Netflix took the unusual step of filing a SEC form 8-K to respond to the widely covered Variety story about Netflix developing a set-top box, Netflix Thinks Inside the Box.
From the 8-K form:
In response to recent speculative reports, Netflix today clarified remarks made by one of its employees at a film industry meeting last week.In remarks during a panel discussion at a meeting of the Independent Film & Television Alliance on Friday, June 16, 2006, Eric Besner, a member of the Netflix content acquisition organization, said that Netflix is developing a proprietary set-top box that would allow subscribers to download movies for viewing on their television sets.
Netflix said that Besner’s comments have subsequently been interpreted to suggest that Netflix has narrowed its downloading strategy to a set-top box product. In fact, Netflix is evaluating a broad range of options, and no decisions have been made regarding specific delivery options or timing. Netflix had earlier indicated that it would discuss its downloading plans more fully in its fourth-quarter earnings announcement in January 2007 and that it is investing $5 to 10 million this year in developing its approach to on-line movie delivery.
When this story broke, I contacted Netflix PR to verify the story, and was told that Besner "was was quoted out of context."
Doesn't anyone verify stories anymore?
Sounds like back-peddling to me - trying to recover as much as they can from leaking a corporate secret prematurely.
Bet Besner got a talking to.
Posted by: gir | June 21, 2006 at 08:10 AM
No. They will lie outright to protect themselves.
Posted by: Becky | June 21, 2006 at 08:28 AM
Even if the format takes off how would Netflix be able to compete wth say google or cable companies for delivering content.
Posted by: ms | June 21, 2006 at 09:29 AM
"Even if the format takes off how would Netflix be able to compete wth say google or cable companies for delivering content."
That is an excellent point ms. In a 2004 interview [http://www.businessweek.com/magazine/content/04_31/b3894128_mz063.htm] , Hastings said he planned to deliver content electronically in '05. While it still seems the technology has not evolved, I would have thought that they would be building relationships with distribution partners...maybe it is still too early.
Is there website really a compelling enough reason for someone to stay with Netflix when vod becomes a reality? They have significant investments in distribution centers that become useless in a vod scenario. What else do they have?
Posted by: noe638 | June 21, 2006 at 01:36 PM
I would say that overall Netflix is fighting an uphill battle to secure a large piece of the VOD pie.
They have two useful competitive advantages.
#1) They have 5 Million customers and growing very rapidly. People will tend to do business with companies they already are doing business with. So unless something else exists that is MUCH better, people won't switch to it.
#2) Not all content will be unlocked for renting digitally at the same time. Via one simple interface and bill, customers will be able to mix and match digital and physical delivery of movies. Don't underestimate simplicity. This website skews towards people that are highly value concious, heavy users, and tech savvy. That's not typical of mainstream. Mainstream wants a decent price, but optimizes for convenience and simplicity.
Posted by: Aron | June 21, 2006 at 06:55 PM
But more on topic.
I find it hilarious how quickly the press and blogosphere jumps on any squeak about VOD from Netflix. Even an analyst firm downgraded the company based on the premise that Netflix would spend loads of money on a proprietary set top box. It was premature and ignorant of them.
However, when Netflix finally does launch their system, it appears they will have a veritable army of hypesters ready to work for free.
Posted by: Aron | June 21, 2006 at 07:01 PM
I think there are two key ingredients needed for a successful *new* VOD service:
1. Subscription instead of PPV model.
I'd get on the bandwagon now if I could pay $20/30 per month for an all you could eat, or a thresholded all you could eat VOD service.
2. Availability and Timeliness
Currently Cable VOD is long after the DVD has become available, if a service could offer the video on or close to the DVD release date it would be a slam dunk for me ( not to mention earlier )
Other vectors include how fast ( overnight might not be that bad ), breath of selection, and DRM issues.
Given the recent stories, I doubt any of these will hit these sweet spots:
ShoWest: Studios say three month grace period for DVD release will not shorten.
Cablevision: Server based DVR violates DMCA.
Steve Jobs: Studios cannot agree on $9.99 iTunes flat price for movies.
and on and on....
If Netflix was to buy the digital rights to a flick not long after it was available on DVD they might be able to accomplish it.
A deal with Tivo, the ILEC fiber ( ala Verizon ), and Netflix might get all of this done - but the studios, even the forward looking WB will probably blanche.
Posted by: WeaselBuddha | June 22, 2006 at 11:20 PM