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Latest Netflix Earnings Report Mixed
nmpost writes with one interpretation of Netflix's Q2 results (PDF). From the article: "The beginning of the end may be at hand for Netflix. On Tuesday, the movie rental company posted its second quarter results, and they were not promising. While the company returned to profitability following a first quarter loss, Netflix had a 91% drop in net income. The company's troubles began when it attempted to split its DVD-by-mail and streaming services, effectively doubling the price it was charging customers. External forces are now beginning to weigh on the company, and its doom appears to be within sight. The biggest challenges facing Netflix over the coming months are going to be competition and licensing fees. Three huge companies are competing against Netflix in the streaming arena, which has already surpassed its DVD-by-mail business. Amazon, Apple, and Google all offer streaming content as well. As movie and television studios began to demand higher licensing fees, Netflix will not be able to pay, while these tech giants will. Netflix will eventually be priced out of the market."
Engadget, on the other hand, shines some positive light on the report: "The results are in from its Q2 2012 earnings report, and it's claiming 27.56 million streaming subscribers worldwide, up from 26 million last quarter. In the US alone that includes 23.94 million customers, after it reported 23.4 million in Q1, while DVD customers dropped by 850k to 9.24 million." So it appears that Netflix is either gaining new streaming customers, or converting those expensive DVD customers into more lucrative streaming-only customers.
Since nearly all the content people want to watch needs to be licensed willingly be the major studios, this should be no surprise. They'll just keep raising their rates until Netflix goes out of business. This is the inevitable failure of a permission-based service provider.
At least with DVDs they weren't existing at the whim of the studios. They could make them horribly angry and still operate legally. With streaming they have no such independence.
NetFlix may not survive, but even if they die out I couldn't be happier for their contribution to the world.
You may not like their policies, business decisions or CEO, but NetFlix was a pioneer in their field. They were the first company to provide cheap, easy, unlimited streaming compatible with dozens of devices. That genie is out of the bottle now, and while there's a long battle ahead over licensing fees, royalties, etc ... there has been a permanent shift in the way we watch movies.
NetFlix has also established a very nice base price-point. If Amazon, Apple, Google or any other competitor want to charge more than $8-10 a month, they'd better provide some added value.
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A note to the MPAA. You better be careful what you wish for.
My family loves and adores Netflix. It is an creative and innovative method of consuming entertainment.
If the MPAA succeeds in their obscene desire to destroy Netflix at any cost, I WILL NEVER EVER respect their "IP" rights. I will steal any content I want.
I am sick to death of the entertainment industry on bing hellbent on not letting me enjoy the entertainment they are selling in the way I choose to.
They should view Netflix as a godsend that enables them to have a future. Instead they view it as the enemy.
If they destroy Netflix, I will have no ethical problem stealing what the movie and TV industry creates. Their obscene greed and arrogance doesn't give them any moral standing to lecture the customers who they depend on for their existence.
GIVE US WHAT WE WANT! Oh and what we want is to not wait months after DVDs are released to stream movies, and we don't want to pay $5 to rent a streaming video, and we don't think ridiculous DRM schemes (hello ultraviolet) are reasonable.
Hastings is on the MS board. Netflix chose silverlight to promote silverlight. It really is that simple.
It works on linux if MS would hand over the DRM binary, they will not ever do that.