Netflix loses top hits in strategy shift
You won't find many box-office winners from last year on the company's streaming service. There's a reason for that.
Internet veteran Tristan Louis has an observation that should come as no surprise to a Netflix streaming subscriber: The biggest box-office winners aren't on the service.
Netflix streams only five of the top 100 box-office winners of 2011, Louis notes. That's down from 10 in 2010. You can, however, find most of those hits for rental or purchase on Amazon (AMZN) or iTunes from Apple (AAPL).
Netflix doesn't stream the latest Harry Potter movie, for example, or "The Hangover Part II" or "Transformers: Dark of the Moon." In fact, you have to go all the way to the 29th-biggest hit of last year, "Gnomeo and Juliet," to find something on Netflix.
In the following video, one analyst says Netflix is poised for losses.
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That's an endless source of disappointment for Netflix subscribers sitting on the sofa on a Friday night staring blankly at their computers. "Well, honey, it's either 'No Strings Attached' or 'Justin Bieber: Never Say Never.'" Ugh.
So Netflix isn't going to be the hit repository that some subscribers had hoped. But that's not what the company wants, Louis says.
Look at what the company has chosen to spend money on instead. It's bought an exclusive show, paying for a jaw-dropping 26 hour-long episodes of "House of Cards," starring Kevin Spacey. It's also debuting its own original series, "Lillyhammer," starring Steven Van Zandt, next month.
It looks like Netflix wants to be its own online TV network.
And it's not the only one. Check out what Hulu is doing. The online video site has announced two new shows this year, including a half-hour comedy about a wacky U.S. Senate campaign. Hulu started its original content push last year with "A Day in the Life" from director Morgan Spurlock.
Investors have been of two minds with Netflix this year. Some hope for strong subscriber trends, particularly as Netflix establishes more of a footing overseas. Analyst Eric Wold from B. Riley & Co. has raised his price target for the stock to $125, saying he remains optimistic about Netflix's domestic positioning and market share potential, according to Barron's.
On the other side of the equation is David Miller of Caris & Co., who says Netflix is still paying to sell its brand to former subscribers. It's also running up costs expanding into the U.K. and Ireland, he added. Those expenses will shroud domestic profits in the near term.
So Netflix is trying to differentiate itself from Amazon and Apple by forgoing box-office hits in favor of original shows and an ever-expanding television lineup. Is that what its subscribers want?
Meanwhile, Redbox is riding high with its kiosk DVD model, seeing unit volume rise by 29% last year. Redbox, owned by Coinstar (CSTR), has now seen its share of the movie-rental market rise to 37% from 25% in 2010, according to The NPD Group.
Those that continue to insist that people stop complaining don't understand society very well. It also amounts to an attempt at censorship by bullying others into not exercising their right to protest. (To see if you are at least being consistant, check how you feel about the occupy movement.)
The continuing claims that we have nothing to complain about is hooey. Here is the real list;
During a monumental economic downturn, one of the only businesses to remain profitable increased its price... A LOT. When the people struggling to make ends meet said hey, this seems a bit much, the company said tough. (This is a cornerstone of the problem, with major corporations folding left and right, a profitable company, instead of choosing to lose a little margin or streamline like other companies were doing to survive, decided a massive price increase was the answer.)
This was followed by the revelation that the recent decreases in content that were implied to be temporary contract issues that would get resolved, would in fact likely not get resolved and would be joined by more lost content. As customers we stopped and said, wait, what?
This was then followed by the announcement that the service would also be less convenient. What was a one stop entertainment source would now be two completely seperate services with no ability to reference one against the other. Here is why this was a big deal. A lot of us are busy and already have enough time sucks in our lives. Having to search two services seperately for a movie that may not be available, even if it was previously, is very annoying when for years we were able to do one search only.
So as consumers, when a lot of us had less to spend on our daily needs and a few entertainments, we were asked to pay a lot more for a lot less. Summed up, profitable company, bad economy, charge lots more, deliver lots less. Why are we mad? Oh yeah, the icing on the cake. When the cries of foul and the exodus of customers became too great to ignore, the head of the company, who was responsible for all of the questionable moves, apologized by essentially saying that he was sorry the customers were too stupid to understand why the changes were necessary.
I find the list of offenses unforgivable. It is the same as when we all left Blockbuster. It's talked about now as if it was just the late fees that drove the exodus away from them, but that isn't the whole story. First Blockbuster made sure their stores were physically positioned to drive other rental stores out of business. Then, when competition was minimal they began enacting policies that looked for ways to grab as much from the customer as possible. Late fee policies were manipulated to maximize Blockbuster profit and when it was discovered that large numbers of customers would leave a late fee balance unpaid for awhile, especially if it was a small balance, it was decided they would put those customers in collections to maximize profit. This unfortunately failed to account for the fact that most of those customers did pay the next time they wanted to rent a movie and that after being in their collections department, wouldn't come back to rent another movie. When companies lose sight of the importance of their customers perception of them they lose.
Average cost of monthly cable: $60 + a month
Average cost of Netflix streaming and 1 DVD per month: $16
Now..... which plan would you prefer.
That being said I think I'll have a rolling rock.
If I wanted to watch the junk on television, I would turn on the television. I pay for Netflix for the movies . I don't want the company to spend money on original movies or television shows. I just want the latest movies, thank you.
Thanks for reminding me to cancel Netflix! :) To answer your question, "So Netflix is trying to differentiate itself from Amazon and Apple by forgoing box-office hits in favor of original shows and an ever-expanding television lineup. Is that what its subscribers want? "
The cable companies have been screwing the public for years, monopolizing the markets and over charging everyone. Netflix came along and we were able to give comcast the shaft; granted the CEO of Netflix is a moron, and his board of directors penalized him for his idiocy---if they could only muzzle him. That being said the movies that hollywood has been releasing in the past 5 - 10 years, have all been remakes with a different name. Most suck. I have no problem streaming an old classic from Netflix for 8 bucks a month, rather then paying 125 for cable.
Maybe I am a fool for keeping Netflix, but I am a fool with an extra $1000+ bucks a year to spend on booze and hookers... and that my friends is real entertainment.
I have streaming only with Netflix. Yes, I'd like to see more top movies but for $8/mth it's still worth it. There are plenty of good movies on there. I watched 'Buried' last night and thought it was great. 'The Machinest' another good movie. Then there's Family Guy, Bones, The Tudors, Spartacus. Plus, I get to watch any of this stuff on my Kindle Fire when I'm on the road. For $8/mth it's still entertainment for me and I haven't bought a movie in months !!!!
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Henrique de Castro got a whopper of a severance package after 15 months on the job. He can thank Alibaba.
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