Hacking NetFlix

New Releases for July 27th, 2004

Here's the new releases:

A Midsummer Night's Dream (1981) Ileana Cotrubas, James Bowman
A Touch of Frost: Season 3 (3-Disc Series) (1995) Bruce Alexander, Caroline Harker
Brakhage (1998) Jerry Aronson, Stan Brakhage
Ghost in the Shell: Stand Alone Complex (2-Disc Series) (2004) Atsuko Tanaka, Akio Otsuka
Greendale (2004) Eric Johnson, Ben Keith
Hanson: Underneath Acoustic Live (2004) Hanson Brothers
Hellboy (2004) Ron Perlman, Doug Jones
High Art (1998) Ally Sheedy, Radha Mitchell
In the Soup (1992) Steve Buscemi, Seymour Cassel
La Ceremonie (1996) Isabelle Huppert, Sandrine Bonnaire
Masques (1987) Philippe Noiret, Robin Renucci
Music for Montserrat (1997) Jimmy Buffett, Sting
Ned Kelly (2004) Heath Ledger, Orlando Bloom
Nero Wolfe: Season 1 (3-Disc Series) (2001) Timothy Hutton, Maury Chaykin
Out on Parole (2004) Suzette Tomlinson, Buddy Lewis
Pennies from Heaven (1981) Steve Martin, Bernadette Peters
Pennies from Heaven (3-Disc Series) (1978) Bob Hoskins, Cheryl Campbell
Rocked With Gina Gershon (2-Disc Series) (2004) Gina Gershon
Sledge Hammer!: Season 1 (4-Disc Series) (1986) David Rasche, Anne-Marie Martin
Story of Women (1989) Francois Cluzet, Isabelle Huppert
T9X: The Tech N9Ne Experience (2004) Tech N9ne
The Celebration (1998) Trine Dyrholm, Henning Moritzen
The Jeff Foxworthy Show: Season 1 (2-Disc Series) (1995) Jeff Foxworthy, Anita Barone
The Last of the Belles (1974) Richard Chamberlain, Blythe Danner
The Persuaders!: Set 2 (3-Disc Series) (1971) Roger Moore, Tony Curtis
The Waltons: Season 1 (9-Disc Series) (1972) Richard Thomas, Michael Learned
The Whole Ten Yards (2004) Bruce Willis, Matthew Perry
They Came to Cordura (1959) Gary Cooper, Rita Hayworth
V: The Complete TV Series (6-Disc Series) (1983) Andrew Prine, Blair Tefkin
Vamps 2: Blood Sisters (2002) Paul Morris, Glor-Anne Gilbert
WWE: Hard Knocks: The Chris Benoit Story (2-Disc Series) (2004) Chris Benoit

Fool.com Story Disputes Netflix Churn Numbers

Hacking Netflix reader Aron posted a story on The Motley Fool with his analysis of the Netflix "churn" numbers. He makes an interesting argument:

Netflix's churn formula is unprecedented in my research. There is not a single churn calculation method used by all subscription-type companies, but there is no other company I could find that uses this particular one. Since a new trial subscriber that fails to convert to a paying subscriber is counted as a churned subscriber, Netflix seeks to include all new trial subscribers in the denominator of their formula. There should be no ideological problem with this goal. However, in implementing this goal and attempting to remain simple, they over-simplified. There is a flaw in the formula which leads to increasing inaccuracy as true underlying churn increases and/or growth rate increases. Netflix has both a high churn and high growth rate. The conclusions I have found are two-fold:

1) An accurate measurement of churn shows an increase from Q403 to Q104, not a decrease.

2) In absolute terms, the churn measurement is roughly 20% inaccurate to the low side for Q104.

I've seen several different views on how Netflix calculates churn. What do you think?

BusinessWeek Online Says Netflix Possible Aquisition Target

BusinessWeek Online has an interesting story about Netflix, "Netflix: Moving Into Slo-Mo?." They do a good job of summing up why the market slammed Netflix since the earnings announcement, and point out that Netflix could be at risk:

Combine strong growth with weaker-than-expected financials, and chances rise that Netflix will be acquired. Possible buyers include online players such as Amazon.com (AMZN ), and telcos like Verizon Communications (VZ ). Amazon sells DVDs and, like Netflix, gets a competitive edge from customer ratings. Verizon, which is battling cable-TV companies, could use Netflix to enter the video-on-demand business. Both companies declined comment.

Here's something I didn't know:

Piper Jaffray's Safa Rashtchy says Hastings, who has been selling 10,000 shares a week, should buy some Netflix stock to rebuild credibility with investors. The CEO, who owned 5.7 million shares as of March, declined the invitation. "I'm not trying to convince the market fast -- I'm trying to build a big stable business," he says.

Thanks again, Joe.

Variety.com: B'buster Busts Move

Variety.com has has an interesting story entitled, "B'buster Busts Move" (subscription required). The story talks about the $90 million they will spend to fight Netflix and Walmart and the tough financial road ahead for Blockbuster:

But investors should get ready for a whole lot of pain between now and then. Net income at the company plummeted nearly 25% in the quarter to $46.8 million from $61.2 million in the same quarter last year. Same-store sales decreased 4.4% from last year, with rental revenues dropping 6.4%.

Antioco said the company expects third-quarter profits to fall again in the single-digit percentage range and full-year earnings to fall as much as 30%. "There will be short-term pain and sacrifice," said Antioco. "But we are determined to emerge from this crisis as a highly profitable entertainment brand."

Thanks to Joe for sending this in.

Neflix Niche Competitors in NY Daily News

The New York Daily News is running an excellent story, "The Web Snares Elusive DVDs," an excellent overview of the smaller, niche DVD by mail companies.

The list includes some you may not have heard of:

Greencine - 15,000 hard to find independent movies.

CleanFilms - Family edited movies.

Spiritual Cinema - Inspirational movies you don't have to return.

Indo Films - Indian movies, in the spirit of Bollywood.

Number Slate - DVD sharing site.

Film Movement - Independent film sent each month.

When you add Netflix, Blockbuster, and Walmart you have a lot of choices for DVD rentals by mail.

Netflix TV Commercial Review

Brian Baily wrote about the elusive Netflix TV commercial on his blog, Leave it Behind:

Here's my version. Same parents sitting on the floor with their child. Child begins to struggle to her feet and start walking. Father stands up and says, somewhat panicked, "What time is it?" Wife looks confused as she struggles to setup the video camera. "11:45. Why?"

"I have to take the movies back. They're due at noon."

Does anyone know when the Netflix commercials will be shown or where I can see them online? I think we owe them the courtesy of watching them since they spent $20 million on them (Engadget's estimate).

Blockbuster vs. Netflix Googlefight

Just a quick, silly post: Blockbuster vs. Netflix Googlefight.

Blockbuster Vows to Fight Netflix

Reuters posted a story from the Hollywood Reporter where John Antioco, Blockbuster Chairman & CEO, promised to take the fight to Netflix:

"Two million (customers) have spoken," he said, referring to Netflix's subscriber base. "We can't continue to allow our customers to erode away from us. We are not going to ignore these folks."

I disagree. They should ignore Netflix publicly. This is like McDonalds fighting Burger King, or Budweiser fighting Miller or Sam Adams -- it's stupid. Blockbuster is giving Netflix credibility and free advertising by acknowledging they exist. They should fight hard and compete in unique ways (like the 2 free in-store rentals). Never mention the much smaller competitor.

I bet the Netflix people are celebrating.

Tidbits from the story:

Blockbuster estimates 30% of Netflix subscribers were Blockbuster customers. I disagree. I bet most of the 2 million Netflix subscribers got sick of late fees.

They can't deliver movies overnight like Netflix at this point, but are focused on 2 day delivery. (I'm getting 1 - 2 day from Netflix).

He's predicting 10% of the customer base and 20% of the revenue will come from subscriptions.

They won't launch the site until it's ready, which could be Q4.

Subscribers of Blockbuster's in-store subscription rent about 10 movies per month, compared with 7-8 for Netflix, making the slightly more expensive Blockbuster offering a better value, according to Antioco.

Thanks to Netflix reader Joe for this story.

Engadget tells Netflix to "Open up or die...."

Phillip from the Engadget Blog has written an excellent list of suggestions for Netflix to survive the coming battle with Blockbuster and Walmart.

Open up. Google did it, Amazon did, Apple did it, Netflix— expose your API so people out there can use www.netflix.com  the way they want to, in new ways, in ways you haven’t imagined. What do I mean by that?

Phillip goes on to suggest RSS feeds for movies, shared "playlists," integration with iTunes, Moviefone and Fandango, and exposure of the Netflix API (an interface for programmers to do cool things with the Netflix data). Amazon & Google have opened up their systems, with hackers and programmers creating all kinds of new and interesting applications (Amazon Web Services Demo Applications).

I agree with Phillip about TV. I have heard about the ads, but I have yet to see them. They have to find cheaper ways to get new subscribers than TV which is bringing the cost of new customers to nearly $40 each.

I think they really need to build out their community efforts. Phillip mentions my struggle to get the PR department at Netflix to treat me as a journalist, and I'm only one of many bloggers that cover Netflix (including Netflix Fan and A Netflix Odyssey). There are millions of Bloggers and Netflix needs to find ways to work with us.

Netflix has a real chance to win at this game. They are smaller and able to turn the ship in new directions a lot faster than the big guys. My only concern at this point is that they will do too well and get bought, leaving us without an innovator.

Thanks to Phillip, Ken & Dave Winer for letting me know about this story.

New Releases for July 20th, 2004

Here's the lineup of new movies for this week:

All in the Family: Season 3 (3-Disc Series) (1972) Carroll O'Conner, Jean Stapleton
Aqua Teen Hunger Force: Vol. 2 (2-Disc Series) (2000) Dave Willis, Carey Means
Barber Shop Blues (2003) Charlie Robinson, Curtis Von
Broken Wings (2004) Orly Silbersatz Banai, Maya Maron
Bus 174 (2003) Sandro do Nascimento, Yvonne Bezerra de Mello
Castle Keep (1969) Burt Lancaster, Patrick O'Neal
Caught on a Train (1980) Peggy Ashcroft, Michael Kitchen
Combat! Season 1: Campaign 1 (4-Disc Series) (1962) Rick Jason, Vic Morrow
Combat! Season 1: Campaign 2 (4-Disc Series) (1962) Rick Jason, Vic Morrow
Confessions of a Teenage Drama Queen (2004) Lindsay Lohan, Adam Garcia
Crimson Gold (2004) Hossain Emadeddin, Kamyar Sheisi
Dirty Dancing: Havana Nights (2004) Romola Garai, Diego Luna
Early Summer (1951) Setsuko Hara, Chishu Ryu
Foyle's War: Set 2 (4-Disc Series) (2003) Michael Kitchen, Honeysuckle Weeks
Hands of a Murderer (1990) Edward Woodward, John Hillerman
K Street: The Complete Series (2-Disc Series) (2003) Mary McCormack, John Slattery
Kung Phooey! (2003) Michael Chow Man-Kin, Joyce Thi Brew
Millennium: Season 1 (6-Disc Series) (1996) Lance Henriksen, Brittany Tiplady
Miss Lettie and Me (2002) Mary Tyler Moore, Holliston Coleman
NBC News Presents: Ronald Reagan (2004) Stone Phillips
Olympic Series (3-Disc Series) (2004) Peggy Flemming, Jackie Joyner Kersey
Out of Reach (2004) Steven Seagal, Nick Brimble
People I Know (2003) Al Pacino, Kim Basinger
Port of Shadows (1939) Jean Gabin, Michael Simon
Pulse (2003) Madeleine Stowe, Norman Reedus
Rigoletto (2003) Joseph Paur, Ivey Lloyd
Sealab 2021: Season 1 (2-Disc Series) (2001) Harry Goz, Erik Estrada
Seaside (2003) Helene Filleres, Jonathan Zaccai
Soap: Season 2 (3-Disc Series) (1978) Katherine Helmond, Cathryn Damon
Starsky & Hutch (2004) Ben Stiller, Owen Wilson
Starsky & Hutch: Season 2 (5-Disc Series) (1976) Paul Michael Glaser, David Soul
The Big Bounce (2004) Owen Wilson, Morgan Freeman
The Goodbye Girl (2004) Jeff Daniels, Patricia Heaton
The Human Stain (2003) Nicole Kidman, Anthony Hopkins
The Lion in the Winter (2003) Patrick Stewart, Glenn Close
The Vector File (2002) Casper Van Dien, Catherine Oxenberg
The Waiting List (2000) Vladimir Cruz, Jorge Perugorria
Thunderbirds Are Go (1966) Sylvia Anderson, Peter Dyneley
Titanic (1943) Sybille Schmitz, Hans Nielsen
Word of Honor (2003) Don Johnson, Jeanne Tripplehorn