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Comments

Seth

Not a good week for Netflix with the Hulu announcement and the Amazon announcement...

mrmanmac

It is amazing to me how the market reacts to what a worthy competitor "might" be able to do vs. what Netflix has already done. Looking at the Clicker comparision chart Netflix still has all of the would be competitors beat if you compare apples to apples.
I am still long on Netflix and will remain so because we have seen this before. These same Market guys stuck by Blockbuster till the bitter end, and have NO vision of the future.
Wag the dog Wall Street!! What we are seeing now is nothing more than a handful of investors manipulating the market, and taking profit from Netflix's meteoric rise. They will be back when they realize Netflix's customer base is not going to jump ship until Amazon, or any other competitor actually produces a better product.

RH Macy

"CDN" stands for "content delivery network".

Seth

Well, Mrmanmac, I think the issue is that while other companies are innovating and working hard to compete, Netflix appears to be resting on its laurels. If anything, Hastings' company has become largely focused on pleasing the studios and Wall Street and not its customers.

In another comment I mentioned that Hastings once remarked that he admired Howard Schultz and Starbucks but I don't think Netflix has seen the parallels. Indeed, Starbucks became complacent and arrogant in its control of the market and then hit a very rough period which required Schultz to return to the reins of the company.

It looks like Netflix is making the same mistakes, IMHO. Its huge control of the market seems to be leading to a "our customers aren't going anywhere" mentality.

Complication

A serious competitor may be a good thing. Hopefully Amazon will not play the exclusives game like Hulu/Blockbuster and instead focus on the breath of content like Netflix. In this way the content owners get to sell the library rights more than once. At present these owners are choosing whether or not to Netflix their content. Instead, with more than one player willing to give them money on a continuous basis, they might be choosing when (e.g. in what window) that content should be available for library streaming rather than if.

The entry of another big $$$ player in the subscription streaming market will hopefully make content owners less likely to dig in their heels and Beatles the content.

ts

I hope Amazon thrives and succeeds. It will force both companies to offer the best service they can at competetive prices. Amazon needs to improve their streaming library before I'll consider joining Prime, but I'll be keeping a close eye on future developments.

Joemaxhardman

Amazon can't even beat itunes.

mrmanmac

Seth, Where has Netflix been resting on it's laurels, or been complacent? They continue to innovate, and make deals for content that as a customer and investor I very much appreciate. I am looking forward to watching every episode of "Star Trek" when the CBS deal goes into effect.

And what companies are you referring to that are innovating in order to compete? All i see are copycats that want to get in on what Netflix clearly saw as an emerging market long before anyone else. Once these copy cats get into the squabbles with the studios for overpriced content we will see how many of them hang around.

Netflix has a commanding lead in brand awareness, quality of content, and the number of devices the service is already available on. I have 4 (xbox, wii, sony blue ray player, iphone) and only one has Amazon. Even Apple TV has Netflix!! When was the last time Apple conceded anything to any competitor?

I am still amazed at how the stock price goes up and down based on what a would be competitor "might" do, vs what Netflix has already done. While the copycats, try to catch up Netflix will be pulling away.

After doing some more research on what Amazon has to offer, I don't see how it will work for them in the long run.

Existing Prime customers (we don't know how many there really are) are there for the free shipping. I for one would make damn sure I got at least 79 dollars worth of "free shipping" We will see in the near future how many new subscribers they get for the limited amount of streaming titles (most of which are available on Netflix).

It may take longer, but we will also see how many people renew their Prime service once they realize paying higher prices for the product in order to get "free" shipping is not really a bargain. Nothing is "free"! At least with Netflix, I know what I am paying for, and they are not trying to lure me in in order to sell me something i don't want. It should be noted that I like many other Netflix subscribers pay more than $7.99, in order to rent DVD's as well.

What I am looking forward to down the road is Showtime (already sucks) HBO (I only subscribed for the Soprano's) Cinemax and all the others going the way of Blockbuster, when the average consumer realizes Netflix has alot more to offer at relatively the same subscription price. Comcast should be looking into ways of adding Netflix to their devices as well. Especially for those consumers that do not have a broadband internet connection.

If anyone has a "our customers aren't going anywhere" attitude it is Comcast.

As for starbucks..... I don't think the trouble with starbucks was complacency, or competition. Their problem was that it was a fad of the times, and they over saturated the market, opening locations everywhere. The only competition the local starbucks has to deal with, is another location right down the street.

IMHO

Marshall K.

The problem with analysts is that they are all fan boys and interpret the data how they want to. For one thing I doubt Amazon makes any money off of prime when you factor in the shipping savings that members get. Prime is a loss leader to keep people happy with their Amazon experience. Secondly how many people will sign up for Amazon prime because of streaming. Will it take a chunk of Netflix's market. Perhaps. Is it a direct competitor, I think so but it's really too soon to know for sure. Right now the content is Amazon has is pretty much a fraction of Netflix's with very little unique videos. I don't think at this point that people would choose one or the other but would instead opt for both and perhaps justify the Amazon subscription as paying for the shipping discount.

jolly

Netflix's only chance to grow will be internationally. The stock as well as the subscribers here in US are on the down swing. Netflix's market is 25-39 and they are reaching the saturation point with that and now those people are getting bored with the streaming. Once Netflix loses Starz and continues to get windowed and prices raised by studios customer churn will be astronomical. Which I believe is why Netflix executives have changed policies and decided to no longer report their churn numbers.

Marshall K.

Jolly - I'd like to see numbers to back that up. I think the biggest limitation to Netflix is technology, followed close behind by people willingness to use the technology. The amount of stuff they've been adding to streaming lately is in itself astronomical so I don't understand why people are bored with it.

The window system however is another story. Netflix started streaming with b and c level material that they could keep indefinitely. People got used to netflix being the same as owning digital rights. That is not the future of streaming because the studios also see it as owning digital right for free. The shift seems to be towards treating streaming more like traditional TV with syndication windows. People will just have to get used to that and Netflix / Amazon / Hulu will have to find ways of keeping us informed of the new stuff we'll want as it comes available. Everytime something is taken down they need to show each person at least two things that THEY PERSONALLY will like.

Rocketboy_X

I can see how this isn't a half bad deal for any Amazon Prime member, but assuming that the current cost of Amazon Prime is what's used to offset the deal on shipping, I'm not sure how Amazon can offer this without taking a huge loss somewhere.

That, and the fact that the amount of devices that Amazon can stream to vs what Netflix can stream to reduces the threat to Netflix.

rjejr

To everybody comparing NF and Amazon on # of devices and titles, I'm pretty sure NF has been offering their service longer, and at the beginning their devices and selection were limited. I would bet iPad, Xbox and PS3 apps in the near future. Amazon is really just testing the waters by offering this as a part of Prime.

I have been typing on here for some weeks now that NF is a given entity like McDonalds or Kleenex or Xerox or whatever and as such no newcomer like Hulu Plus or Vudu could kill them like they did Blockbuster. Amazon however may already have more brand awareness than NF. If that 10 mil. Prime number is correct they could be competitive. I don't think they could kill NF, but $2 bil should make Reed Hastings pay attention.

Anon/B/

Isn't the first time the stock market has been wrong about netflix...

"Netflix is a worthless piece of crap with really nice people running it," says Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles, who cut his target price to a merciless $3 a share

John

I'm sorry but this "stock analysis" is nonsense. The market has been down for other reasons. To put this in context: from Fri-Thu (last 5 days), NFLX was down 6.88% (loss of 840million), in the SAME time AMZN was down 6.08% (loss of 5.1BILLION). This is using only market capital as a measure (which isn't worth much). In fact both companies were at a peak Valentine's Day. So this all meaningless, considering the Prime announcement was made only a few days ago.

Hence this is just the nature of the market, similar trends exist in SP500, and many other companies, nothing more you can gather from this.

Real impact will take time to measure.

Marshall

Good point John. Looking at the chart you see that the stock actually is going up since Prime was launched. Looking at today you can see Netflix is up again.

I'm not keeping up with stock trends but it looks like the market in total took a hit around valentines day and is adjusting back up.

Dose of reality

"Netflix is a worthless piece of crap with really nice people running it,"...

Trust me, the people running Netflix are not nice people. Narcissism is a company value.

Sam

I don't understand how amazon Prime is profitable to them. Maybe not all Prime members are as crazy as me -- I will just order socks from amazon in 1 order. But all these single item shipments must add up in cost

Wonderbird

Right now I subscribe to bigstar.tv, netflix, amazon prime, and hulu+. I have 2 Roku players, and a couple of PS3s. Hulu+ is the only one in danger of being dropped short term because I HATE commercials... I figure at a total of $38 it is still a better value than cable / satellite...

RJM

I dont own either stock so I dont care in that regard.

I dont order enough from Amazon to Justify $79 a year or even half that. And I already get streaming from NF.

But, competition is GOOD for the consumer.

I just got my roku and a router. Havent got either out of the box. While I primarily watch actual DVD, I look forward to being able to watch streaming from my easy chair on my TV.(Assuming I can do it, I am technically incompetent and even hooking up my replacement DVD player a few months was a challange between the wires and the remotes & so forth.

The significance of this amazon move is that 12-24-36 months out both side will COMPETE for our business and that should keep prices from going too high.

missouri

All I can say is GOOD! Maybe this will send NF the wakeup call they need that they are not the only game in town - and will make them think twice about implementing asinine changes like a 28 day wait and then increasing prices on top of that. I welcome the competition!

Seth

I sense a lot of astroturfing here. I think Netflix is scared by this a lot more than we think.

They have control of the DVD by mail market but the streaming is just a matter of what company makes the best deals. Amazon and Jeff Bezos are definitely not something they can ignore.

I think Netflix is very nervous about this indeed.

Dissatisfied Netflix Customer

Great news. They need a few more hits to their market cap to get them off their butts and start delivering better service to justify the huge revenue growth WE have given them.

I have been on Netflix for several years and the service has not improved, it's arguably worse.
1-Poorer search functions for new releases
2-longer waits for rentals, esp. blurays
3-delayed new title releases
4-no subtitles or CC available on most devices
5- no surround sound (sorry, 1 device doesn't cut it)
6- no 1080p (sorry, 1 device doesn't cut it)

The Netflix bubble is one I am looking forward to see burst, bring on the competition!

Marshall

I will agree that their blu ray support has been mishandled. They don't have enough and they charge too high of a premium to just have them in my queue. Considering that most people will get a blu ray a month the extra fee should be 50 cents to a dollar a month max.

I can't really fault them for the 28 day window however. That was mostly beyond their control.

Seth

Sadly, everything Dissatisfied said is correct.

mrmanmac

Netlix is first and foremost a DVD rental company. If you want Blu Ray, New Releases, bonus features, etc... rent them.

The streaming service is a very nice compliment to the Rental Service. IMO well worth the the cost.

Lets face it.... those that complain there isn't enough content, or the content that is available through streaming doesn't include CC, HD, what the heck do you expect for $7.99?

The only way to have as much content available to you through the traditional avenues is to subcribe to ALL of subscription services through your cable provider. How much would that cost you?

HBO
Showtime
Starz
Encore
Cinemax
Pay per View (Newest Releases)
HD Service.

This kind of package would cost you $100 per month easy.

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