Looks like Netflix is dead. Again.
Once again, Netflix has been placed on a death watch. But I’m not buying it for a second. We’ve heard that too many times over the company’s history. And each time, the company has nimbly defeated new and established competitors, while growing like gangbusters in a horrid economy.
I wrote last year that I was done betting against Netflix. And I’ll stand by that now.
The latest obituaries for Netflix started being written this week after two separate developments. And it sounds like there’s a third coming next week when the Apple Tablet-Slate-Thingy is unveiled.
On Wednesday, YouTube announced it was going to experiment with offering some movies to rent starting tomorrow. From the AP:
“The Internet’s most popular video channel will make its debut as a rental outlet Friday to help promote some of the movies that will be shown at the upcoming Sundance Film Festival in Park City, Utah.
It’s part of a test that YouTube hopes will encourage more studios to rent movies through its site, eventually creating a new financial stream to supplement the Internet ads that bring in most of its revenue.
The first five films available to rent through YouTube will cost $3.99 for a 48-hour viewing period. Movie studios will be able to set their own prices, with rental viewing windows ranging from one to 90 days. YouTube will get an unspecified commission from each rental.”
It’s one more step in the tranformation of YouTube into Hulu, its smaller but more financially sound rival. It’s less than a start, given the limited offerings. We’ll see if studios bite. But even if they do, YouTube will need a major overhaul to offer the Web features of Netflix, like movie queues, finding features, ranking, etc. I’ve found these to be incredibly valuable. And I typically use Netflix to rent TV shows and movies. So YouTube needs deals with the networks and cable stations along with movie studios to pose any threat to Netflix.
Also on Wednesday, MG Siegler at TechCrunch wrote that Netflix Just Gave iTunes A Big Fat Kiss. Why? Siegler was upset over:
”Netflix’s idiotic new 28-day rule; (they can’t rent Warner new releases on Netflix until after they’ve been available for purchase in retail store for 28 days).”
The deal was struck in exchange for Warner offering more movies for streaming. Siegler noted that he could rent that same movie from iTunes right now. Great. Of course, the problem is that you have to pay to rent it. If you’re a Netflix customer, you’re paying by the month. If I’m on the 3-DVD rental plan for $16.99 per month, I can probably watch a dozen or more movies each month, depending on how efficient I am in watching and returning them. Renting 12 movies from iTuneswould cost me almost $40. Plus, Apple still places lame restrictions on rentals. Once I “rent” a movie from iTunes, I have 30 days to watch it. And once I start playing it, I only have24 hours to watch it. Terrible. Almost as bad as Comcast’s OnDemand. I’ve used Apple’s movie rentals a couple times, but don’t recommend it.
Where things could get interesting is with the announcement next week of the Apple Tablet. This week the Wall Street Journal reported that Apple is creating a new ecosystem for the tablet that it hopes will do for traditional media like news and TV what the iPod did for music:
“In developing the device, Apple focused on the role the gadget could play in homes and in classrooms, say people familiar with the situation. The company envisions that the tablet can be shared by multiple family members to read news and check email in homes, these people say.
For classrooms, Apple has been exploring electronic-textbook technology, these people add. The people familiar with the matter say Apple has also been looking at how content from newspapers and magazines can be presented differently on the tablet. Other people briefed on the device say the tablet will come with a virtual keyboard.”
This begins to get at a question I asked earlier this week about the tablet: “What problem will this solve for me?” Knowing Apple and its human-centered approach to innovation, I had a hunch they were focused on this question. And from the looks of it, this is their rationale. And if this includes a different subscription plan for streaming movies and other content, then that could make things uncomfortable for Netflix. But that would happen only if Apple vastly expands its movie offerings. Remember that the number of movies available for purchase and rental on iTunes represent only a fraction of those available on Netflix.
Beyond that, the reasons I’m still bullish on Netflix are simple. Throughout its history, it’s faced periodoc challenges and let many to write it off. Postage costs. Blockbuster’s belated move to online rentals. Increase in movie streaming. Netflix and CEO Reed Hastings have deftly beaten back each one. And when the economy went into the tank, Netflix kept right on growing.
I’ve been a Netflix customer since it launched and have never tried anything that made me think twice about dropping my membership. The company continues to strike a careful balance between trying to offer a full selection of DVDs while goosing the studios to increase the offerings available for streaming. Going up against Google and Apple represents a mighty challenge for Netflix. But for now, Apple and Google remain the underdogs in my view until the prove otherwise.
Subscribe via RSS all feeds
and...
I am now officially addicted to the Netflix streaming service. I have an older PC with a good video card and lots of memory hooked up to my flat screen. The image quality could be better, but that shortfall is more than mad up for by all the great content available.
I liked your article about Netflix . I have question, maybe you can help me with.
I accidently sent back a disc from my box set of the Sopranos. Netflix said they couldn’t send it back, but they did credit my account and told me about another site:replacetvdisc.com.
I was able to get a brand new replacement from them. So it all worked out.
My question is: How come Netflix just can’t send the disc back?
Thanks.
Dan
Chris, your skepticism is well placed! Netflix will beat back youtube ambition quite handily for the foreseeable future because they are continually striving to meet the needs of its customers. This includes their best in show combination of physical media and streaming content delivery at a price point that imparts incredible value and that youtube wont be able to touch anytime soon! I pay $9 for one at a time as much as I want with streaming thrown in every month and of all the things I pay a monthly fee to I am as loyal to Netflix as anything I do.
Good luck youtube
It’s magically coincidental that Dan Patrick’s story is the same one on the front page of the site he explicitly links to with his name and in the msg text.
Isn’t life ironic?
Now that’s a company you can trust with your hard earned dollars.
I’ve also been a subscriber to Netflix since the service started. Netflix has never let me done in all the years, and their policies about lost disc, etc. are customer centric, to stay the least. I think they have Nordstrom-level service and I don’t see any need to switch to another service. Lots of people I know feel the same way. This kind of loyalty is earned and Netflix will be fine as a result.
I have been a netflix customer for two years and never rented a movie through the mail. I pay about 8 dollars a month just for stream rights, and watch about 50 movies a month, as well as several television programs through netflix stream service. Beside the occasional bugged silverlight player problem, its better then 100$ a month cable service.
youtube and itunes are not the threat. Right now netflix is feeding into the contract wars to buy time. Movie studios streaming their movies directly on their sites is inevitable. They WILL cut the middle man out, probably not within the next 3 years. By the time cable companies provide residents with streaming capabilities that actually let you watch HD streaming without cutting in and out, this will happen. They might even offer movies to stream for free on their site in exchange for viewers watching advertisments for upcoming movies.
About netflix streaming… I have watched every single movie worth watching on netflix’s streaming and unless your’e a tv shows person, it will probably take about 12 months before the selection of movies seem narrow. Call me new school, but I do not watch movies that were made before the 80’s, I dont care how “classic” they are.
to RAS:
OMG. That is ironic. Imagine a small company that is beaten down by the studios and large websites trying to get the word out about their site that can save consumers tons of money!?!
I’m glad your on the side of greedy studios and pointed this out to us.
Wouldn’t any small business to succeed in 2010 USA.
Netflix is alive and well. I got tired of paying my satellite bill of $65 a month and discovering there was nothing on that I wanted to watch.
I signed up for Netflix for $9 a month and have thousands of choices of what to watch. I pretty much use the unlimited streaming service, not the DVD in the mail. I set the whole thing up to stream through the Blu-Ray and onto my flat screen. Works great 99% of the time. There have been a couple of times that the stream “froze and required a stop-start cycle. Satellite also offered me some dead times - heavy rainstorms, sunspots, etc.
Direct TV, always wanting to retain customers asked: What can we do to keep you as a customer?” I said they could offer every channel they had available to me for nine bucks a month. The CSR said, “Another person converting to Netflix, huh?” They know they cannot beat the deal of Netflix streaming.
It’s like hearing a rumor that some famous Olympian is laying in a Toronto hospital on “death watch” only to turn on the live broadcast to see him athletically burning through powder on some steep slope. What are the source of these rumors? I’m a Netflix subscriber and the only thing resembling a death watch is seen through one of their horror flick rentals.