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Netflix CFO Sees No Future for Amazon Rentals
Dave H. writes "In comments made at the Morgan Stanley Small Cap conference last week, Netflix CFO Barry McCarthy says he doesn't think Amazon.com will expand its video rental market into the US because the retailer's infrastructure wouldn't work to its advantage with video rentals. He also sees the window between theatrical and DVD releases shortening, which is a Good Thing." From the article: "The price of entry is much higher now than it was in the past, both in terms of the cost of locating warehouses and just the mere fact that Netflix and Blockbuster are both considerably larger now. McCarthy then said that Amazon is in the classic make-versus-buy dilemma, noting that the company can either start from scratch or try to acquire service through either an acquisition or partnership." Update 6/20: Barry McCarthy's position at Netflix corrected.
I'm here first!
Oh, wait...
Hmm, might be a hint that Amazon buys out Netflix....
...until I become a CEO of a large company, so that I can tell other CEO's what to do and think!
please dont go into business against us, we are for sale
I was impressed that they had many shipping locations. Unfortunately I was unable to take advantage of these because it took 2-3 days to get mail from the shipping location to my house, which is in the same state as the shipping location.
It seems shipping locations would be a lot of the cost of setting this up. Perhaps smaller businesses could pool resources?
Note the fact he says either start from scratch or you can buy us.
I found that sentence interesting about how he found the window from theatrical release to DVD release shortening. It's probably because a lot of people are downloading movies now, on the day when they come to theater, and so since people are watching free home video copies of new movies anyway, the shorter window is now allowing producers to profit from people who desire early copies to watch at home. Or the following scenario probably happens a lot now: someone goes to a friends' house and watches a downloaded movie that's in theater, and then that person wants their own copy but doesn't want to download, and then that person gets less and less interested in having their own copy as time passes and newer movies are available, so a shorter window is important in getting customers like that. I'm not sure what my opinion about that is, really -- whether or not it's a good thing or a bad thing.
"I am a fictional character."
I feel like the time between theatre and DVD has shortened signifigantly already thanks to the quality of the films. There is an interrelationship between these two things. How long did it take National Treasure to go to dvd? a week? two?
System.out.println(syynnapse.getSig());
I am the bestest ever. At everything. Nobody can beat me.
/that/ will be news.
What, I'm just doing what all these CDO's do. Tell you what, when one of these guys says 'Our business model is flawed. We're totally going to get taken over by another company' let me know, because
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It doesn't matter if Amazon can break into the market or not. Most people who don't feel like going to the video store to rent or buy their videos probably just... err... "obtain" their movies online for free anyway.
Next big thing will be direct to computer downloads. Sure people are doing it illegally, but if you make a store, it will make ph@t l3vvt. Just look at any itune clone for this. It won't just stop at movies either, it will be a virtual on demand for any television show ever made. Now how it will play out with many rights holders is the question. But undoubtably, in the next 20 years, home entertainment systems will be hooked up directly to the internet. If you think on demand from cable is cool, you haven't seen anything yet.
God spoke to me.
"Now Netflix CEO Barry McCarthy says that he doesn't see Amazon entering the online movie rental business in the US, putting ice on the idea that Amazon is naturally suited to the business."
/., somebody smarter than me help me out here...
There you go, cause and effect. What else did you expect? Do you think the CEO of Netflix would say: "the market is expanding rapidly with absurdly high profit margins and plenty of opportunities for newcomers. Amazon is perfectly suited to join the competition and can make tons of money with little alteration to their existing infrastructure. I'll be the first to welcome them with a handshake while we prepare to downsize!"?
Doesn't seem like anything out of the ordinary to me.
"As to whether or not Amazon and Netflix are in negotiations for a partnership, McCarthy said "my comment is 'no comment'." I think that statement is about as obvious as obvious gets. No doubt non-disclosure agreements are par for the course, but sometimes nothing is so revealing as a "no comment". Then again, that could be read as some kind of public invitation to Amazon. Idunno... this is
I was skimming the article and where it said "Morgan Stanley Small Cap Conference" I thought I saw "Stanley Cup"
<sig>Guvf vf abg n frperg zrffntr
CEO claims company is ahead of competition! News at 11.
quidquid latine dictum sit altum videtur.
"Once the US housing bubble collapses there will be a total economic collapse."
I'd settle for a levelling off. $60,000 houses in parts of Arizona where there are NO jobs at all, going for more than asking price of >$250,000, the day they hit the market? I don't get it.
I'm not convinced a total collapse would be a bad thing, altogether.
-fb Everything not expressly forbidden is now mandatory.
with netflix and blockbuster, you can have as many DVDs a month as you wish, but only 3 at a time, right?
amazon's service only allows 4 dvds a month. and you're only allowed 2 at home at any one time. at least, thats what they offer in the UK.
now, surely the people that are most likely to use a service like this are going to want alot more than that in return for their monthly fee. i watch alot more that one film a week, and i'm only an amateur film buff. so if i were to get one of these services (which i may do in the future) i'd be getting the one that allows me unlimited DVDs.
i did the math, and using the amazon service, you're not saving alot by getting the monthly fee. and if you only get 3 in one month, you lose money compared to renting(assuming renting is £2.50 like at my local rental place).
and if you live near a good library, its even cheaper and you can keep the DVDs for a week.
i'm usually a great supporter of all things amazon, but they really need to rethink their business model.
sudo killall humans
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Just signed up for Blockbuster's free trial to see how that goes.
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1. Microsoft CEO sees no future for LINUX
2. RHEL CEO sees no future for UNIX
3. Google CEO sees no future for Yahoo!
4. RIAA CEO sees no future for P2P
5. CBS CEO sees no future for HBO
6. Western Digital CEO sees no future for Lexar
7. Oracle CEO sees no future for MySQL
8. Sun CEO sees no future for Dell
You read it here first!
Ten quid, she's so easy to blind. And not a word is spoken...
As to whether or not Amazon and Netflix are in negotiations for a partnership, McCarthy said "my comment is 'no comment'
Amazon, buy me out so I can retire a rich man on a tropical island.
Reed Hastings is the CEO.
NetFlix is in the classic "buy me" marketing phase: they see that their own infrastructure is dependent on shipping DVDs, but the immediate future is downloading/streaming data. Since they think Amazon wants to be in the DVD shipping business, they're telling Amazon to buy NetFlix, to buy entry to the "competitive market". If McCarthy is smart, he'll take his buyout money, and sink it into a streaming company.
--
make install -not war
I'm not convinced a total collapse would be a bad thing, altogether.
I'm thinking it will be a good thing as in 2-3 years when the first part of their interest-only (now that's just plain scary) loan starts paying off the principle and their payments go up the market's going to be flooded with houses for sale.
And that means I can snatch up a house in 3 years for what it went for 4 years ago -- so pretty much a 7 year interest free loan for me.
Off course this is highly location dependant -- look for places where people want to retire as being hot. Which means Florida, coastal areas, etc.
Okay, fine, Amazon.com may or may not expand it's DVD rental service into the US. I don't see how on earth it lacks a future if it doesn't, though? Its rental service seems popular here in the UK (I'm pleased with it, I know friends that are pleased with it, anyone got any actual numbers?), so it may not expand into other territories anytime soon, but...
So what, exactly?
friend who is 20 years old and is one of those infoholics who accumulates data the way old women accumulate cats... he gets five or six movies a week, copies them all in a few hours, and sends back the originals without even watching them
Infoholism... You should tell me that 10 years ago... Or at least before RSS was invented...
This Is Not a Sig
I really disagree with you on this.
I use to have NF and I have to say it is a amazing service that saves me time, and increases my enjoyment of the time i spend in front of the TV.
NF allowed me to make a list of all the TV shows and Movies that I wanted to see. I was able to make sure that I would see those random movies that people always recommend, but i never remember when i get to the video rental shop.
I stopped watching a lot of TV becuase I was able to watch all the same shows i like, but commerical free, and on my own schedual.
I personally just view NF and simular services as a extension of the Video On Demand (VoD) future. We all know that someday, once all the legal and technical problems are worked out, we will watch shows with VoD.
We will be able to filter the crap out, save tons of time, and view things on our own schedual.
You forgot people living in semi-remote locations with limited/no movie rentals and/or obscenely expensive satellite service. Alaska, etc.
The only thing that makes sense is for amazon to buy a similar service that was designed to scale without large infrastructure. Enter Peerflix, I've been reading a lot about it lately, and I tried it out... it's pretty interesting, although they don't have plans that accomodate heavy users (it's $1 per dvd) it works for me because I only watch like 5 a month. It seems to me that if Amazon were to buy a service like that and offer flat-rate pricing they would kick ass.
I swear its the killer app of the late 2000's (as in from 2005-2009). Being able to rent movies over broadband is a killer app. Imagine Netflix's library available on demand. Fucking outstanding.
The Doormat
If you're not outraged, then you're not paying attention.
Or "regular" people watch more movies than you think when presented with a three a month opportunity, especially when they may have been paying nearly as much on late fees for watching less than 3 a month (ahem).
We don't have to leave our house to get DVDs, ever. It uses a queue that you can update or change at your whim. Three a month, anything you could think of, easily searchable... etc.
I just don't think your definition of "regular people" is on target. Consider someone who merely has kids...
In 1998, 72% of teens ages 12-19 reported going to the movies and 71% purchased at least one full-length CD during a three-month period.
Teens ages 12-20 make up 16% of the population, but purchase 26% of movie tickets.
63% of kids ages 9-17 say that seeing the latest movies is important.
62% of youth ages 9-17 say they watch a video at least once a week.
54% of kids view a movie on a VCR three or more days a week and 47% see a movie in a theater at least once a month.
I've never heard of anyone doing that to a cat.
Are we supposed to be surprised that he'd say this? I mean, was he supposed to say "Oh noes! Amazon is going to steal our market!" ?
Friend: "The NIC is misconfigured..." Me: "No prob, I'll just telnet in and fix it." *Silence*
Good point, but all of these companies are large companies that are down talking their competitors. All Netflix is doing is telling a giant that they can't do something completely within their control.
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Forgive me, i'm a new /. poster, and couldn't figure out which thread to put this in (since it replies to multiple threads).
Just some general comments:
1) With all the discussion of direct downloads, has anyone tried Cinemanow and/or Real's movie rentals? With the seeming convergence of media and computers (ie Windows Media Center Edition, Mythtv actually runnable on a $300 PC with realtime transcoding), maybe this actually is an "oh crap, we're screwed, buy us now Amazon".
2) In regards to the shortened release to DVD cycle, it mostly has to do with the fact that margins are higher on DVDs than theatrical releases (remember, cinemas make their money on concessions, not the movie).
3) Another reason why rentals are more popular might have to do with the fact that Hollyweird has released *crap* for years. I mean, come on, the comics that make up the big blockbusters have been around for what, 40-50 years? Try something original/interesting (and, yes, I am a fan of comic books), and stop releasing disposable crap. Why should i pay $10 to see your crap in the theatres when i can rent it for $3 later.
As an aside, this will reduce piracy issues. I (and most other people) have no problems shelling out $$$ for Citizen Kane, The Matrix, etc, on DVD since I/we will watch them over and over again anyway.
You wouldn't be saying that if you OWN a house or property.
Sounds to me like he is just asking to be acquired by Amazon.
But Officer, I DID read the f**king article!
As soon as subscription-based HD video-on-demand becomes available, Netflix and Blockbuster will begin their final declines.
"...terms of the cost of locating warehouses..."
Maybe if Amazon went straight to movie download on demand, they won't need to compete in this way with Netflix or Blockbuster.
I can't speak for Blockbuster Online, but NetFlix is worthwhile for the non-movie buffs, non-'pirate's, and non-mathematically-challenged.
If I'm on the $20 a month plan then I simply have to watch 4 movies a month before I'm saving vs. renting in-store at Blockbuster. Although I'd be saving only a small amount, I'm also saving my time. I can't speak for where you live, but where I live Blockbuster rentals are $5.25+tax (last I checked), and you have to wait in, at least, a 15 minute line unless you go out of your way to get there before the rush (like leaving work early or skipping lunch).
Since I joined NetFlix I've only had to deal with that once, because I wanted to rent something to watch it that night. Otherwise, I know that I have a DVD or two lying around for whenever I want to have a movie night (which sometimes is only 4 times a month, and sometimes it's 12 times). I considered trying Blockbuster's Online service just because I heard that you get two free in-store rentals per month which would solve that short-coming of the system.
I also find that it's kinda like having a gym membership. You'd never go if you had a pay-per-use membership.
The best part is I could grab the movies at home and return them from ANYWHERE. Then, I'd have more movies waiting for me when I got home.
It required no thought or effort on my part, and I never had to worry about renting a movie in Armpit, Iowa and wondering if I was going to be there next week to return it. The video store was the nearest mailbox.
Well, I don't travel anymore, so I canceled my netflix subscription. But it sure was great for the road.
"Avoid employing unlucky people - throw half of the pile of CVs in the bin without reading them." -- David Brent
I'd love it if DVDs DIDN'T have those atrocious custom menus, especially with:
- mandatory pre-menu animations (time wasted)
- hard-to-read typefaces
- hard to distinugush "active area" indicators
- snippets from the feature (spoilers)
- mandatory copyright FBI/Interpol warnings
Why can't DVDs follow the CD Audio model? Just let me put the disc in and click Play.
You're telling us that creating this stuff slows down your production time (and increases costs and decreases profits)?
Well, duh, as the doctors like to say
If it hurts, STOP DOING IT.
"You wouldn't be saying that if you OWN a house or property."
I own a couple of houses and a small farm in East Texas. All together, not worth the down payment on a 2 bedroom anywhere I'd actually like to live.
-fb Everything not expressly forbidden is now mandatory.
Oh, and they used to have such fun with it too, thinking the dazzling interface was "just part of the fun." Those Monty Python Flying Circus DVDs are just atrocious. You have to go through so much silly crap to get to the extras and main shows that I hardly watch them any more. I'm sure glad we've gotten past the "gee whiz" factor of menus. Maybe someday they'll re-release the Flying Circus DVDs, maybe with more than 3 episodes to a disc and a kinder, gentler interface.
Amazon wouldn't do too badly, compared to other companies, but it's a tough market to enter... Wal-Mart, the corporate giant, didn't succeed.
Of course, Amazon already has a distribution network... More competition wouldn't hurt, and I'm sure that Amazon would do a better job of it than Blockbuster Online.
On a side note, any Netflix users out there who are tired of fighting to get your queue in order, try out my Netflix Queue Manager program, FlixQueue, at http://www.5hyphen.com/FlixQueue. It will save you time, and has many neat features that you simply can't do on the Netflix site.
Don't buy WoW Gold! Make it yourself!
Aside from selection, that is the best part of Netflix. Now, when I read a movie review that makes me want to see it, I just open a new tab and put it in my queue.
TRUE ENOUGH...
but the greater point is when reporting the analysis/opinion of a direct competitor (the CEO of direct competitor, no less), you need to be ESPECIALLY SCEPTICAL about their analysis....
Netflix does indeed have the "well-embedded" position in their space, but i can quickly think of ways that i could attack that position, were i the Amazon CEO...(all just off the top of my head NO deep thoughts provided)
1. offer a free DVD of the customer's choice for every X months of rentals
2. cut prices by 30-50% (or more)
3. go to the Broadcasters, Movie Studios and Cable Networks and buy exclusive and/or early access to their top rated and most popular products
4. since the US' has reasonably strict laws about "loss leaders", go to the big dollar advertisers and get an income stream from them by including a 5-10 ads (that can't be forwarded around) at the begining of the DVDs, then further cut prices "dollar for dollar"
5. Look at the Netflix demographic and start including coupons for; 3 months free at Bally's Gym, 1 cup Starbucks drip coffee per day free for 30 days...ad nauseam...
I guarantee you that if I had access to Amazon's revenue stream and, more importantly, corporate tie-ins, i could put a real hitch in Netflix's getalong..and i'm just some dumm Nganear.
There once was a time when dinosaurs roamed the earth, Visicalc and Wordperfect were King, and CPM ruled the Universe...
Market-dominating companies only look impregnable because of the perceptual rate differences between "market time" and "biological time", coupled with the fact that venture capital nearly always prefers going into "open" or "poorly defended" markets.
But, if you're familar with the corporate histories of General Electric, General Motors, Ford and IBM...over the last century, thousands and thousands of "well-embedded" companies were shredded by these corporations when they felt they needed to be in a given business space.
If a "Giant" can find ways to turn marketshare compeitition into a "dollar for dollar race", the vast majority of the time, they with the deeper pocketbooks wins. And remember, people have predicting diaster for Amazon for years now....
"No Fool, Bezos, is he!"
Ten quid, she's so easy to blind. And not a word is spoken...
In the Vatican City> In Dharmasals?
Are you the pope? The Dalai Lama?
Given same quality people will buy the cheapest.
The burgeoing black market of non "official" stuff attests to that.
IANAL but write like a drunk one.