Hacking NetFlix

Portfolio.com Interviews Netflix's Chief Content Officer

Portfolio.com talks with Netflix's Chief Content Officer, Ted Sarandos: Netflix's Top Recommendation. They story highlights Netflix's hopes to get the Watch Instantly service on a wide variety of tv-connected devices, and addresses the problem of getting the studios to release movies for downloads.

But in moving to digital content, Netflix is coming up against a whole new set of hurdles. Sarandos now finds himself locked into a battle with the movie studios, who are clinging to their old model of milking as much revenue as they can from their blockbuster hits by charging cable channels a premium for exclusive rights to show these movies after their theatrical release. As a result, Netflix currently only has about 8,000 films available now for online streaming to PCs, and they are offered simply as a free supplement to customers’ existing DVDs-by-mail plans.

But Sarandos is pushing for a nonexclusive distribution model that would allow the studios to make money off a higher volume of rentals and sales to broadcasters.

“Every successful internet play is about broad access, never exclusivity,” maintains Sarandos, who so far has made successful bids for nonexclusive access to movies like Pan’s Labyrinth and The Good German.

Forbes Includes Netflix in Creativity Story

Forbes included Netflix in a story about How To Unlock Your Company's Creativity.

Once you get enough people around the table, rip apart the assumptions that are holding you back. That's what Reed Hastings did when he launched Netflix in 1997, when Blockbusters were virtually on every block. Hastings shelved three assumptions: 1) that customers would only pay to rent movies they could watch on the same day they thought about watching them; 2) that late fees were a necessary evil and revenue driver; and 3) that a start-up can't compete with an entrenched giant. Netflix's recent market cap: $2.1 billion. Blockbuster's: $643 million.

Netflix & Microsoft Xbox 360 Rumors Persist

Last week (while I was suffering from a painful herniated disc) Reuters reported that Netflix was surveying customers about the Xbox 360, a survey reported here late last year.

I own a Xbox 360, and while I'm disappointed that Microsoft has decided not to develop a Blu-ray drive for the Xbox, I'm beginning to think they're smart to skip Blu-ray and focus on downloads. Microsoft already has support for Movielink and CinemaNow on the Media Center, so they are open to third party applications such as Netflix's Watch Instantly. A partnership with Netflix would give their customers unlimited access to 7,000+ movies and TV shows (in addition to the selection already available through the Xbox Live Marketplace).

Do you think that Microsoft should support Blu-ray or skip it and move customers to downloads?

via Gizmodo.

Postal Worker Arrested For Stealing Netflix Envelopes

The Pittsburgh Post-Gazette reports that a postal worker has been arrested for stealing Netflix envelopes.

A federal grand jury indicted an U.S. postal employee yesterday for stealing Netflix movies from the mail.

Randell Johnson, 52, of East Liberty, is charged with one count of theft of mail by a postal employee.

If convicted, he could be sentenced up to five years in prison and a $250,000 fine, according to a press release from the U.S. attorney's office.

Newsweek on Unusual Netflix Subscribers

Daniel McGinn in Newsweek has written a story about libraries and video stores that subscribe to Netflix, Sure, We've Got That! Libraries are able to offer Netflix's 90,000 title library to customers, and one video store claims to save $2,000 per year in inventory costs.

Netflix, aware of the practice, is not a fan. Spokesman Steve Swasey says the Netflix customer agreement clearly states that DVDs are to be used only for personal enjoyment, not for renting or loaning to others. However, with 1.8 million DVDs shipping from Netflix warehouses every day and no obvious way to catch rental bandits, Netflix has limited ability to police it. Swasey says anyone caught doing it will receive a reminder that they're breaking the terms of their contract. How about sending a copy of "There Will Be Blood"?

Netflix To Add 1,500 Blu-ray Titles in 2008

Video Business reports that Netflix will be significantly increasing the selection of Blu-ray titles in 2008.

McCarthy also said today that Netflix will add as many as 1,500 Blu-ray titles to its existing 400 titles this year as customers ditch Toshiba’s discontinued HD DVD format and converge onto a Sony’s Blu-ray format. He said he didn’t know what effect more Blu-ray titles would have on earnings.

“It seems apparent that content will cost us more,” McCarthy said. “Whether we raise prices will be entirely a function of churn, subscriber acquisition costs and gross margins.”

Wired on the $1 Million Netflix Prize Competition

Wired has an interesting story about the $1 million Netflix Prize contest, This Psychologist Might Outsmart the Math Brains Competing for the Netflix Prize. The story goes behind the scenes and talks to several of the research teams, including the mysterious "Just a Guy in a Garage."

Secrecy hasn't been a big part of the Netflix competition. The prize hunters, even the leaders, are startlingly open about the methods they're using, acting more like academics huddled over a knotty problem than entrepreneurs jostling for a $1 million payday. In December 2006, a competitor called "simonfunk" posted a complete description of his algorithm — which at the time was tied for third place — giving everyone else the opportunity to piggyback on his progress. "We had no idea the extent to which people would collaborate with each other," says Jim Bennett, vice president for recommendation systems at Netflix. When I ask Yehuda Koren, BellKor's leader, whether the prize money would go to him and his teammates or to AT&T, he pauses. He seems honestly to have never considered the question. "We got a big prize by learning and interacting with other teams," he says. "This is the real prize for us."

"Just a guy in a garage" was the exception to all this openness. He didn't even have a link attached to his screen name, which kept creeping higher and higher on the leaderboard. By mid-January, there were just five teams, out of 25,000 entrants, ahead of him. And still, no one knew who he was or by what statistical magic he kept improving. "He's very mysterious," says Koren with unconcealed interest. "I hope you will at least be able to find out his name."

The rest of the story is available online.

Sanbornton, New Hampshire Library Offers Netflix Rentals

The Sanbornton, New Hampshire library is now offers Netflix rentals to customers, Sanbornton Public Library joins Netflix.

So for a number of months the library has been looking for a cost-effective way of significantly expanding its selection of films while not breaking the budget. With the closing of Video Vendor in Tilton, a resource heavily used by the Sanbornton community, this project took on added urgency.

With this new service, patrons now have access to more movies in many genres and subgenres, including action and adventure, alternative lifestyles, anime and animation, children and family, classics, comedy, documentary, drama, faith and spirituality, foreign, horror, independent, music and musicals, romance, sci-fi and fantasy, sports and fitness, television, thrillers, westerns and others.

Does your library offer Netflix rentals?

Thanks to Kap for informing me that Sanbornton is in New Hampshire, not Maine.

The Standard on The Challenges for Netflix 2.0

Terrence Russell on The Standard writes about the Challenges for Netflix 2.0:

Netflix shook up the brick-and-mortar rental chains when it appeared on the scene, but it took the company almost five years to turn a profit. Since then, the home entertainment landscape has changed drastically. Netflix did well by riding on the success of the DVD format, but new high-definition formats and distribution methods have upped the ante. On one side, Netflix has to deal with the transition to high-definition physical media such as Blu-ray, and on the other, the encroaching threat of online rental and delivery systems like iTunes. To stay relevant in the marketplace, Netflix has to remain profitable while fighting a two-front war.

The company has responded to these challenges by launching its own online streaming service for 6,000 of its titles, and working high-def formats (now mostly Blu-ray) into rotation. Both of these features have been incorporated into the regular subscription fees, which Netflix has been quietly lowering to fend off online rental competitors such as Blockbuster.

What do you think Netflix has to do to survive?

Thanks to Joe for sending this in.

Do You Suffer From Netflix Burnout?

Film.com has a list of Common Causes of Netflix Burnout:

1). Out of Sync With My Life

Perhaps the chief problem with services like Netflix is that DVD rental is inherently a spur of the moment decision. Let's say I'm sitting at home early on a Friday night after being stood up by whatever evil girl from the coffee shop and I want to wallow in I'm-a-survivor self-pity. I'll pull myself up from the couch, hop in the Accord and go rent myself some sort of hard-boiled revenge flick, say, Get Carter or Point Blank. With Netflix, you've got to predict your mood three to four days in advance. That's the paradox: if I knew I was going to be stood up, I wouldn't have gone out in the first place and hence, no need for wallowing.

And so, the DVDs just sit there while I wait to fall back into that just-right state of mind.