Slashdot Mirror
Netflix Pioneers Industry To Get Left in the Dust?
prostoalex writes "The New York Times profiles Netflix, the company that pioneered subscription-based DVD plans where a disc is sent via postal service and no late fee is charged. It describes the company from May 1998, when it originally launched the Web site as a DVD-by-mail rental service (with late fees). Interesting factoids: Netflix operates 30 centers around the country and 11% of San Francisco residents subscribe to the service. Turns out, the company is not really afraid of Blockbuster, Wal-mart and Amazon moving into their markets, but they do consider on-demand Internet-download services to be a threat to their business model."
Seriously: Netflix ships movies for a flat monthly fee. So does Blockbuster and companies X, Y, and Z. What makes it better? Nothing? Well, then we compete on price and margins go out the window.
It's basic business 101: if you have a strong differentiator (my product is better and no one else can sell it), you can charge more and make money. If you can't, you wind up in a commodity market and you make a lot less...or get trampled by a larger competitor, go through a consolidation wave, etc.
A good example is Tivo. First to market. Good product. Not really anything unique or hard to copy. Now facing stiff competition.
Yes, good customer service should matter, but honestly in these kinds of businesses it's really a self-service kind of deal. Sure if they ship you Patch Adams III when you were waiting for Back Door Housewives Vol 14 you will call up and complain but you're not building a real relationship here.
Advice: on VPS providers
I've been a Netflix subscriber for about a year. At first they were great. Three movies, one day to return them and a day to ship them. I could watch about five movies a week. Then, Netflix realized postage was eating them alive and announced they were going to increase their price from something like $20/mo to $22/mo. The same week, Amazon and Blockbuster both introduced their services for something like $18/mo. Netflix immediately retracted their cost increase and announced a price matching reduction, and THAT'S when they started the big slowdown that made sure that I received at most three movies a week, assuming no USPS holidays. The policy of "as many as you want as long as it isn't more than 3/week" is cheesy weasely. They should just be honest and charge a flat rate per movie, or offer a flat monthly rate for a service not to exceed X DVDs per month, and get back to shipping without an artificial delay. I don't expect them to lose money, but as customers, we should inundate them with emails, calls and letters demanding they deal honestly and treat us with some common decency instead of lying. I know that's what marketing people do, but we shouldn't let them get away with it.
Around the same time they started emailing to ask me when I received a DVD. I always told them a day later than the actual day I received the DVD to try to beat their scheduled delay BS, but I don't think it worked.
Still, three movies a week is not too bad. Any more and my productivity would suffer. It's about $1.70 per DVD. My local library charges $1 per day, but they don't have many titles and I have to go there to get them. Netflix is a MUCH better deal. I like the convenience of internet browsing, wide selection, deep stocking (seldom a wait if I want a title), and delivery and pickup at my mailbox.
It takes me 30-60 minutes to get a movie at Blockbuster, and I average a movie a minute browsing online at Netflix. I don't know why it's so much more efficient, but it is. That's the real value of Netflix. There are over 100 movies in my queue and it's on autopilot. Whenever I want something special, clicky clicky, top of the queue, here it comes.
I can see why they'd consider online movie distribution a competing technology, and why they'll probably try to be first into that market as well. It's the only way I can see it being more convenient than their current DVD service. Of course downloaded movies will be horribly encumbered with Digital RESTRICTIONS Management. I have a couple of friends who are building significant DVD collections by ripping Netflix movies.
>> My ultraviolent Linux switch video.
I have to agree. I've had netflix for a couple years and honestly, the three at a time subscription provides me with more than I actually need. I can't imagine who has the time to watch a couple movies per day and have a life, but for you guys, get a subscription to BOTH Blockbuster and Netflix and you'll never have to leave the couch!
For what it's worth, I did try Blockbuster for a month because it is a tiny bit cheaper, but when it appeared that they were missing an entire season of Voyager (the 4th I think), I canned them. They had all the other seasons - I just couldn't find a single episode from the season I wanted to see - not by any search pattern or even through a time consuming browse. And in response to whoever writes back saying I'm an idiot because it exists and I was to stupid to find it, I don't care. Blockbuster's search/browse interface was flawed enough to make finding the season hard and was reason enough for me to stick with Netflix.
What changed under Obama? Nothing Good
I have been with NetFlix for about a year. I have enjoyed the service and find the website easy to use. I am a tab browsing addict and open a ton of pages at once. Browsing one page at a time is too slow, even over broadband. So, the Netflix site rules for ease of navigation.
I return movies the day after I receive them, most of the time. A few months ago, I decided to try BlockBuster. The net service is a little cheaper and I can also get two instore rentals a month. The big advantage is the games.
So, I am finally catching up on movies and I need to decide which service to keep. Here's the kicker: Both places have service centers in Denver. So, my movies go to Denver no matter what. However, BlockBuster's service is constantly faster. They claim the post office notifies them of which movies are sent for return and cross ship. This gives me a couple more rental periods each month.
For example, after Christmas, I sent 6 movies back to NFLX and BB on the same day. All three BB movies arrived before the first two from NFLX. What gives?
So, for me, after I receive my last two movies in my queue, I am cancelling the NFLX account. However, I do wish BlockBuster.com was easier to navigate...
I root for the underdog, but I am also a capitalist. Therefore, I go with the cheaper service that gets the movies to me fastest. And on both accounts, it is currently BlockBuster.
just my two cents.
iPod's days are numbered. Apple's Microsoft-esque shennigans of blocking out contnet from other vendors and funky prorietary DRM schemes have earned them no love. Combine that with the comparable (if not better) quality, yet cheaper priced products from competitors (which just happen to be compatable with whatever you want to run on it from wherever you can get it) will be the stake in the heart.
Take off your geek blinders and look at the cold, hard numbers. Sales of iPod are *increasing* not decreasing. And despite how most people on Slashdot (including myself) feel about DRM, most people really don't care as long as the restrictions aren't over the top, and the iPod restrictions are perfectly acceptable to almost everyone but the hardcore "Ogg or nothing" crowd, which makes up a very small minority of the real world, even if they are over-represented here.
Thought Experiment: Suppose a Netflix customer does not have time to watch all three DVDs the day they arrive. They copy them to a hard drive, mail them back that day, watch them all in the two day time they are in the mail, and then delete them before getting the notice from Netflix that they have been received. Illegal? Probably. Unethical?
Suppose they keep them on the hard drive for the five day window from the day they are received to the day they get the next set? An interesting question...
"Remember, there never were pineapple-almond cookies here."
Since 1991 my business has required almost constant travel. My stays in an area range from a couple of weeks to 6 months, I noticed a long time ago that Blockbuster's prices varied widely from town to town. If there was a thriving local video market, Blockbuster's prices were competitive. If they were the only game in town you payed through the nose. Independent rental stores in most places couldn't compete against BB's corporate slack for long and soon enough went under. Of course, prices at your local BB then went up. Market share is everything. You could ask if it's fair, without a doubt it's legal. Now those folks pay top rates to rent the corporation's bland catalog of current selections. Anyone else notice that although the rise of the dvd format has lowered the cost of owning movies, the cost of renting movies (at least in the brick and mortar world) continues to rise? Right now there's a price war in online rentals. Care to speculate whether BB or Walmart would even be in the business without Netflix? Care to speculate on prices if Netflix goes belly up? Hell, BB even gives you free rentals at their stores - wouldn't want you to get out of the habit of stopping by. But hey that's just doing good business - right?
Well I think companies should get some credit for risking their ass on ideas that are good for their customers. So all things being equal - or even fairly close to equal - I say dance with the one that brung ya. And that's Netflix.
Probably that too. It's like taking out food to eat later from an all-you-can-eat buffet.
Their whole buisniess model depends on the assumption that average turn around time is not that short. Every time you send back your DVD to get new ones, it costs them money. By copying contents to hard disk, you shorten the time abnormally, thus cost them more.