they are dependent on CAC (customer acquisition costs; the cost required to land a new sub) and churn (the percentage of subs that leave the service). For example, a typical gross CAC for a business like netflix is $200. At $10/mo the subscr…

"Name a few successful subscription businesses. Successful (in my mind) means PROFITABLE. Revenue does not mean sh. Come-on, name 'em."

USA Today, the Wall St. Journal, People Magazine, porn websites, zipcar, Red Hat, salesforce.com, github, dropbox, evernote.

Re: Netflix Splits DVD And Streaming Businesses

#68

Post by biot » Mon, Sep 19, 2011, 6:24 AM UTC

For those who think Netflix has been smoking a bong with this move: https://mobile.twitter.com/Qwikster

Re: Netflix Splits DVD And Streaming Businesses

#69

Post by cek » Mon, Sep 19, 2011, 6:26 AM UTC

BrandonWatson wrote: post #65

cek wrote: post #57

That Netflix needs to keep making these changes is simply a symptom of a brutal endemic problem: In general, subscription business suck. Most subscription businesses suck because they are dependent on CAC (customer acquisition costs; the cost required to land a new sub) and churn (the percentage of subs that leave the service). For example, a typical gross CAC for a business like netflix is $200. At $10/mo the subscr…

Oh dear...where to start: * 37Signals * Salesforce * of the month club (you said profitable - not Fortune 500) * membership * Does Amazon Prime count? * Costco - you need to pay to be a member, whic his, by definition, a subscription business * Successful hosting providers - I myself use the great Bluehost.com Though you could argue that paying for and building a gym gives you exclusive right to a physical asset. Out…

I have no way of knowing whether 37signals is actually profitable or not, but perhaps Salesforce is a real example. You found ONE.

Your gym membership does not count: Physical asset.

Amazon Prime is not a business. And I guarantee you it is NOT profitable anyway. It's a marketing program.

Hosting does not count: It's a physical asset.

Costco is not a subscription biz. It's a retailer that uses membership as a marketing ploy to drive loyalty.

Re: Netflix Splits DVD And Streaming Businesses

#70

Post by barista » Mon, Sep 19, 2011, 6:36 AM UTC

TomOfTTB wrote: post #13

I think this is a good move simply because the two divisions have contradictory goals at this point. For example, the Qwikster division should be looking at finding ways to deliver DVDs quicker (Kiosks for example). But that's not something that would ever occur to Netflix because they're focused on streaming as the future. Which is where the contradiction comes in. It is hard to run a business unit when the goal of…

Also I don't get the creating of a new brand altogether. Netflix is a popular brand and a household name. Who knows qwikster? Looks indicative of a future split up of the company to me.