Netflix Now Thinks Amazon is Not Launching U.S. DVD-by-Mail Service

Video Business Online is running a story, Amazon Unlikely to Rent in U.S., that includes comments about Amazon made by Netflix CFO Barry McCarthy at the Morgan Stanley Small Cap Executive Conference on Wednesday.

Netflix slashed its subscription price to $17.99 in November for its popular three movies out plan based on the company's belief that Amazon would enter the DVD rental business as a serious competitor within a year. And that suspicion was based on talk that Amazon had a team of software engineers developing the business and was negotiating revenue-sharing deals with studios, McCarthy recalled.

"Today, I don't think they're coming," the Netflix CFO said. "I could be wrong. I guess we'll see over time."

Also of interest from the story:

Meanwhile McCarthy also told analysts that the two things that will have the biggest impact on Netflix's business in the future will be high-definition DVD and the shortening of the theatrical to DVD window. He predicted windows will continue to shorten, eventually to day and date with the theatrical release, so long as theatrical revenues remain soft.

You can listen to the Webcast of Wednesday's Morgan Stanley Small Cap Executive Conference (he discusses Amazon near the end of the recording).

Thanks to BoB for sending this in.

Comments

Here's hoping Netflix returns price (and service) to the old level. END THROTTLING NOW! I agree that studios are stupid NOT to release DVDs on the same day as movies. It is obvious they make more money from selling DVDs than theater tickets. Why don't they wake up to reality? It's more convenient to rent a DVD or buy it than go to the theater and sit down for a fixed showing. Plus, theaters are too expensive, unless you go alone to early matinee showings and don't get anything to eat. Why pay $20 for taking the family to a movie when you can rent 3 DVDs at half that price and watch at your own pace?

[Steve A.]

While I don't think the window will be wiped out entirely, I do think it will narrow to 6 weeks for bad movies and 3 months for hits. It really does make sense as they can save major marketing dollars off the release buzz.

"It's more convenient to rent a DVD or buy it than go to the theater and sit down for a fixed showing. Plus, theaters are too expensive,"

Not just that, having to sit elbow-to-elbow with a stranger, everyone talking & laughing over the audio, babies crying, cell phones, having to go potty and no way to stop or pause the film.

It's so much easier to watch at home & with big screen tvs and home theater equipment, you can even enjoy it the same. The last movie I saw in a theater was Titanic!

Here is another article about how 3 out of 4 people PREFER to view movies at home. It also talks about a shorter window between theater & video release dates.

http://www.dailynews.com/Stories/0,1413,200~20954~2925197,00.html

"The survey of 1,000 adults conducted June 13-15 found that 73 percent of adults prefer to watch movies at home and that 82 percent of those polled use DVD players"

"Theater owners also are up against an ever-tightening time window between a theatrical opening and a DVD release. Dieterich said that in 2002 the average elapsed time was 165 days. In 2003 it dropped to 145 days, and last year it was down to 138 days. Many moviegoers could be reluctant to shell out $10 at a theater for a movie they and their families can see in four months for $5 or less.

The poll also found that 47 percent of respondents feel that, in general, movies are getting worse, while 33 percent believe they are getting better."

[Kilroy]

Am I the only one that thinks he made the announcment so he could buy up NetFlix stock when the price dropped?

[IReadTheNews]

Already happened. This past week in China the movie "Sisterhood of the Traveling Pants" was put out on DVD the same day it showed up in theaters.

[Sonja]

I still like going to the movies, but when you have so many coming out at once, I just wait until some titles come out on DVD, and others I just have to see on the big screen. I saw Hitch and Diary of a Mad Blackwoman at the theaters. I have not been to the movies since.

[Nick]

I like going to the movies, it's a cool experience. However, so many of the big movies this year simply have not intersted me. I have been seeing a lot of indy films.

I live in Manhattan, so I am able to take advantage of all the foreign and indy fare that hits the theaters here and that is mostly what I have been seeing in movie theaters this year so far.

I love getting my wallet raped at the movie theaters. $10 for a ticket and $20 for concessions. Everytime I go with my lady friend I end up spending at least $40.

Man I really wish Amazon got into the rental business. Hopefully that would deal another blow to BB video. You know BB will lower its prices and eventually kill itself off. I don't know how BB currently keeps prices so low.

My hope is NF will raise prices and up their service.

I also hope NF raises their prices, it would bring BB a lot of business. More biz for BB = better chance of them staying alive = less chance of a monopoly for NF which I'm all for.

It's quite interesting to see people actually chant for monopolies, and then cry when it happens. It's people like this that help fuel these industry giants, you have no clue what it leads to. Rent "The Corporation" to get a glimpse.

BB wants to have a monopoly of the online rental market.

They did it in the brick and mortar world until Hollywood came along. I won't cry if BB dies.

Too bad about Amazon eh. Would have gave the other companies a run for their money.

[Prudent]

"BB wants to have a monopoly of the (insert area here) market."

Well, what company would not?! I have never been a BB B&M customer but it seems like they have stepped on some peoples toes along the way. I'm sure NF would love to have a monopoly of the online rental market if they could as well.

[roror]

even if amazon does not come in, bb will make netflix behave.

[vn]

Barry McCarthy said a few months ago that Amazon was not getting ready to start DVD subscription service in the US, based on what him contacts in the real estate industry told him. My own sense is that Amazon wants to expand their operations to other european countries first.

Blockbuster started the movie rental business, or at least they are the ones that made it mainstream. Why wouldn't they be expected to be the biggest player? Netflix may be big online, but if you were to do a huge survey and ask who they think of when someone says movie rentals, you can bet that everyone will say Blockbuster. Their brand recognition is second to none. Netflix is way behind in that aspect, and Blockbuster is growing at an alarming rate in comparison. Netflix open for 7+ years, has over 3 million customers. Blockbuster will have online service open for 1 year this coming August(that's right, only about 9 months old) and they already have 1 million customers. Plus they are about to start delivering from stores soon for faster shipping. I hear of talk of downloads or something too. I also heard of a temp deal for Movie Pass customers...you can get some sort of coupon or something and get 1 out at a time online free with an in-store movie pass. I am certain that next year they will reach their 2 million mark goal, I am really excited to see just how much things will change in the next year. It's going to be a good showdown between NF and BB for a while.

"I don't know how BB currently keeps prices so low."

Maybe because they have machine-sorted mail, while NFLX chooses to remain in the 19th century with hand sorting. My guess is that this adds a lot to Netflix postage. If NFLX reduced the size of their envelope to the standard size and used maching-sorting, they could probably cut their postage bills in half, from an alleged $2 per disc to $1. Then we might see an end to throttling. But then, they prefer to piss off customers and inconvenience the post office with their big red envelopes sorted by hand.

[dreamer]

I'd love it if Blockbuster combined their Movie Pass and Online programs, or at least cut the price of Movie Pass by $10-15. It's way over-priced right now, because they let you take out brand new releases and there are no due dates on Movie Pass rentals. This results in low profits and poor selection, compared to the Hollywood MVP model, where all movies are due in 5 days as usual, and you can not get the newest movies for 2-6 weeks on average.

It woul be awesome if you could return BB online movies to any local store, then take out 1 or 2 movies, and get the next 1 or 2 movies in your queue sent. It shouldn't be that hard to integrate the stores and the online, but they say they lack the computer power to do it now. I'd like to see Movie Pass work at any store, as long as you have open slots. It's probably too much to ask to return to any store, but maybe any stores in the same city?

[Saxon]

"Maybe because they have machine-sorted mail, while NFLX chooses to remain in the 19th century with hand sorting."

True enough, but I've been a customer of Netflix for over a year now and can count the number of times they've shipped me a wrong movie on two fingers. I tried blockbuster for a month and they sent me FOUR incorrect movies in that timespan. It was rediculous. I was more than happy to pay a few extra dollars for Netflix considering they sent me what I wanted almost every time.

You know why you got incorrect movies? Because the schmucks that rented before you didn't take the 2 seconds it takes to actually read the labels on the sleeves and envelopes and match them. Seriously, how hard is it to put spiderman in the spiderman sleeve? Well the shipping centers are automated, and all they do is scan scan scan. Nobody at BB will bother touching whats in there unless someone reports a problem before hand. So you can thank other inconsiderate lazy bum customers for you receiving wrong discs. I am glad to see that there is at least some level of personal accountability that is placed on us customers for once to help keep costs down. I don't need my rental company paying 20+ people making close to minimum wage just to look at DVDs all day because some asses are too lazy to read a freaking piece of paper before they close an envelope. I would rather save more money and let us be responsible.

BTW, I am pretty sure this is a big reason why the new envelopes have the names printed on them. Too many jerks weren't matching the sleeves with the envelopes, and too many movies were being scanned incorrectly and wreaking havoc on their inventory accuracy. The new printing was a solution for the retards who need their service spoon fed to them.

I've gotten lots of wrong discs from Netflix. They don't check every disc either. Many of their discs are labeled incorrectly. Like the pan-and-scan ___ is labeled as the widescreen Special Edition. I can't get the right movie from BB Online or Netflix. Every time I've reported the wrong disc, written on the sleeve, they send another one and it's still the same thing. Either they just printed another sleeve or every copy is mis-labeled. Blockbuster has alternate versions of titles that Netflix doesn't. That's a major strength, when Netflix refuses to update their inventory. Like "Entrapment: Special Edition."

[Mike]

"It's so much easier to watch at home & with big screen tvs and home theater equipment, you can even enjoy it the same. The last movie I saw in a theater was Titanic!"

Who can blame you? That stinker turned me off movies for a while, too. I ended up rooting for the boat.

Stinker?!

Appearently you went to see TIT-anic since Titanic grossed over $$1,835,400,000 world-wide & $600,788,188 in the US.

http://www.the-numbers.com/movies/records/index.html

http://www.the-numbers.com/movies/international/records.php

[Mike]

What, it made a lot of money, so it's good? By extension, any movie that doesn't do well at the box office is bad?

Do you, by chance, work in the film industry? It would explain so much....