« Netflix Hits 26 Million Streaming Subscribers & Posts $5 Million Loss in Q1 2012 | Main | Netflix CEO Reed Hastings Made $9.3 Million in 2011 but Compensation Cut for 2012 »

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451c1bb69e2016304c0a273970d

Listed below are links to weblogs that reference Investors Not Happy with Netflix & Stock Drops Again:

Comments

A Facebook User

Focusing on Streaming while slamming the door on DVD is a HUGE mistake that I can only assume will one day lead to this company's demise. I've been a subscriber for years, and I hope I'm wrong, but streaming just isn't feasible at this point in time. Why? Because Netflix doesn't OWN anything. With DVD's, they could own, or engage in a revenue sharing model. For the most part once they had a DVD, they had it, and could rent it out as many times as they wanted to, especially back catalog titles.

With streaming, these deals are different. They expire, and need to be renegotiated. Now, they are paying for the same content over and over and over. And when the cost for the content gets too high, Netflix walks away. Yes, for the consumer streaming is much more convenient. I love it, personally. But anytime you "lease" content, costs go up. As costs go up, so do membership fees.

This has been proven now that the businesses are split apart. The DVD business is profitable, and the instant arm isn't.

CordCutter

Netflix is positioning themselves for the future. DVD is profitable now, does that change when the USPS is gutted? It's inevitably going to happen. I don't fault a company for positioning itself for the future. I have never not been able to find a DVD on Netflix... I've never had issues with lost/damaged discs. It's been business as usual as far as the dvd side goes for me. Maybe I'm in the minority, but I don't think so.

Crow550

Once those content deals they made start showing up it will help things a lot.

Robert Emmerich

My simple understanding of this - if anyone is interested - is that nf was priced as a "growth" stock which was seeing 50% growth year after year and the stock was priced accordingly, (apparently people like paying lots of money for growth stocks) - but now "growth' is forecast at 18% year over year, meaning nf isn't growing nearly as fast, making it just a plain old company, so nobody wants to pay as much for it's stock. In other words - nf is nearing saturation, so the stock shouldn't get any higher.
Makes sense to me.

imyselfandme

"The DVD business is profitable, and the instant arm isn't."

domestic streaming IS profitable, and growing more so every quarter.

international expansion is NOT profitable (yet) because of startup costs, just like netflix wasn't profitable when it first started in the US.

don't confuse the two.

CordCutter

Crow - I agree. I'm looking at box office for this year so far and it's littered with NF streaming deals. Hunger Games, Cabin in the Woods, The Grey, Act of Valor, Lockout, Mirror Mirror should all be on streaming within a year (or less) of hitting the theater.

GeeEmm

With more and more ISPs capping usage (some at insanely low limits with stiff overage penalties) pushing an inferior streaming catalog over a much more robust DVD one is not going to satisfy current members, or win over many new subscribers. Especially since streaming is still so temperamental. Trying to watch a movie that constantly stalls and blurs-over is going to waste many subscribers' internet allowance.

Streaming may be the future, but it needs to be vastly improved and made more cost effective for the long haul.

Fred Talmadge

Maybe now is the time to make a long term purchase of Netflix stock. Or not.

bigqueue

A Facebook User says:
>Yes, for the consumer streaming is much more convenient.

I disagree. I find DVDs more convenient, because (1) I get a better picture, (2) I get extras (commentary, subtitles, etc.).

I actually WOULD consider using streaming, if they didn't completely separate DVDs and streaming now. I can't even tell (except through third party sites) if something is AVAILABLE on streaming. (I could see using streaming while waiting for my next DVD.)

Though I'm currently 'on hold' entirely, but will probably turn it back on in the summer for at least a month or two.

JohnnyO

I don't think the investors are being hard on Netflix. If I were at the helm, I'd do the following:

1) Slow the beating on the DVD business - sure, things are moving to streaming, but there is no reason to beat your DVD customers over the head making them feel like second-class citizens.

2) LISTEN to their DVD customers about what they prefer (in addition to availability of titles) about DVD content vs. streaming content, and figure out how to add it to the streaming product. Two suggestions: DVD extras, and 5.1 (or better) surround-sound.

3) LOOK at the content of what people are renting on DVD and streaming. Are more streaming customers watching TV shows because they WANT to watch TV shows, or because there are so many fewer movies available on streaming. Determine if more money needs to go into requiring streaming rights to movies as opposed to TV shows.

JohnnyO

Crow550

Don't forget the surge of people who use portable devices like phones and tablets.

Judy__

Most of the investors are probably also customers. The search mechanism is broken on streaming so finding movies one wants is almost impossible unless one can remember the exact title. The worst thing about the changes is the new streaming interface. It's just awful to deal with unless one has a lot of time to waste. The old streaming interface at least worked.

WakkaWakka

"5.1 (or better) surround-sound."

I'm not sure what you are using, but Apple TV has 5.1 sound.

FearNo1

@ Robert Emmerich
When netflix stock was $300 per share, it was greatly overvalued. IMHO it should not be worth $100 per share as netflix owns very little content and is dependent upon studios. I disagree with analysts about the "competition" as they have been saying that for about 2 years now. They predicted a mass exodus after starz deal ended but netflix added 3 million subscribers.

@CordCutter
Thanx for the info. So those movies are coming to netflix via epix deal? IMHO netflix site needs to do a better job promoting the movies available and coming soon to streaming.

CordCutter

Fear - Some are EPIX, the Lions Gate Films (Hunger Games, Cabin in the Woods). I would need to get on wiki but I believe Mirror Mirror is the Relativity deal, The Grey/Lockout I think are from the Open Road Films deal.

I really like the EPIX deal, we have to wait 90 days after they air on EPIX but it still puts them on streaming pretty quick. Rango was less than 13 months from when it hit theaters. Couple conference calls ago Reed said they hadn't discussed whether or not to renew that deal yet (I think it still has 3-4 years left), but it made me nervous. The large chunk of "blockbusters" come via that deal and it would be a much larger loss than Starz (atleast after the Sony content was lost). Hunger Games and the Avengers will be on NF because of that deal. Thor & Captain America will be showing up soon too because of it... would be a big loss without another deal to make up for it. As much as I liked the Dreamworks/Weinstein deal in place of Starz... those deals wouldn't compensate enough IMHO for losing the EPIX content.

JohnnyO

" "5.1 (or better) surround-sound."

I'm not sure what you are using, but Apple TV has 5.1 sound."

I've got the Apple TV, and while it has 5.1, there is still a lot of content (even relatively -new- content, including popular movies from 2011) that doesn't have surround sound.

Donga

Actually, the EPIX deal stinks from Netflix's perspective. Without Netflix, EPIX is dead. They don't have enough carriage deals with cable companies, and there's been no interest from Comcast or Directv in "another movie channel."

Netflix is paying $200 million a year to EPIX (about 70% of Epix's revenues). That amount is about what Netflix would pay for an HBO-like deal with WB, Universal, Sony or Disney for exclusive Pay TV rights. Yet, Epix has the exclusive first pay TV rights and Netflix gets stuff 3 months after that. Meanwhile, Dish includes Epix in its Blockbuster@home service, so they're getting Epix movies ahead of Netflix and not paying anywhere near the same amount.

If I'm Netflix, I'm not renewing that deal for any significant period. And I'm doing my level best to win pay TV rights away from Epix by negotiating directly with the studios that set up Epix.

Judy__

The capping by ISPs will kill the streaming market if allowed to continue.

A rather predictable outcome of the change in the FCC rules and the fact that ISPs can also sell content providers. They will naturally provide their own commercial products which include well controlled propaganda...unlike an open internet.

Capitalism Rocks

The risk takers who have built out their networks should reap the rewards of taking those risks without government intervention in the public marketplace.

They tried government control of the economy in communist Russia and it didn't work out.

If Netflix wants unlimited throughput on streaming for their customers, let them build their own network.

CordCutter

Donga, how are they going to negotiate those rights away from EPIX when the studios that supply EPIX own it? EPIX isn't some 3rd party company that has license deals with Paramount, MGM & LGF. It is OWNED by those 3. So negotiating the rights away isn't possible.

Dish including it with it's ondemand service is completely different. You have to pay X amount of dollars for basic Dish services. For cord cutters like myself that is not an option, I will gladly wait 90 days and only pay $8 a month. Beats getting it immediately and paying the ridiculous fees big cable/sat want.

Tom

BIG Difference between streaming and physical disc.

Streaming has Netlflix tell YOU what you can watch while the mail option lets you watch what you want to watch. Netflix popularity is based on access to wide content. If I wanted limited content I'd use Redbox. Until streaming is 100% of titles, the mail will be needed.

I've also noticed since the split that there isn't much if any increase in streaming title quantity relative to the complete library. Pathetic attempt actually given the huge influx in dollars. Nearly 500 in my queue and only 60 are streaming.

24frames

After almost 5 years as a Netflix subscriber and putting up with far too many snafus, especially since the major rice increase fiasco, I decided to finally give Netflix the boot.

The last straw was yet another shipping promise unfulfilled. I might have considered merely suspending my account but adding insult to injury, Netflix in their infinite wisdom decided to do away with their vacation hold. It is as if whoever is making the corporate decisions at Netflix is purposely doing so with the intention of running what was once a superb, customer service oriented company straight into the ground.

The comments to this entry are closed.

Sponsors

Third-Party Netflix Sites