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CordCutter

After much debate we signed up for Prime. It finally made sense for us. Besides a 1-month trial I didn't have much exposure to Prime previously. I've had it for awhile now and can say it doesn't come close to NF streaming. Selection-wise or ease of use. The watchlist was a long time coming, but it isn't very limited device-wise. IMHO Amazon doesn't have a desire to push prime to NF levels... why should it? It makes a bundle off hosting NF, why piss them off? They also are all about pushing the VOD stuff, like pay per episode, season, movie. Prime Instant is also just a fraction of what their prime model is about... they have the lending library, 2 day shipping, etc.

Jay

I posted this under a different subject earlier in the day, it makes much more sense here:

Just went through the financials of Netflix recent earnings post. In the 3 months ending June 30, 2012, the company spent $374 million acquire streaming rights for their 23 million streaming customers. Over the same period, they spent $8 million on DVD acquisition for their roughly 9 million DVD customers.

I haven't been a fan of the notion that the DVD and streaming should be split up - but on looking at this, I am now. I'm tired of subsidizing the "wave of the future." I hope someone buys this DVD business from them, and pays attention to it. It could be profitable for a long, long time.

Frank22

@Jay, Yes DVD should still be the future. It is the only way I can watch new releases also the least expensive way. The providers have too much control on the streaming.

I haven't been a customer of Netflix's since their debacle. I have Amazon Prime for other things and find that they have enough quality streaming to keep me happy combined with OTA and basic Hulu. A big reason I don't sign up for Netflix DVD is reading that they aren't putting anything into it, many people think the service isn't what it was. It means there is an unserved market.

ScottZ

Jay,
Your point does not quite come across. Why should Netflix sell the DVD business they built and perfected? Do you feel you are paying too much for DVD services? Are you not satisfied with DVD rental selection?

Sam

The fact that Amazon offers Prime movies can't help them in the long run.

First, some people will now be less likely to buy a dvd from Amazon if they can stream it for free. In addition, it's not going to be easy to convince their customers to also pay a few bucks for a 24 hour rental on top of that.

Jay

@ScottZ

If Netflix was still a DVD only business, they could double their DVD acquisitions, cut the price of their service significantly, and still have dramatically higher margins for their investors.

To answer your questions, I don't really think that my 16.99 or whatever it is is too much. However, I am no longer satisfied with the DVD rental selection, though I used to be. DVDs don't get replaced anymore when they are damaged, and acquisition of obscure titles (which is generally my interest) is much more thin than it used to be.

Unfortunately, the old netflix effectively killed all the competition. They don't seem to have much interest in keeping DVDs alive - so I wish someone else would buy that part of the business.

Jim

Jay is spot on. NF is losing interest in discs. Right now 17% of my queue are on a wait list and 6 movie classics in my saved discs list are readily available from Amazon (i.e. not out of print). Really, Tom Jones is not available? This is neglectful.

Streaming will not be as profitable for NF as discs. There is competition from Amazon, iTunes, Hulu, the networks and others and they will be bidding up the streaming rights. The studios will not let NF gain the upper hand and NF will not be able to stomp out the competition like they did to Blockbuster.

Sam

@Jay,

What makes you believe that they don't take out damaged or defective disks?

It's possible that fewer people report disk skips so not as many are replaced.

MIke

@CordCutter
Your description of Amazon Prime is spot on. I am having the same experience.

@Jay
I am seeing mixed signals from Netflix. Yes, they are not as enthusiastic as they once were about buying classic, foreign, and indie dvd titles, which is the main reason I subscribe to Netflix DVD rentals as well as streaming. On the other hand,

1. They moved two more titles from my 'Saved' queue back to the Available list last week. My Saved queue has shrunk by about 30% since January.

2. Last month (previously unreported on this site, I believe), the link between the Saved queue and the Instant Watch database was broken. Several of us complained, and now, only six weeks later, the 'Play' icon is back in the Saved queue for titles that become available on Instant Watch.

These are signs that someone at Netflix still cares about the DVD customers and still wants our business.

Streaming movies cost more than DVD's. Given the absence of new titles relative to say 5 years ago, $8 million is clearly not enough, but $16 million per month might be enough. I don't think it would be possible for them to spend $374 milllion per month on DVD's even if they tried.

Nevertheless, you may be right, and I am covering my bets by subscribing to BlockBuster (yes, they s**k, I know) and GreenCine. If Netflix does turn actively against its DVD customers again, those two companies are all we will have left. Think of a subscription to GreenCine as insurance against the future.

Account Deleted

I wonder what the new International Market is. Has there been any rumors?

Jay

@Mike
How is GreenCine? I subscribe on occasion to Blockbuster (I maintain a queue of things not available on Netflix, and when it reaches a couple months worth of movies, I switch for a bit), but has it certainly has its problems.
I've never tried GreenCine. I'm on the East coast, and was under the impression that getting the disks was slow on the right coast.

MIke

@Jay
Delivery is the Achilles heel of GreenCine, because they only have one warehouse, and it's in LA. I live in Portland, and I wait several days, sometimes a week, for my next title. GreenCine does have an advance pick system where you can mail a disc back to them and then go on their website and tell them the return is in the mail. They will pull your next selection and have it ready so it can be mailed out the same day that your return is received.

I wouldn't drop Netflix for GreenCine, but I will continue to subscribe to both. Netflix may have a 48-hour turnaround for DVD rentals, but GreenCine has its heart in the right place, and that counts for something too. I would like to see them stay around.

Tim Brownhouse

The corporate automatons should retire phrases like "at this time" and "going forward." They should realize how incomplete they sound as human beings when they communicate in this instantly recognizable corporatespeak.

rjejr

I know this isn't a stock blog but if anyone was wondering - NF stock 52 week low is 60.70 June 1, 2012. It is now at 61.75 so still better but barely. But it is lower than last years fiasco, so they haven't really fixed things much from a shareholder standpoint. Makes me wonder how long before the inevitable price hike. They have to do something.

Deckard Trinity

What about Vudu? A lot of co-workers rave about the quality of movies, and they have day-one availability, unlike NF. I personally couldn't deal with NF's lack of transparency on availability, quality, and selection, so I ditched the streaming altogether last year. I just bumped the DVD queue up to 4 (from 3) for the summer, and mostly just have my queue stocked with recent Blu-Ray releases.

Amazon Prime is a non-starter afaic too... very hokey interface on the PS3, and quality is even below NF (which is saying something). I'll probably be giving Vudu a try when I bump the queue back down to 3.

TomFresh

Trinity, Vudu is a Pay-Per-View service. That is why they have movies on the day they release on disc and Netflix doesn't. It's the same as Amazon On-Demand or iTunes. You are going to pay $4-$6 for each title you watch as opposed to a monthly subscription from Netflix. They are more of a competitor for RedBox, as you get the title for a very short period of time. But I do hear their upper level HD streams are pretty nice.

CordCutter

Fresh is right - Vudu HDX is very nice, but you need a consistent 4+mb down to achieve it. I don't have any problems, but I could see others have difficulties with that.

Reed has said before that he sees HBO/HBOGO as their biggest competitors. When I finally checked out HBOGO it had a "late night" section. NF could generate millions of new subs overnight IMHO if they got into the adult game. Now this would take NF getting serious about profiles and user controls though. It might not be everyone's cup of tea but it's out there and being exploited by the very people NF openly admits to being their chief competition.

Bob Emmerich

As Cordcutter pointed out there is a noticeable lack of porn on NF. Last night while I was checking the Free on Demand I get with Cablevision I realized porn is bountiful on my tv. YOU DON'T NEED THE INTERNET. Not that any porn is free, but between Cinemax, the straight up adult flicks, and the "Too Much for TV" subscription channel, well it's not like it's hidden.
Two problems though - the cost of obtaining porn must be prohibitive b/c it is always expensive, and how many current subscribers would quit?
Still, maybe with the stock price falling more than 25% today they should consider it. Not the hardcore stuff, but the Cinemax stuff at least. Maybe they should have a "T & A" category. Or "AO"? Maybe "Smut"? Pay USA for the rights to "Up All Night"? "Jiggles n Giggles"?

Perkins Cobb

Greencine is a waste of time, especially if you're on the East Coast. Unless maybe they still have some OOP discs that Netflix is out of, or newer catalog releases that Netflix doesn't stock. But as a primary source of discs, forget it.

Blockbuster has also gotten really, really bad in recent months. I'm seeing no new catalog acquisitions, much longer waits on new releases (and some not available at all), and they've been throttling me by an extra day or two since April. I'm thinking these are death throes.

Sam: They are taking out the damaged discs. They're just not ordering new ones to replace them.

Scott: In terms of restoring the link between the saved disc cues and the streaming, therefore driving more customers to "instant," I don't see that as support for the disc business -- exactly the opposite, in fact. Also, I wish I could agree with you that there are signs of improvement in the disc area, but I haven't seen any. If you take the Criterion Collection as a bellwether, Netflix is still purchasing only a handful of titles, and only on DVD. Another recent development -- there are also major new TV series that have Blu-ray releases, but are DVD-only from Netflix: THE KILLING, FALLING SKIES, HELL ON WHEELS.

Jay is absolutely right: disc rentals will only get worse from Netflix, and it's time for them to sell off that part of the company. Hopefully to someone who will do it right; obviously, there's no guarantee of that, but I'll take my chances at this point. Disc rentals (and disc releases) are a niche/legacy business, but they still represent a generally superior viewing experience to streaming and those of us who care about movies will pursue them. Somebody out there should be willing take our money.

just sayin'

Greencine was an absolute mess a few years ago. I have not heard anything to indicate that things are different now.

I was a big fan for a long time, and chose them over Netflix way back, as I wanted to support the local small green guy over the huge red guy. Then, they moved their distribution center down to souther CA, and even within CA the shipments were taking several days to show up as received, another few days to leave their DC, and another few days to arrive at my house.

After keeping track of shipments for a month (in late summer 2007, when they switched), I finally gave in and switched to Netflix, and have not looked back since.

Groggie

"When I finally checked out HBOGO it had a "late night" section. NF could generate millions of new subs overnight IMHO if they got into the adult game."

They have that section. It's in foreign and steamy "genres" and they are way more racy than what HBO shows. Don't believe me, check out "nine songs".

Personally, between Prime and Netflix (I subscribe to both), Netflix has, by far, a bigger selection of streaming movies. Prime has enough to make it worth their cheap price, but Netflix has like 3 times their selection.

moviegeek

Wow NFLX is taking a beating these past two days, it's down 30%. I think that's an overreaction because the Q2 numbers aren't that bad. The buying pattern is clear now, buy after earnings and sell the day of the next earnings.

As for Netflix streaming, I'm still a subscriber and watch about 12hrs a week.

GeeEmm

I agree with those expressing concerns over the DVD side of the biz. Remember this past January when Hastings predicted a steady decline in DVD subscribers "for every quarter, forever"? While some decline would have naturally occurred over time as the NF streaming catalog grew and the technology became more reliable, a large part of the decline can actually be attributed directly to Hastings own attitude. He has virtually hidden DVDs from view, unless one is already a DVD subscriber, and has refused to acknowledge that DVDs are, and will continue to be, attractive to a large segment of viewers for a variety of important reasons: the catalog will always be larger and more diverse, the selections don't expire, the quality is (currently) consistently better than streaming, there are often options and extras available on disc that are not available through streaming, etc.

The popularity and growth of streaming in no way negates the demand for disc. And by marketing only the streaming end of the biz, Hastings is missing an opportunity to keep old customers happy and to gain dual-media subscribers. And he is also giving business away to his competitors.

Edward R Murrow

If all an investor did was read the bullet points of the title of this topic, one would go all in. The Street hammered this stock due to declining subscriber growth which is missing as a bullet point here. Let's have all the information otherwise let's get a new web site going called "Pravda Netflix". But we all know there's no Pravda in Pravda. Bonus points for those who don't have to Wiki Pravda.

Galagatron

There is free porn on the internet, Bob Emmerich, in several YouTube-like sites. Sometimes they might have erotic or nude scenes from regular movies.
As for Netflix, when I started subscribing, it was known to have NC-17 films whereas Blockbuster did not, but it does have many of those usually goofy, softcore "USA Up All Night" and Cinemax "Friday After Dark" movies I use come across as a kid.
Anyway, I thought about experimenting with Greencine, but has anyone tried Facets?

CordCutter

Looks like Redbox is getting hammered too. Bad quarter.

rjejr

Galagatron - I know there is free porn on the internet. There is so much free porn on the internet I think you pretty much have to be an idiot to pay for porn. But everybody knows this, it's why the internet is "evil" and parental groups get in an uproar when the DS gets internet access. This is something nf kind of advertises itself against, like AOL did back in the days of dial-up, "the walled garden". It's why nf has a Kids start-up screen on the Wii. And I also know nf has soft-core porn, but my point was they don't have a suitable category. They don't advertise "Adults Only" b/c they say America doesn't want porn.

By coincidence I got my Cablevision bill in the mail yesterday and here's what it listed:

PPV and On Demand Channel moves:
Playboy PPV 94 - 530
Playboy OnD 516 - 531
Too Much for TV 517 - 521
Spice Xcess 95 - 533
Adult on Demand 515 - 520

All of that is advertised and available in my household - no internet required. There must be a demand for porn for Cabelvision to advertise at least 5 channels worth. nf should have at least 1.

I do not view or subscribe to any of those channels, but it's hard not to know they are out there, and they probably make $. NFLX stock at 58.62

frank

There already is an instant streaming a la NETFLIX service for Adult Entertainment. They are always advertising on the History channel during "Pawn Stars", no pun indended.

CordCutter

Whether it be adding an adult section, putting the "buy now" link on movies or by selling that prime advertising space on the inside of disc mailers to studios... NF has numerous options to expand their customer base and also get more favorable terms on streaming deals. NF has 10 million DVD subs, no testing/screening needed... they ARE MOVIE FANS. NF could sell the inside of the mailer (the throwaway part) to a studio in return for more favorable streaming terms. Heck, they're worried about losing streaming exclusivity of EPIX content here in a couple of weeks... hey EPIX, you're a fledgling cable channel, how about the eyes of 10 million movie fans if you let us keep exclusivity!?

Just seems NF could be doing more than they are.

Mrmanmac

Netflix beat estimates regarding profits, adds subscribers, but because the growth is slowing down the stock takes a beating? This is what is wrong with Wall Street. They are making money and growing. Maybe not as fast as last year but it is still growing. They already have more subscribers than Comcast, and HBO. WTH! I am going all in on Monday. For less than 20 bucks a month i get streaming and DVD rental, for new releases. I am the cheapest bastard on the planet, and I think Netflix is a GREAT Deal!

The only think I would do to raise revenue at Netflix is.... do the same as Amazon, Itunes, Vudu etc..... ADD the PPV stuff. Maybe they can work a better deal with the studios for the streaming stuff. I would do it in a way where everything you see just browsing is a streaming title, but if you use a Search function it will bring up whatever title you are looking for, if it is available streamin great, but if it isn't you can do the PPV option.

Itunes, Vudu, and just about every other "competitor" out there is all PPV. Amazon has some "streaming" and a ton of "PPV" which i think is Bait and switch.

Capt. Ogee Readmoore

Netflix does in fact still get in and send out OLD titles to all it's mailing locations.

I work there.

Perkins Cobb

Capt. Ogee: Perhaps, then, you can explain where they've been hiding all those DVDs and Blu-rays of "OLD titles" released recently by Criterion, Kino, Olive Films, Shout Factory, Raro, CBS, E1, VCI, AnimEigo, Code Red, Scorpion Releasing, and Flicker Alley.

Because I sure can't seem to get them from MY shipping center.

eviltimes

I cancelled my IW recently. Nothing worth watching but trash.
Keeping 3 BDs at a time, but the turn-a-round time has doubled and the wait for new releases is ridiculous. I agree with everyone who thinks the disc business should be split off and run by people who'd like to be billionaires in a few years.
And Greencine was Ok up until 2005 or so, then it seemed like they only filled orders on Wednesdays. I used to get anime from RentAnime in Tampa, but they also only seemed to work one day a week.

Walt D in LV

Very interesting company. Whereas 46% of their profit comes from DVDs, they concentrate whole-heartedly on Streaming, and don't even seem to try to keep/gain new DVD customers. Very strange, especially when you consider that two-thirds of their DVD customers are also Streaming. Seems to me like a win-win if they get more DVD customers.

Netflix' letter to the their shareholders has a very short section (paragraph) about DVDs, despite it being enormous profitable, and a huge part of their profit margin.

netflix watercooler

I love complaints about "turn-around" times.
Folks do realize this directly correlates with service cutbacks at the post office and not with Netflix's media priorities, right?

When the company packages your next DVD selection the same day as receiving your old disk back, and gets it in the mail immediately so it can be sent your way as soon as the P.O. receives it (and even drives back and forth to the post office for delivery/pick up as not to further delay shipping by waiting for postal trucks to come to the hub) what more do people want?!?

Netflix's operating procedures haven't changed regarding shipping. It's not their fault postal service has slowed due to financial trouble, and yet it is Netflix constantly shipping out courtesy disks to those who don't feel 2-3 discs per week is enough value for 8 bux a month.

There may be some who have some legitimate gripe here, but certainly the customers who phone in demanding compensation because they don't have their next disk on Sunday after mailing-back on Saturday can't be serious (rhetorical, because YES, they ARE - quite comically so).

stoopid is as stoopud does

could it be that hastings wants netflix streaming to succeed so much that he's killing the netflix dvd biz? he refuses to spin it off because he knows that streaming will fail on it's own while dvd will succeed on it's own.

Perkins Cobb

The more I think about it, the more I suspect that Netflix will dumpster its DVDs before it will sell them off to a third party. It would be creating a new competitor from scratch, and why would Netflix want to do that?

I guess it's more likely that Netflix would "spin off" the DVDs and retain ownership, or a major interest, in the new company. But the Qwikster incident has tainted that idea, which in any case is at odds with Reed's overarching philosophy of herding customers toward streaming.

I'm not predicting a good outcome for those of us who find "instant" inadequate ... unless the stock slide compels them to kick Reed to the curb and backtrack on the company's recent direction.

Capt. Ogee Readmoore

DEMAND BASED BUYING

enough people have to want something before it's even bought even in small QTYs

If only 50 people want some odd ball title they might not even buy it and if they did they would by 5 copies

rudyroundhead

Netflix seems to be doing what all large publically traded companies eventually do, they pander to the "Street" and stockholders and forget about the customers. If you take care of your customers then in the long run you will have a stronger company and a better stock price. However just like most companies these days they think to short term and focus on next quarters earnings instead of doing things that will actually help the company. IMO, once you get caught up in the earnings and stock price game you can forget it because you start making stupid decisions to make the investors feel good instead of the people that are actually paying the bills, your customers.

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