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Netflix CEO Hesitant To Fight Cable
imamac writes "Those who were hopeful that Netflix would bring the fight to the cable companies may be disappointed in the latest comments from their CEO. 'Reed Hastings is pleased with his company's massive growth, but he fears that getting too large will start "an Armageddon" with cable networks.' It's a fight he doesn't think his company could survive."
"Nice little Netflix you got there. Pity if something were to happen to take you down, hmm? Your friend, Comcast"
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
That could be the result of the fact that we gave the keys to the pipes to the same people who create content to push through those pipes. It's not difficult for them to decide that Netflix's traffic is a conflict of interest, and can be easily choked off.
He's 68...This can't be right?
http://en.wikipedia.org/wiki/Vince_Cable
This is the first time in my computing history that I like my entertainment service, and don't feel like turning to alternative sources for my movies and tv. So please Netflix, take em to the mat, let us count to 10.
If it came down to it, I wouldn't put it past the cable companies to destroy themselves just to take Netflix down. The cable companies would probably put themselves to the brink of going out of business and only be pulled back by being bailed out by the government.
And at that point, Netflix would be gone and it would be mission accomplished.
Netflix, gives me, for the most part, exactly what I want in television watching. I pay a reasonable monthly fee. When I want to watch a movie, there is a selection of B-movies and older classics (I use the term lightly) for me to choose from. No commercials. Nice! I pay my cable/internet bill on-time and regularly. I watch on average 1.25 moviews per day. AS far as I can tell, everyone wins. I'll never go back to straight cable. If netlix dies, I'll throw the TV in the trash and be done with it.
Over-the-top Response Guy! Giving "Over-the-Top Responses" since 1970.
Come on, Netflix. You're really the only company in the position to fight big cable and the crappy ISPs. Plus, they're in the interesting position that if they really take this seriously, they'll be on the consumer side of the bandwidth cap\throttling argument. I'd love to see Reed grow a pair and put a large company behind the little guys in a fight that we'd otherwise certainly lose. In a justice system dominated by corporate money, and with an anemic FCC, we the people might actually stand a chance with some corporate money on our side for once.
If Comcast continues to purposely oversell its upstream connection so much that Netflix use is crowded out, watch Xfinity Internet customers switch to FiOS or high-end DSL where available.
What it will take for true competitiveness happen here is a regulatory order to have the cable and DSL companies split their content purchasing sides off from their "pipes" business. Whilst they still have vertical integration there is going to be no further incentive for them to compete on usage limits and speeds. What they have today is "fast enough" for web access, email, etc. Their own digital content whilst travelling across the same physical infrastructure does not count toward usage limits.
The problem is that market forces do not work towards efficiency in situations of "natural monopoly". I don't blame Comcast, or AT&T for how they behave, it's only natural and in the interests of their shareholders, however economically they are benefiting from an externality and this must be gradually dealt with.
Netflix just needs to wait a few years for some more streaming companies to get a foothold. Then when the cable companies try to crack down, there will be more than just one company to fight back. It's also a lot easier to get public opinion/lobbyists on your side if an entire industry is the defendant rather than just one company.
why not dump their less robust on demand services
Two reasons:
My former ISP (Frontier) had DSL speeds up to 3 meg in my area.
What happened after that? What excuse is Frontier throwing around for why it hasn't rolled out FiOS?
Neither company is very well served by the way the telecommunications monopolies in the US work. If they teamed up with Google and funded alternate companies and bribed regulators and such, I bet they could create a telecommunications infrastructure that was independent of these monopolies and a whole ton better for everybody.
Need a Python, C++, Unix, Linux develop
Basically instead of having to produce content he's letting cable companies pay up front so cable and network channels produce content and he reaps the benefits later on when the DVDs ship.
Producing content is an expensive and painful business. Why fight the guys who are in essence subsidizing his business plan?
Non impediti ratione cogitationus.
Never provide a media service that delivers what the customers want without a huge hassle or outrageous prices. Customers must be bled for every last cent!
Netflix is an efficient use of available technology in the United States; therefore it must be annihilated.
If Reed wishes to avoid an all out confrontation with the cable and content providers, it would make sense that he would speak out against doing so. However, that doesn't mean he isn't still planning on competing. The more he can appear tame and docile, the more cunning the surprise attack will be when he finally unsheathes his weapon. If you give the lion a wide berth and a calm gaze as you circle him, eventually the lion will relax and be unprepared for a lunge from behind.
"Molest me not with this pocket calculator stuff."
- Deep Thought
Netflix subscribers: 23 million
Cable TV subscribers: 100 million
Who do you think content producers are going to side with (NBC/Comcast type mergers aside) if push comes to shove? It's just a matter of numbers.
Kind of ironic that the relatively recent push to get TV shows out on DVD as quickly as possible, as well as getting all the old shows out, is probably one of the leading causes of the decline in cable TV. This is what really allowed Netflix, especially Netflix Streaming, to take off. How many of you would be subscribing to Netflix Streaming if it were only movies, and not TV shows as well? I doubt I would; and I guarantee you I'd still be subscribing to Cox.
Networks got a huge profit boost when DVD sales started coming in, but in the long run it may end up doing them more harm than good.
Netflix to Cable: "We're not quite ready to take you out...yet. So we'll leave you alone for now. When we DO decide to take you on, it will be too late for you."
Way to go Netflix, you are playing the game very well. I'm betting on Netflix in this battle.
Next time the government bails a business--any business, I don't care if it's a healthcare provider or an orphanage for puppies or the largest car manufacturer in the world--we should start a riot in DC. Imagine if GM and Chrysler collapsed ... Ford would own the market, but they don't have the capacity. People would still buy Toyota and superior Mazda cars (Mazda way better than Toyota), Volkswagen and Audi, and of course new American car companies would spring up.
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How much boat-rocking could you expect from such a guy?
If I was a cable provider, I'd be looking to partner with Netflix. Netflix seems to have figured out video on demand, so I would have them be the official VOD provider for my customers. Netflix would just be an added service on my customers' bills. I'd get a cut every month. And my customers would get the most popular VOD provider.
Coder's Stone: The programming language quick ref for iPad
Movies continue to be made for peanuts
I don't remember any new feature films based on Peanuts since Bon Voyage in 1980.
Movies continue to be made for peanuts
Got any tips? (Requirement 1: English language.)
I guess maybe you're right, but if he did stand up and force the telecoms hand, it might expose a few more people to the truth of what's really going on.
They feared that it could be used to suppress protest or support unpopular rule.
Here's the thing about cable TV:
It's really expensive for the content that most people actually watch.
If you have a good ATSC receiver, you get a SIGNIFICANTLY better looking (less compressed) picture off the antenna for free than you do off the cable for large bucks.
Netflix is, what, $4.99 a month for unlimited streaming, which is not an "introductory offer" that's going to triple in 6 months, and Roku boxes are about $100, a one-time cost, not the monthly rental that the cable companies want you to pay.
"Triple play" packages are not really a very good deal. Minimal phone and internet is less than half the cost of the total package, and you're not paying for content you're not watching. Consider, even HBO and Showtime original series eventually make it onto DVD, and become available on Netflix.
Even with the "triple" discount, our cost went from $135/month to $60/month just by dropping cable and returning the two set-top boxes. Now, they'll tell you that you're paying a (slightly) higher price for phone and internet, but the important thing is that your total bill is down by more than 50%. In a down economy, that's increasingly important.
Get a phone base station that'll pair with your cell, (about $60) and you can even drop the land line and buy internet service only.
Even if netflix gets extinguished, those red boxes at the supermarket are good enough for a significant number of people.
Cable TV is becoming this century's AOL. More and more people are realizing it's a crappy high priced service for shlubs who don't realize that all you really need from them is an internet connection. I think this is why Comcast is trying to leverage their current capital (as did AOL) and branch out now, before the inevitable collapse comes.
Frontier, the company that took over Fios from Verizon in our area, is getting out of the cable TV business. Comcast comes by about twice a month to remind us of that and try to get us to switch, so we can keep our cable TV. But we've already dropped it, and we suspect Frontier has seen the handwriting on the wall.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
In your poorly wired city? yes.
Then how do you recommend making a city no longer poorly wired? Or instead, do you recommend moving your family to another city?
The only relevant question in business. Mr. Hastings says that he will not sell out, which means his price is very high. However, there is too much money out there hunting too few deals like this, and Netflix's position is too valuable to remain a wildcard. Somebody will make him an offer he cannot refuse. The only question is, "How much?" Investors want to know.
I've recently had a great discussion with a representative from my Cable company about reducing my bill. Paraphrasing, cutting the TV part of my service actually ends up costing me MORE. Makes sense when you just want to keep bilking customers for crap. With Netflix, Hulu Plus, and other services there's no real need for hundreds of channels of garbage.
If Google rolled out a small fiber-to-the-curb network and charged a REASONABLE price they could expose the chicanery of our non-providers. It sickens me to see the monetary restriction of technology, particularly when we are in the midst of such a financial decline. I reckon our Fearless Leaders will help the monopolists keep us down until all of our third-world competitors have achieved parity, then they can control (bring down) wages with total impunity. I wouldn't say it's a conspiracy, but it's getting harder and harder to say it isn't.
They feared that it could be used to suppress protest or support unpopular rule.
The two things to get from this article are that Netflix doesn't feel like it's in a position to take on cable and that it is rapidly growing. So just wait for it to have a few more years of exponential growth and then it'll get more aggressive.
Democracy Now! - your daily, uncensored, corporate-free
Adam Smith, along with most of the pther pioneers of classical economics, were well aware of the problems of monopoly and of anti-competetive collusion between firms. Moreover, most western nations have all sorts of anti-trust legislation on the books.
You have to turn to the Austrians (Hayek, etc.), and to a lesser extent the Chicagoans (Friedman, tc.) to get the sort of pure laissez-faire capitalism that suggests that trusts, monopolies and the like would not form--or at least be less likely to form--in a purely free market. While such theories are pretty popular with certain groups such as the Tea Party movement in the US, I don't know how much currency they actually have in the realm of policy makers and their economic advisors.
Who said you were supposed to trust your "congresscritter"? If they promised something and didn't follow up you are supposed to vote for someone who you agree with who will keep promises. It's called being active in your government and it's what you are supposed to do in a democracy. It's better than letting the cable companies hire thousands of lobbyists to bribe and manipulate your congresscritter while you sit at home watching American Idol on your way too expensive cable feed. We don't have that because we don't have enough people in the US who do just that.
"All great wisdom is contained in .signature files"
The legacy services have successfully stifled à la carte for decades. ESPN costs a basic cable subscriber $4/month in the US and I couldn't enumerate the ESPN channels on my service if you put a blowtorch to me. Netflix is the first credible example of à la carte service. The legacy services refuse to provide what that market wants so the market is abandoning them.
What will Netflix do as it continues to obviate cable/satellite subscriptions? Ban new customers? Confrontation with the legacy services is inevitable. It is inevitable. Prepare for it. Win it. Or go home, because if you're not willing to deal with it you're not qualified for the position.
Lurking at the bottom of the gravity well, getting old
Seriously. Cable company infrastructure is getting old, and their business and customer-service practices are shit.
If Netflix is making a lot of cash, no better way to use it than to roll out a nationwide to-the-home fiber network to deliver Internet service including of course full-bore Netflix product.
Then Netflix will be big.
I believe that what I would call my "soul" is an emergent phenomenon arising from the highly complex biochemical and electrochemical reactions in my brain. If my soul is decoupled from my brain it immediately ceases to exist
Which is not entirely unlike annihilationist belief systems such as that of Jehovah's Witnesses: the soul dies with the body.
In a democracy everyone gets one vote. In a corporation only a few people with money really matter.
In a representative democracy, only the corporations that choose the candidates matter.
an contract with verizon not to roll out FIOS so verizon can. however Verizon won't do it for many areas.
i thought once I was found, but it was only a dream.
If "the free market" was allowed to decide, no areas outside major cities would have telephones or internet services. Unless they were willing to pay the thousands of dollars to run all the phone/cable lines to their house.
Imagine if you will a cartoon world where anthropomorphic chickens live in a village out in the middle of nowhere, not unlike the setting of Animal Crossing video games. Say a bunch of them want modern conveniences such as Internet access. They could pool their money and form a chicken co-op to spread those thousands of dollars for the last mile across multiple families of chickens.
people need to tell their reps that it was a mistake to allow media companies into the isp market. they should be broken apart. no more sony+anyisp or warnerbrothers+anyisp. imho, the best time to call your congress_dumbass is the year before the election and once a month until the polls close.
Having to work for a living is the root of all evil.
The barriers to entry are entirely artificial, by mandate of local governments
The barriers to entry are exclusive rights in land. How is a new utility supposed to dig under non-subscribers' land to reach subscribers? True, exclusive rights in land are artificial, just like any other exclusive right since the dawn of government, but they're so enshrined in tradition that any practical solution would need to work around them.
"comcast offers a superior broadband service that I find to be worth the money"
Comcast's service is superior to having to live next door to the startup ISP because non-subscribers won't let the startup ISP pull fiber or copper across their land.
This might be a brief golden age of Netflix, like the brief golden age of Napster, but I hope not. I couldn't care less that the TV shows and movies I'm watching are a couple years old. There's more than enough material to fill up the time I have for television, and it's blissfully commercial-free. A couple months ago I cut off my cable service because I wasn't watching it anymore. I dread the day when Hastings decides he needs to insert commercials into programs to pay for new ventures that don't make as much profit. The idea of original Netflix programming makes me think scarily back to MTV's first game shows. But I like Hastings' philosophy of staying niche instead of trying to conquer the world. Please, Reed, you're rich enough already and your service totally RULES! Keep thinking niche and don't ruin a good thing.
Their customers will do it for them. Netflix doesn't need to "fight" the cable companies. Once they have enough that their customers want to watch their content, their customers will demand fair treatment.
I love the fact that it has taken over 15 years to get fiber rolled out to select communities in the US.
In the mid-90's I had Fiber to the Curb with a coax cable. The local phone company, NBTel (Now Aliant), rolled out an experimental fiber optic network called Vibe. It was nice having 1.5Mb up and down at a time when mose people were lucky to get 256K DSL. When I moved to the Boston area a few years later, I went from having a decent Internet connection to having to use Comcast.
I keep hoping that FIOS will be delivered to my city, but at this point Verizon has deployed it to the suburbs, ignoring the cities. So I'm not holding my breath. I'm just going to have to move as I doubt that deployment will happen within the next 5 years.
David
Easy, just sue the cable company for fraud if they do choke it off.
And by the time the wheels of justice have spun, Netflix would very likely be out of business. Lawsuits take years to accomplish and it's not uncommon for the injured party to go bankrupt before a verdict can be rendered.
Uh Verizon has spent 23 billion dollars building up their FTTH Network. That was before any (broadband stimulus) Federal Tax incentives, and there were no incentives at my local city level to speak of. At any rate, whatever breaks there may have been are a drop in the bucket when compared to the massive amount spent building the network. Oh! And if you are talking about the rights to install fiber from the utility companies own pole to my house, then SURE I gave them permission. After all they were supplying me with an 3K installation for free. Don't get me started on who owns the land the poles are on, because, again, it's usually private property and utility companies pay the owners an easement. Stick that in your commie pipe and smoke it!
Haven't Got Service Yet, and don't want it
Comcast: "We want your money. Please sign-up for service."
ME: "Fuck you." (hangs-up on comcast sales idiot)
Government: "We want your money next year for your services."
ME: "Fuck you." ( Leaves country to another country )."
Has Received Services, and won't pay
Comcast: "We want your money. You haven't paid in a year."
ME: "Fuck you."
Comcast: We are disconnecting your service and going to have a judge throw you in jail if you don't pay.
Government: "We want your money for last years taxes."
ME: "Fuck you.""
Government: "We are going to disconnect your citizen services by throwing you in prison."
Go to Wikipedia and search for "lobbying by industry".
You'll see the "communications industry" spends more money on politicians than the energy industry (which adds together all of oil, nuclear, and coal). Darn right he doesn't want to battle with them!
I think Netflix is planning to do exactly what they claim they're not going to do. It's common practice for companies to make deceptive public statements regarding corporate strategy.
Perhaps not in the short-term, but down the road when conditions are more favorable, when the net is more neutral and the pace of cable revenue decline begins to accelerate, then Netflix will pounce and crush the cable companies. And I for one welcome in advance our future media overlords.
I already ditched cable. Netflix rocks. Hulu is OK but not quite really good yet. And everything else I want to see I can stream directly from the content providers' websites. It won't be long. Soon it will be time to short the cable companies.
"Crude and slow, clansman. Your attack was no better than that of a clumsy child."
In which area are dial-up and satellite unavailable? Sure, it's only 0.05 Mbps compared to Comcast's 6 Mbps, and WildBlue and HughesNet have caps completely unsuited for Netflix use, but one can still use dial-up or satellite to rent DVDs and BDs by mail from Netflix. Otherwise, see Rockoon's post about Comcast providing "a superior broadband service that I find to be worth the money."
</devils-advocate>
I have a real issue wondering how Comcast can legally say, "we wont place the cap on our own stuff" but all the other non-comcast content we will apply the cap. Comcast has every right to build their own video streaming services but why do they have the right to place preferential treatment on that service for the sheer motivation of trying to force people or make people feel forced to use their own video streaming services? If XFinity isnt doing as well as you would like then as a company thats the risk of doing business. The question should be asked: "Why does a cable operator also offer internet service"? should this even happen? should it be broken up? Why cant each municipality be the last mile and maintain the infrastructure between that last mile and the pipes running between the next municipality? Should cable operators be forced to have common carrier status if they try to build their own competing service that attempts to wall-in their customers like the old days of AOL?
Personally using netflix I could cut my cable right now and be okay with it, the selection is huge. but I can also see huge obstacles before they can become the way to go past cable.
Yep.
But remember, they're too big to fail, right?
Meh, I say. Liquidate the assets to pay the creditors, and let those creditors bathe in the bathwater that they themselves drew -- just as with any other failed business. Loaning money is never without risk; loaning money to GM should be no different.
In the aftermath is a bit of a mess, but the end result is cleaner: The assets that were worth anything would be reutilized, while the assets that were worth little will fester and die (and, as is likely in the case of an old factory, be sold as scrap to be turned into new Mazdas). The worthwhile people who worked for them will either find a new job with the new owner of whatever asset, or they'll end up doing something else.
*shrug*
And I say this even though I'm a stupid American, raised in a Chevy family, and I'd actually consider some of their cars if I were in the market for something new at the moment.
Back to the topic at-hand: A government-sponsored bailout of Cable is not so far fetched. I dropped subscription-based broadcast TV service a year ago (though with U-Verse), and haven't looked back. Netflix provides what I want just fine, and the rest comes in via antenna. I hate TV news, I don't watch sports, and MTV has been shit for a couple of decades. There's just not much on TV that I care about.
We also dropped our home phone line at the same time, just because we hardly ever used it (everyone's got a cell phone).
Oh, sure: I do miss out on the latest releases with paid on-demand PPV services, but I never used that much at all anyway (and if I did want to, the PS3 offers similar functionality...if Sony would ever get their network back online, anyway. I was rather impressed with it the one time I did use it).
So, the cable TV provider (whether AT&T or Time Warner) went from close to $150 per month in revenue from my house, to $45. This must hurt them, but I just don't care: They're simply not offering me anything else that I want to pay extra for.
If this buries them, so be it. Liquidate the gear, the right-of-ways, and the infrastructure, and let someone else figure out how to make money with it (and if that's impossible, even at pennies-on-the-dollar pricing, simply scrap it and turn it into new Mazdas).
Am I missing something?
Kid-proof tablet..
Am I missing something?
Short-term effects. Nobody wants to see millions of jobs lost, because it upsets people, and it's "horrible." Too fucking bad, shit happens; and besides, with all those unemployed people and that sudden huge vacuum in multiple markets ... lots of talent out there for rapidly growing businesses. Sure, there's death and destruction; but a few years later we're all better off, minus a few thousand casualties, instead of all of the hundreds of millions of us here in the US (not to mention impact on the rest of the world) dragging ourselves along under the dead weight of this failed-and-bailed economy that we wrung more money out of to 'save' after it started dying from lack of money.
People are impatient and they want everything and they want it now; politicians especially have their short terms and can't stand to make a problem even worse in the short-term to avoid unholy hell in the long-term. They'll always say they tried, it's good enough for the voters; if they save us all and build a giant eternal utopia via 2 years of suffering, that's 2 years in which they're voted out in the interim and the new guy gets all the credit.
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