Netflix abandons plan to split DVD services

[best12bars]

Posted: 10/10/11 at 10:21am

Man, they are flailing. This is what happens when technology-driven businesses jump at the "future" as if it were today. Terrible strategy.

Consumers are not fast adopters to technology. Sure, there are always the early adopters, but they make up a tiny fraction of the buying market. Netflix wishes it were ten years from now, when downloadables and streaming will actually have the lion's share of the home entertainment business. When all the kinks, glitches, fees, quality issues, bandwidth issues, and encryption techniques have been perfected. That day is not today. DVDs and BDs will be around and flourishing for at least another decade, and even then they will not die completely.

The Star Wars BD box set just broke all previous records for a Blu-ray release by selling a million units its first week. Considering the average price was $89, that's as big as a feature film release grossing $89 million. In one week. And Blu-ray, for the time being, is the biggest growth market.

So Netflix jumps the gun (by a decade) with overeager planning and says, "downlodables and streaming are today! We'll separate and sell off our home delivery of "hard copy" discs and leave the "past" behind us!"

And they went into the toilet doing it.
LINK

[best12bars]

Posted: 10/10/11 at 10:39am

More on a previous thread ...
Continue here!

[nygrl232]

Posted: 10/10/11 at 10:51am

Former technologies rarely go completely away. Radio didn't kill theater, tv didn't kill radio, films didn't kill tv, and the internet only almost killed tv and films. :) Foolish of netflix to think no one will ever want hardcopies of anything ever ever ever again. Streaming entertainment helps the environment in that resources are conserved for other things, but hard copies are probably going to stay a while.

Updated On: 10/10/11 at 10:51 AM

[Gothampc]

Posted: 10/10/11 at 11:01am

"Former technologies rarely go completely away. Radio didn't kill theater, tv didn't kill radio, films didn't kill tv, and the internet only almost killed tv and films."

Video killed a radio star.

[nygrl232]

Posted: 10/10/11 at 12:23pm

No, it didn't.

In other news, this board's become super predictable.

[jasonf]

Posted: 10/10/11 at 3:45pm

I'm not generally one to look for conspiracies, but could it be that Qwickster was a big hoax anyway to make us all look away from the price change? Now that they're keeping the service we wanted all along, could it have been a gambit to make us see "hm, maybe the price change isn't so bad compared to what could have been?"

Or maybe I just had a long day.

[nygrl232]

Posted: 10/10/11 at 3:57pm

Could be. They lost quite a few customers, though, who might not have gone back.

[best12bars]

Posted: 10/10/11 at 4:23pm

Their revenues and stock plummeted. They lost an enormous amount of money in the past few weeks. I don't think it was a smoke and mirrors trick. They were clear they wanted to disassociate themselves from "hard copy" media and movie into the digital realm.

It was a huge mistake, and they're paying dearly for it now. I doubt this is the end of it. I would guess you'll see several key executives lose their jobs over it.

They almost sank the whole company over this "forward thinking" move.

Updated On: 10/10/11 at 04:23 PM

[Jordan Catalano]

Posted: 10/10/11 at 4:58pm

I'm curious if there was any research or any type of customer surveying done before making this enormous assumption that people wouldn't mind having their queue's and memberships split up. It's all just very strange but in the end I'm happy I can stay with them for both dvd and streaming now that they're staying as one website.

Everyone messes up, even companies. I can forgive them this since they still offer a fantastic service that I use far too much.

[jasonf]

Posted: 10/10/11 at 5:24pm

Yeah, we canceled our DVD subscription over this.
This afternoon we reinstated it -- before the expiration date on our cancellation so nothing was lost. I guess the timing of it fuels my conspiracy theory.

I would guess you're right, best -- Netflix made a HUGE mistake and this was their mea culpa. Notice how this message was worded - no flourishes, no apologies, not even really much in the way of details.

The whole thing is just very strange.

[best12bars]

Posted: 10/10/11 at 5:48pm

I just think it was a gross miscalculation.

And I do think the best thing they could do to salvage things was an about-face. I would imagine they'll gain some steam in the coming weeks. This bad decision may have cost the company millions of dollars and knocked them (temporarily) out of a leader position, but it won't put them under.

A lot of people cancelled (WAY more than they anticipated, and their stock plummeted), but I'll bet many of those disgruntled customers return now, because they haven't really found anything they like better out there. They may also feel vindicated by this decision. Their collective voice has most definitely been heard. If Netflix had waited much longer, though, I think people would have adopted something else. That would have been fatal for them.

[Calvin]

Posted: 10/11/11 at 3:52pm

Netflix is learning that you can't ask customers to pay for innovations you haven't made yet -- unless you're the MTA.

[Mister Matt]

Posted: 10/11/11 at 4:35pm

I just think it was a gross miscalculation.

I agree. Seems to be a case of jumping the gun. A little consumer research within their own customer base would have been more effective, especially after the controversial price increase.

[best12bars]

Posted: 10/11/11 at 7:12pm

There's no question that studios and other home entertainment distributors should be gearing up and poised for a streaming/downloading digital future.

They need to iron out all the technical issues before they force people into a decision, the way they tried to. There is no "trust factor" yet with downloading, especially for collectors like me. I have no intention of storing all my DVDs onto a hard-drive storage system only to watch it crash and burn three years later. Or to have my ISP send me an overage bill for downloading 20 GB over my monthly limit, only to find out there was a glitch in the download, and I have five "feature films" that cut off after 30 minutes each.

Even just watching all the BWW brouhaha over that UK Into the Woods download. It was painful to read through all the crap people were going through.

The average home entertainment consumer wants to select a movie (either by putting in a disc or punching it up on the screen), and press "play." That's it. If it's more complicated than that, other than perhaps selecting an audio option or subtitle option, they aren't going to sit still for it. They won't understand how to work it, and they won't want to learn either. They will just walk away and chose another way to watch, buy, and rent their movies. They also will want to take their movies to a different player and loan them out to friends. If they can't do that as easily as they can with a DVD, they'll stick to discs.

And for the really big techno-geeks like me, the quality of downloadable and/or streamed movies is total crap. I mean complete suckage. Studios should be looking at yet another compression codec (something even more amazing that mpeg-4, which is BD). Something's got to give: either a better compression that doesn't cause images and audio to break up, or they have to improve bandwidth. Fiber optics will be everywhere in 10-15 years. AT&T can't move fast enough with U-Verse and their own fiber system. Talk about a "growth market."

So that's the advance planning and homework for the providers. They have to make it easy to access, with basic, simple interface, and with next to no glitches (I mean a seriously low percentage).

Until then, you will see DVDs and (especially) BDs continue to thrive.

On-demand cable options, DVRs, and Netflix are one thing. But none of them are for collectors, whether serious or casual. Way too many issues. Not enough quality. And too difficult to manage.

Updated On: 10/12/11 at 07:12 PM