Great Debate: Will Netflix emerge from its big collapse a long-term winner?

Moderated by Lawrence Dignan | November 7, 2011 -- 07:00 GMT (23:00 PST)

Summary: Will Netflix emerge from its big collapse a long-term winner? Steven J. Vaughan-Nichols sees big gains ahead. Christopher Dawson sees more pain.

Steven J. Vaughan-Nichols

Steven J. Vaughan-Nichols

Yes: Big gain

or

No: More pain

Christopher Dawson

Christopher Dawson

Best Argument: Yes: Big gain

The moderater has delivered his final verdict.

Opening Statements

Netflix will be a winner despite itself

Steven J. Vaughan-Nichols: Has Netflix made some really dumb moves? You betcha. The combination of a big increase in rates with the bone-headed move of trying to split its video service into two lead to the company losing 800,000 subscribers. But, even after this fiasco Netflix will still end up a winner.

Why? Because even with Google exploring commercial video on YouTube, upstarts like Crackle and CinemaNow, and Hulu and individual networks moving content online, and its CEO's burst of idiocy, Netflix still has 28-million paying customers. They don't.

With the exception of the Apple TV, every device out there that plays Internet video—DVRs, DVD players, tablets, Roku Streaming Player—come ready to play Netflix video. So, besides Netflix's customer base, Netflix also has the best hardware penetration. There's a reason why Netflix alone takes up more Internet bandwidth than any other Internet service. Note, I said “Internet service” not video service.

The simple truth is that Netflix still doesn't have any real competition.

Netflix: More Pain Ahead

Christopher Dawson: Netflix, once the darling of both consumers and the tech industry, has made a series of critical missteps this year that have seen it fall from favor almost as quickly on Wall Street as it has with consumers.
 
Why shouldn't we be surprised? Because the way we consume media is changing very quickly. Netflix is no longer the only game in town as Apple, Amazon and Google solidify their ecosystems, while upstarts like Crackle continue to innovate and drive prices downward.
 
Netflix has admitted that its DVD rental service's high margins and competitive pressures from the likes of Redbox will limit growth in that space, as will changing market dynamics.

There is simply too much money to be made and too much technology ready for the viewing for startups not to enter the fray and further degrade Netflix' position.
 
It will be a long, painful death, but Netflix is headed nowhere but down.

Talkback

39 comments
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  • RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?

    Marketing ploy, it worked for coke so why not NetFlix
    wazusa
    Reply Vote I'm for Yes: Big gain

  • RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?

    I predict more pain ahead for them if they don't come up with something innovative soon!
    LOUIETR ...
    Reply Vote I'm for No: More pain

    • RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?

      The bottom line is Netflix wants so change it's business model to streaming only... because they make a ton more money on streaming than with DVD (although that is still very lucrative for them). However, they've made one bad deal after another with the studios, and have made lots of sacrifices and concessions that will haunt them (let's ignore the recent price hikes and stupid decsions for now).

      For starters, their streaming content sucks, period!! Their customers have to wait 28 days to get new releases (on DVD only), that's fine, but they should have conceded the 28 days only if they could stream new content. Without streaming new releases their streaming service will go nowhere, and to me it's currently worth $0 per month.

      Starz has already walked away from Netflix, studios are now in the power position and dictate their terms and conditions to Netflix, more money, less streaming content etc. The studios have absolutely no desire or motivation to stream new releases. They want to sell DVD and BluRay discs. Hollywood lobbyist have Senators and Congressmen in their pockets and "our" representatives will do whatever the studios want and pass almost any law the studios write up.
      Masari.Jones
      Reply Vote I'm for No: More pain

  • RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?

    It's not really up to Netflix or Apple or Google or Hulu. Securing content deals is key. Companies like Netflix and Hulu live or die by the content they can secure. And here it's the content owners who will determine the winners or losers. This is why i'm not sure I'd want to invest with any movie streaming service. Unless there's a compulsory licensing scheme for movies just as there is for songs on radio, comapnies like Netflix will utlimately be pawns on the movie studios' chessboard.
    dsf3g
    Reply Vote I'm Undecided

  • ATV2 Supports Netflix out of the box

    btw
    bloveless
    Reply Vote I'm for Yes: Big gain

  • Good enough

    Netflix doesn't have to be the best anymore. They have to be good enough to not lose customers. If they could come up with a killer app - something that makes them more attractive on one hand while making it more difficult to switch services on the other - that would cement them as #1
    kiz
    Reply Vote I'm for Yes: Big gain

  • titles, titles, titles

    what it all comes down to..is titles. I browsed my Netflix instant streaming catalog the other night...finding myself saying "Seriously" and "What the ___ is this" more than "sweet" or "awesome" "can't wait to watch this". Now without literal DVD/BR services (I dc'd after the price hike), they never have anything remotely close to new releases, instead having a bunch of movies I don't want to waste my time with. Even at 7.99, i would rather cash that in and get TWO new releases through Best Buy's Cinema Now or Vudu app (3.99 HD New Releases) through the PS3 each month. With these options and as a Amazon Prime member, with a slew of instant videos there, Netflix better step it up in way of titles or it may have just lost another customer..
    Lttlwing16
    Reply Vote I'm for No: More pain

  • RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?

    Even thou I???m undecided ??? my true answer is I DONT care - I have so many ways to receive video one more or less isn't a big deal - price increase for less than new content, meh, go someplace else.
    eric_s@...
    Reply Vote I'm Undecided

  • Too much competition

    Content has been the Netflix streaming achilles heel for ages. I do sometimes find things I wish to watch but I have to REALLY dig and get creative. I usually spend more time finding something I want to watch than I do watching it. Sometimes have good TV shows, but never the seasons that you need.

    With VUDU and Movies on Demand from the cable companies there is almost always something I legitimately want to watch. At one movie a week, it is more expensive than Netflix, but mostly higher "value per dollar".

    And Netflix really hasn't shown that they CAN improve that selection. The studios want them to fail and will charge them through the nose. And they have lost the good will of the customer in a big way. No scrappy upstart "fighting the man for you" status any longer.
    SlithyTove
    Reply Vote I'm for No: More pain

  • RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?

    Money has a way of incenting competition. Netflix messed up, big-time, not just with the move being debated here, but more so IMHO with the loss of Starz. 800,000 defectors and counting. I almost bought a Netflix device myself, but then the Starz debacle emerged, and I said, "No, thanks." Netflix does NOT care about their users.
    paulstanley
    Reply Vote I'm for No: More pain
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