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Is anyone sick of Reed Hastings spouting out the same statistics in every interview? Maybe he should figure out a way to ship & receive movies on Saturdays, like Blockbuster does! Yet another advantage of Blockbuster Video over Netflix! With each passing day, it becomes harder & harder to recommend Netflix over Blockbuster.

hueristix

"heuristics--machine-aided learning"

That's what I'm talkin' about!

Edward R Murrow

Please. Running the result of a calculation through a switch statement with several cases? If this counts as machine aided learning then there's been a massive dumbing-down of COMP SCI.

Firstlawofnature

If methodology is so flawed why is the rest of the world only able to improve by 7 to 10%?

Edward R Murrow

We always hear about this story of Hastings going to Africa with the Piece Corp as the great white hope teaching the poor African. Has his story ever been vetted by anyone?

I think what would be of more interest is if Hastings wrote an article explaining if he ever recovered from his obvious liberal, white, guilt or if he's still suffering from his self induced guilt complex?

Ricklogic

Reed 'The Huckster' Hastings

"Those movies are drawn from 75,000-plus titles in 200-plus genres."

Hastings has no conscience. He knows that that makes it sound like there are 75,000 movies. At most, about half the titles are movies. The rest of the titles are many different things: exercise videos, documentaries, TV shows, god knows what.

I’d like to see Netflix and Blockbuster state how many movies from major U.S. studios they have. It’s probably virtually exactly the same, something like 25,000 or 30,000 ‘titles.’ That would stop the baloney about the exponential increase in the number of titles every quarter as if the studios were releasing thousands of movies every few months.

type-cast

"if Hastings wrote an article explaining if he ever recovered from his obvious liberal, white, guilt or if he's still suffering from his self induced guilt complex?"

Being a white liberal is nothing to be guity about. I think his problem's that he's a bit arrogant. It shows in his interviews, as for instance Charlie Rose. This puts him in good company with elitist critics like Edward. At least Rick has some substance. The claim for 75k titles is absurd. It's 75k DISCS, and it includes bonus discs and multi-disc sets.

Not sure if this has been posted before, but I think I may have found Reed Hastings netflix profile page:

http://www.netflix.com/Profile?prid=5428845

the bio reads "Movie Lover. CEO."

leonardodicrapio

"I’d like to see Netflix and Blockbuster state how many movies from major U.S. studios they have."

Great, so you wouldn't include any independent films (i.e. Red Envelope) or foreign films in your tally? I'm sure there's a lot of things you would like to see NF and BB do just because you say they should, Rick.

I don't really care how they count their titles. They both have a ton of films. I'm sure it is easier to just have a count of all possible (65K+ or 75K+) DVD's they can rent and that happens to be a big number that both of them like to brag about.

"That would stop the baloney about the exponential increase in the number of titles every quarter as if the studios were releasing thousands of movies every few months."

With lots of catalogue films (i.e. 1995 film Kiss of Death with David Caruso wasn't released on DVD until 2004) and TV box sets coming out all the time, there are a lot (thousands) of new DVD's that come out every few months.

Ricklogic

Leo, Leo, Leo
'''''''''''''
"...thousands of movies every few months."

I'm talking about movies. Do you rent exercise videos and church music?

Movies from major U.S. studios are the foundation. From there, having other major breakouts might yield information that helps a person make a more informed decision, or at least a good starting point when evaluating who to subscribe with. There is an alternative which is to accept your opinion as expressed here on Hacking Netflix. But some people may not tune in here, if you can believe it.

The only reason to hide it is that there is a junkload of stuff that just about nobody wants but it makes for good advertising, a Netflix specialty. Sadly, Blockbuster is now also plastering the Internet with ads to compete as Netflix has done for years. Like cigarettes on the sidewalks and highways.

leonardodicrapio

All right, Rick. So should Netflix exclude all films from independent film distributor Miramax from before 1993 (when they were acquired by Disney) but include them from 1993 and after because they were part of a major U.S. studio on the later date? And Netflix and Blockbuster should do this just because you say they should? Lay out all the groundrules why don't ya, Rick.

"Movies from major U.S. studios are the foundation. From there, having other major breakouts might yield information that helps a person make a more informed decision, or at least a good starting point when evaluating who to subscribe with."

leonardodicrapio

"Sadly, Blockbuster is now also plastering the Internet with ads to compete as Netflix has done for years. Like cigarettes on the sidewalks and highways."

Why don't you just condemn every company (i.e. hp, American Express, etc.) that pays for banner ads? I guess you would rather pay $5-$10 per month to access sites like Yahoo!, MSN, and AOL. Ya know you could get a pop-up blocker (probably for free).

leonardodicrapio

"...thousands of movies every few months."

455 new releases in the last 4 weeks.

Sorry, Rick, I am not going to count how many are movies from major U.S. studios.

If you want to break out how many of those 455 NF and BB should be counting do it yourself.

superfunhappy

Oh leo, please. Don't waste your time. It seems there is a cadre of people who post here who HATE Netflix no matter what. Netflix could give them every movie they want all the time with no delay or problem and they'd still bitch about the envelope being wrinkled. I do find it odd how many of them still subscribe based on their comments.

I hated renting from the physical store and Netflix solved that for me. Is it the best value from a "number of movies vs. amount paid" perspective? Probably not. But I don't care. It works for me.

I have to say, the fact that "murrow" is questioning an aspect of the CEO's life that has nothing to do with the post Mike put up is pretty telling.

leonardodicrapio

Top Five Arguments by Ed, Rick, and type:
1. Throttling has been definitively proven by tracking labels.
2. Comcast HDTV OnDemand will eat Netflix's lunch.
3. 75,000 titles is more like 25,000 movies by major U.S. studios.
4. You can get 4 times as many DVD's with Blockbuster Total Access than you can with Netflix.
5. DRM is evil which is completely applicable to Netflix's WatchNow "rentals."

Ricklogic

Leo
How is it that you all of a sudden wrote such clear, concise narrative? I am being serious, believe it or not. The grammar, spelling, everything is just right? You are freaking me out.

There is one more item for the list. And it is this: There are many forms of direct and indirect competition for Netflix (for consumer eyeballs and cash) and all of them are growing in impact.

Can you name any competition that directly or indirectly affects Netflix that is actually shrinking?

Kudos are due to Hastings for being the first to very effectively and powerfully monetize catalog films. But many others are now selling and renting catalog films which demonstrates how weak the moat was that Netflix had.

There is a massive draw to the Internet with many content owners streaming content for free. Interactive activities continue to quickly grab increasing audiences. Game consoles are carving out a huge footprint.

leonardodicrapio

"Can you name any competition that directly or indirectly affects Netflix that is actually shrinking?"

Sometimes, Rick you make it too easy for me. Blockbuster's rental revenue went down more than 7% from 2005 to 2006. That $600 Million decline at Blockbuster is more than half of Netflix's total revenue for 2006.

"Of the $24.1 billion in revenues generated by the retail home video industry during 2006, about $16.9 billion were generated by sales of movies and about $7.2 billion were generated by in-store and online rentals of movies. This compared to about $16.4 billion of revenues that were generated by sales of movies and about $7.8 billion that were generated by in-store and online rentals of movies during 2005. While retail home video industry revenues are projected to be approximately $31.2 billion by 2011 due largely to anticipated increases in DVD sales, Kagan projects that movie rental revenues will continue to decline, from approximately $7.2 billion in 2006 to about $5.7 billion in 2011."

Page 3 of Blockbuster's annual report.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001193125-07-044360&Type=HTML

leonardodicrapio

All right I quoted something and got it wrong (was quoting something about the industry at-large), but BBI's rental revenues did decline from $130 million from 2005 ($4.16Billion) to 2006 ($4.03B), which is over a 3% decline. And I don't know where BBI got the $7.2B number but it appears to be low.

Netflix's revenues went from $0.68B in 2005 to $1.00B in 2006, and substantially all of Netflix's revenue is from rentals.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001193125-07-042689&Type=HTML

Movie Gallery had rental revenues of $1.21B in 2005 {61% (DVD and VHS rentals) of $1.99B total revenue} and $1.47B in 2006 (58% of $2.54B).

Add just those three companies up, and movie rentals increased from $6.05B to $7.57B, which is greater than the $7.2B quoted in Blockbuster's annual report.

leonardodicrapio

$6.05B to $6.57B (not $7.57B). But that would means rentals outside of BBI, NFLX, and MOVI went from $1.75B in 2005 to $0.63B in 2006 (a 64% decline).

Ricklogic

Leo
I'm not sure what just happened there. It seems like whenever you get upset at me you write too quickly which no one can do effectively with any consistency.

I can tell you this; physical DVD rental is not at the top of the food chain. It’s more like the Pinto (car from the 70’s). And, at this point in time, that is true whether the physical DVD rental is facilitated in-store or by mail order. The margins for content owners are thin.

Sales are a huge deal with much better margins for content owners. VOD is very competitive on margins for content owners. Download is huge on margins (90%? when using P2P) for content owners. Studios are still a bit of a hold out because it is still scary for them, especially regarding new releases.

What else, besides Blockbuster, is shrinking that directly or indirectly affects the viability of Netflix? [Of course, Blockbuster is now seeing booming growth in the mail order (‘online’) business. They could be 60% or 70% as big as Netflix by year-end 2007, up from 10% at the beginning of last year. From this standpoint, the affect on Netflix is not really shrinking.]

leonardodicrapio

Rick,

Blockbuster Online had about 1.1 Million members at the end of 2005/beginning of 2006. Netflix had 4.2 Million members at that time. That is about (roughly) 25%.

I don't think Blockbuster's Total Access is sustainable at the current prices, and I think you would agree that most people would have the same perspective as me in that regard (about profitability of TA at current prices). When/if Blockbuster decides to charge a premium price for Total Access, how many people will defect?

And even at a premium prices how economically viable is the TA plan for BBI (BBI's store customers should generate much higher gross margins even if TA is sold at a premium price, at least IMHO). After all isn't that one of the knocks on Netflix all these years (Blockbuster had higher gross margins).

And I still believe that Total Access was a scheme by Antioco to hit the 2 Million Blockbuster Online subscriber target that enabled everybody at the top of BBI to collect their year-end bonuses. After all for at least three to four straight quarters Antioco had promised 2.0 million Blockbuster Online subscribers. In October they only had 1.5 million (adding about 100,000 to 150,000 subscribers per quarter). It's quite a rabbit he pulled out of his hat.

Firstlawofnature

"At most, about half the titles are movies. The rest of the titles are many different things: exercise videos, documentaries, TV shows, god knows what."

Don’t act so enlightened when peddling worthless points such as the above. Go sell crazy somewhere else.

Even if the studios could eliminate renting we’d all know what would happen – the total pie would shrink. I’d be forced to buy more but not enough to offset all the renting I wouldn’t do. The market is not so inefficient that a viable rental industry developed through a freak occurrence. And yes the rev share should be lower for renting since it’s an uglier business – the product out comes back in, late fees, account forms, physical plant, employees etc etc. Even without the first sale doctrine a rental market would exist. Who’d want to buy Grindhouse? Rent? Sure maybe.

Shrinking: box office w/o price increases, network TV, radio, major cable properties within the cable pie (which is growing), music, PC games, print media, TA profit margins…


Ricklogic

Leo
My mistake, I should have actually looked back and not guessed.

Blockbuster has to build critical mass to compete. No choice. They have enough free cash flow to do battle. Not all TA members will continue to take out huge numbers of movies. People are too busy. They are not addicted like the cinephiles so it won't continue to cost as much as you might think for Blockbuster.

leonardodicrapio

Rick,

Enough free cash flow to do battle? Correct me if I'm wrong, but when was the last time prior to last year that Blockbuster even had free cash flow? And how did they get this free cash flow -- by selling off their last remaining assets and getting a whopper of what should essentially be called a tax refund in the amount of millions of dollars.

Total Access exchanges take titles off the shelves from the non-TA customers. That means that BB either has to stock more titles (costs additional money) or see paying high-margin customers leave the store empty-handed. It's really a double-edged sword Blockbuster is holding now. IMHO they eventually have to raise prices. If they raise prices too much, they lose so many TA customers that the whole venture wasn't even worth it. If they don't raise prices enough, they end up cannibalizing their in-store sales.

And Blockbuster talks about reducing the footprint of their stores. How? TA requires them to have as many (or more) movies on the shelves to keep up with this new demand in-store. IMHO the stores have fixed costs such that even a fairly infrequent TA-renter isn't going to help them because they will still be a lower margin customer than someone who pays in cash at the store.

Netflix actually has a business model that is working currently. Netflix offers movies on-line to all their customers at no additional charge. Blockbuster isn't making any money, but the executives at the top cashed in on millions of dollars in bonuses.

Edward R Murrow

"This puts him in good company with elitist critics like Edward."

I've been accused of being lots of things, but elitist is a first for me. I get accused of being too patriotic all the time for communicating something like the following:
1) There are plenty of impoverished and illiterate Americans in places like the Ozarks, Appalachia, Smoky Mountains, etc. For whatever reason, white liberals won't go help poor white folks in these places. Instead, they go to Africa and the Philippines to try to alleviate their unresolved guilt complex.
2) White liberals suffering from guilt complexes continue to push for affirmative action which is an insidious form of racism that basically says, "You can't succeed on your own because you're inherently not good enough. We're the Great, White, Hope and we'll help you because you'll never be able to make it on your own."

We need to recognize and acknowledge the Enemy Within. I know I'm off topic, but how many more boring posts do we need about recommendations?

Firstlawofnature

Go to the Ozarks?? Haven't you seen Deliverance? Throw it into your queue and see if you'd prefer that to Africa.

Ricklogic

If the Netflix model is so good, why are they so sleazy in marketing their product? Reed Hastings is a huckster.
''''''''''''''''''
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RBC's Rohan: Valueclick's Lead-Gen Creates Regulatory Risk
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http://internet.seekingalpha.com/article/33721

Firstlawofnature

Nice twist spin-boy. Doesn't actually say flix is sleazy, just that is reliant on lead gen. No actual detail on what flix does that might be considered sleazy besides using the word 'free'. A free 2 week trial period doesn't sound unethical to me.

Ricklogic

Funny thing about Netflix is that, on their own, they are, and have been, one of the very top Internet advertisers for years (almost always in the top 3). The additional use of the sleazy ‘lead-gen’ entities is a poor testament to Netflix's promise. If it is that hard to maintain growth, maybe the model has limited potential. {'Lead-generators’ are known for offering ‘free’ stuff like computers but once you open the ad, you find that you need to buy 2 or more of the offers that are listed, e.g. subscription to Netflix, etc. to get the free computer.}

On Netflix’s site and in articles, Netflix makes claims that large percentages (80%, 90%) of members come to them based on word-of-mouth. Seems like some disparity.

Kudos are due to Hastings for being the one to first effectively and powerfully monetize catalog films. But now, many entities are renting and selling catalog films. Even with the continuation of huge advertising, Netflix has projected zero net subscriber growth for the 2nd Quarter, 2007. There is a limit to everything.

Ricklogic

Funny thing about Netflix is that, on their own, they are, and have been, one of the very top Internet advertisers for years (almost always in the top 3). The additional use of the sleazy ‘lead-gen’ entities is a poor testament to Netflix's promise. If it is that hard to maintain growth, maybe the model has limited potential. {'Lead-generators’ are known for offering ‘free’ stuff like computers but once you open the ad, you find that you need to buy 2 or more of the offers that are listed, e.g. subscription to Netflix, etc. to get the free computer.}

On Netflix’s site and in articles, Netflix makes claims that large percentages (80%, 90%) of members come to them based on word-of-mouth. Seems like some disparity.

Kudos are due to Hastings for being the one to first effectively and powerfully monetize catalog films. But now, many entities are renting and selling catalog films. Even with the continuation of huge advertising, Netflix has projected zero net subscriber growth for the 2nd Quarter, 2007. There is a limit to everything.

Ricklogic

Type pad sucks.

Firstlawofnature

Show a link to a free whatever that requires a NF subscription. Can you find an example?

Most of the money is going to banner, TV & radio. Is that ok with you?

Edward R Murrow

"Go to the Ozarks?? Haven't you seen Deliverance?"

Firstlaw, I would expect no more from you. What are you going to say next - that black people like to eat chicken and watermelon? That Hispanics enjoy living in crowded conditions?

Why is it ok to be racist against poor, white, illiterate folks who need our help and pass it off with a flippant comment about a movie?

Firstlawofnature

This from the king of spoof on hacking? Sacred cow slayer no more? I didn’t mean to joke about your cuzins. Sorry.

Edward R Murrow

"I didn’t mean to joke about your cuzins. Sorry."

These are historically the folks who's only opportunity in life is to go into the Army and fight the wars so that we can all sleep through the night.

Stop acting like one of the dix from flix and have some respect.

Firstlawofnature

Spoof king,

Let me know which topics you are sensitive about and I'll try to nicer.

leonardodicrapio

"These are historically the folks who's only opportunity in life is to go into the Army and fight the wars so that we can all sleep through the night."

That sounds like one of Michael Moore's lines from his movie "Fahrenheit 911."

Edward R Murrow

"That sounds like one of Michael Moore's lines from his movie "Fahrenheit 911.""

Naw, more like Jack Nicholson in "A Few Good Men". I'll keep watching the macho guys movies and you keep watching the girlie, chick-flick movies like "Fahrenheit 911".

leonardodicrapio

Wow, Ed, you are the first person to call "Fahrenheit 911" a girlie, chick-flick. A few words of wisdom: don't rent "Fahrenheit 911" if you want to get laid.

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