TechCrunch Asks Netflix CEO Reed Hastings about Streaming

Eric Shonfeld from TechCrunch interviewed Netflix CEO Reed Hastings at the All Things D conference, and Hasting talked about the economics of streaming.

As you can imagine, it costs much less to stream a movie over the Internet than it does to mail it as a DVD. But Netflix ends up paying twice anyway because it already owns the movies on DVD. It has to pay the studios an additional streaming fee. The studios like that. “If the studios have their way, we’ll pay them two or three times,” quips Hastings. But he is resigned to paying wtice for movies he’s already bought. The way he looks at it, Netflix is paying the studios instead of the Post Office.

Comments

[Danny]

Reed is so darn cute.

[PLB]

Mailing physical disks is a kludge. In the old days before high speed lines, computing centers would send data to each other by station wagon. Computer A would write an optical disk put it in a staion wagon and deliver it to Computer B which would mount it and read it. This was an advancement over the shipment of tapes.

Not very long from now we will tell our disbelieving kids that that NetFlix once had a large operation that mailed out physical disks. The kids will say, "No way".

[MCW]

Why does he turn into a cockroach at 1:37?

[CyberPhoenix]

Netflix should stop using Microsoft's Silverblight web cancer.

"Media Reality Check: Microsoft Silverlight a Big Programming Scam"

“Silverlight is cancer on the Web.” It is intended to restrict or altogether block access to information, discriminate to promote Microsoft’s business agenda, force developers and users to purchase software from a monopolist, harm digital durability and curation (DRM, specifications), and stifle search engines too"

"Silverlight is a wolf in sheep’s clothing. Discourage Webmasters who make use of Silverlight and discourage those who accept the content or download appropriate plug-ins, of which there are none for GNU/Linux"

http://boycottnovell.com/2008/10/14/silverlight-programming-scam/

[tsrblke]

@CyberPhenoix,

Could'y you really say the same about Flash though? Being Owned by Adobe isn't actually a prize either. (I'm looking at you PDF which became a defacto web standard.)

[CyberPhoenix]

@tsrblke - I don't like Flash, but it's still a better choice than Microsoft's Siverblight web plague.

"Moonlight is Not Silverlight, Silverlight is Not Flash"

"Do not allow people to draw a comparison between Flash and Silverlight because Adobe is neither interested in discriminating against operating systems, nor has it got a history that demonstrates this"

"The only thing more worrying than Silverlight is people’s lack of awareness of Silverlight’s danger to the Web, to GNU/Linux users, to search engines that compete against Microsoft, to digital preservation and many other things"

http://boycottnovell.com/2008/01/23/silverlight-not-for-linux/

Open source JavaFX would be a good choice.

http://www.javafx.com/

[Matt Rafat]

One issue with online streaming video is the lack of captions:

http://willworkforjustice.blogspot.com/2009/05/netflixs-annual-shareholder-meeting.html

Netflix's failure to take an active approach to online captioning excludes millions of potential customers.

[Edward R Murrow]

"Why does he turn into a cockroach at 1:37?"

That's a good question and the simple answer is that he's Edgar the Bug from Men in Black: Reed the Bug

[CopaceticOpus]

I think that if Netflix has a copy of the DVD not being used at the moment, they should be able to stream that content to a customer without paying any studio fees. It's not really different than allowing a person to borrow the physical disc, it's just a little more convenient. Of course, this is a pipe dream because it will never be legal.

[Hunter McDaniel]

Whether NF already has a disc version of the movie they are streaming is really irrelevant. They have a model for how many discs to buy in order to strike a balance between purchase expense vs. customer waiting time. Each DVD is (on average) good for some number of rentals before it gets scratched, broken, or lost. To the extent that customers start streaming instead of getting DVD copies, Netflix will adjust their model to purchase fewer DVDs.

So Reed's statement about paying twice is really just FUD. The unrented discs in his warehouse are unavoidable waste, much like the last half batch of fries at McDonald's that get tossed at the end of the day.

The real question is how (a) the total cost of postage plus DVD purchases plus distribution center labor - compares to (b) studio licensing fees plus data center plus bandwidth cost, on a per-transaction basis.

[tsrblke]

@ CyberPhenoix,

I've seen radical websites that speak less harshly than that. Seriously? Adobe has long been implicated in trying to monopolize the market just in a different way. Just because they happily have a Mac program doesn't make them any less driven to control the market. I'd garner there's just as much adobe hate as MS hate (and you've just chosen the microsoft hate site.)
(In purchasing flash, for example adobe now has proprietary contol over 2 of the most used web formats.)

[CyberPhoenix]

@tsrblke -Microsoft is a convicted abusive monopolist, they can NEVER be trusted.

Comes vs Microsoft anti-trust documents -

http://boycottnovell.com/wiki/index.php/Comes_vs_Microsoft

Microsoft Critique: Resources -

http://boycottnovell.com/microsoft-critique-resources/

Microsoft drones list: It contains names of people or organizations who consistently promote Microsoft's line. -

http://boycottnovell.com/wiki/index.php/Drones_list

The Microsoft Mafia is failing, they are desperate and nasty. -

Why Microsoft Is Headed to $4 -

http://news.goldseek.com/RickAckerman/1229089401.php

s M$ Finally Over? The M$ Death Watch -

http://slashdot.org/~twitter/journal/213707

Their Windows 7 trash is just the same low quality Vista crap with a new look. -

Windows 7 Failure Log. The Crash of Vista 2.0: Windows 7 is Vista 2.0 and will follow Vista into oblivion because M$'s development method is broken and their business model has been discredited. Windows 7 is mostly a name change that inherits all the technical and ethical problems of Vista. -

http://slashdot.org/~twitter/journal/215957

Ogg is the superior choice: Increasingly proprietary software companies like Microsoft, Apple, and Adobe are pushing video and audio formats that restrict access and restrict software developers, but there is an alternative that can be played on all computers without restriction — Ogg. Ogg provides professional grade multimedia formats. Ogg is used extensively by free software projects, artists and a growing number of music and video distributors. -

http://www.fsf.org/resources/formats/playogg

[Tom]

CyberPhoenix, go troll somewhere else. We talk about Netflix here.

Anyone who thinks that Ogg stands a shot is living in lala-land. If you want to join the real world someday, you could begin by no longer getting your news from BoycottNovell and Slashdot.

[CyberPhoenix]

@Tom - Do you want to be forced to use products from the Microsoft criminal organization?

http://www.msversus.org/

[CyberPhoenix]

The Microsoft crime syndicate uses "perception management" to trick people into using their poisonous products.

"Perception Management at Microsoft, Using Web Agents"

"Microsoft AstroTurfing is a reality, not mere speculation. Microsoft admits it, but it contracts those who are responsible through outside entities."

http://boycottnovell.com/2009/06/08/perception-management-web-agents/

Here is a petition to boycott Microsoft's Silver Lie web plague.

http://www.petitiononline.com/noxaml/petition.html

[used computers from warehouse]

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