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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.
...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?
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());
"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
CEO claims company is ahead of competition! News at 11.
quidquid latine dictum sit altum videtur.
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
Comment removed based on user account deletion
Yeah, but it would most likely take extra time to be inspected at customs, then there is the issue of having a fleet of planes going 24x7 and the fuel costs etc etc.
Some things are still cheaper to handle locally.
If I mail a DVD to netflix on monday I get a new DVD wensday. Try having that turnaround time when using an out of state facility, let alone an out of country one.
"Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe." --Albert Einstein
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...
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
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
Blockbuster is going to have to do something to remain afloat. They still have brick&mortar stores to support and I don't think virtual rental is going to bail them out. The expenses affiliated with their hard stores cannot remain fixed and in order to offset them, those stores' revenues will have to increase just to break even.
An interesting question is whether Blockbuster will find a better business model than to mimic NetFlix. It was obviously an immediate counter-move to watch their market share disappear forever, but obviously not original. The result was merely price competition. That alone can't make or break a company because things such as customer service can easily outweigh it.
Blockbuster does have an advantage in the form of having local stores. This provides access to spontaneous rentals. Over time, some form of algebraic equation will have to be worked out to figure out the right mix of their online business model and the number of real-world stores. Too many or too few stores and the balance will be upset.
As far as Amazon's entry into the fray, waving a red flag in front of them won't guarantee they will move forward, but it certainly won't tell them to stay away, either.
There are going to be all sorts of strange statistics to make things interesting. Something which has held true (since forever) is 95% of the people who have access to cable have but a single provider [to choose from]. Otherwise, it's a dish. Pay-per-view is already available as a service but depending upon your provider (and location), the prices aren't always as gentle on your monthly bill as a visit down the street to Blockbuster. Fortunately, many systems permit 24-hour "rental" where you can play it at will, including rewind, fast forward, restart, etc.
As UWB (ultra-wideband) and other technologies (not cable modems) capable of either downloading or providing streaming movies could easily push Blockbuster's retail stores to the bring of survivability.
One of the bigger questions out of all of this - and it seems somewhat unrelated - is how all of this will affect the ability to put butts into the movie theatres. At least one recent survey shows a significant number of people prefer to watch movies at home. Admission price; food choice, quality, and price; and listening to babies cry, bored kids complain, and everyone else talk, surely cannot be factors in all of this, can they? Seriously, the quality and accessibility of home electronics has been cited as adding to the movie experience. (in addition to the other things I mentioned, IMO)
Blockbuster needs to work out a deal w/ the MPAA to burn DVDs at their stores. This way you have access to the entire catalog of thousands of DVDs immediately. You'd still have to return the DVD which they'd use as inventory so they weren't burning a copy each time, only if they were out of stock. They'd also need to add kiosks for burning DVDs and use the current stores for renting video games, buying entertainment focused magazines and books, junk food, and providing movie catalogs with information about the all the movies in their catalog.
I had a Blockbuster pass that allowed me to rent two movies from my local store for as long as wanted, and I could return them and get two more. I canceled it b/c I rented everyting I wanted to see (and several movies that really REALLY sucked) and the new releases didn't make it worth my money to keep the pass. If I would have had immediate access to TV Shows on DVD (past and present... I like The Shield and The Twilight Zone), more independant and foreign films, and classic films and guides or reviews to help me find a movie I might like to watch I'd still have my pass and would keep it for quite a long time.
I've never heard of anyone doing that to a cat.