Steven J. Vaughan-Nichols
Christopher Dawson
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
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.
The Rebuttal
Closing Statements
Why Netflix can still win
Steven J. Vaughan-Nichols
So, with management missteps, grumpy content providers, disillusioned customers and potential competition from Amazon, Apple, and Google why do I think that Netflix can still win? It's simple: They still have no real competition.
Netflix is still the largest one price for all you can watch DVD and streaming video company out there. Its non-video rivals may be bigger, but their video-on-demand services still use a pay to watch a single model. Netflix's video rivals, such as Redbox and Blockbuster, have little streaming presence and they've also raised their rates in the last few weeks.
It's not easy to set up a big-time video streaming company. You've got semi-hostile media companies; you have to partner up with content delivery networks (CDN)s; you've got to get your player software in DVD players, media-extenders, etc.; you must set up serious video server data farms. It's a big job. Netflix already has all the parts and its one price business model. No one else does.
Netflix - It's terminal
Christopher Dawson
My colleague, Steven J. Vaughan-Nichols, outlined some very reasonable arguments explaining why Netflix will thrive in the future. Most importantly, he cited their subscription model, noting that "no other streaming service offers so much for so little." He’s right, of course, but this is hardly a defensible market position.
Perhaps the clearest reason that the company's unfortunate fate is already sealed, though, is the changing hardware, software, and content landscape. Ubiquitous streaming HD content on mobile and other connected devices is just around the corner. With Apple retaining dominance in the tablet space and Amazon dumping their Kindle into the market, the concept of ecosystem has never been more critical.
Too many strong competitors, too many PR gaffes, and too clueless a leadership team mean that Netflix was in the right place at the right time 10 years ago, but missed the boat for 2012.
Netflix will survive, thrive
Lawrence Dignan
This debate was a bit strange because the two parties often agreed. Dawson argued that Netflix has more pain ahead---and could be right. Vaughn-Nichols agreed that Netflix may still take its lumps, but will recover in the long run. In the end, the winner comes down to time frame. I'll side with Vaughan-Nichols on this one: Netflix's mistakes were messy, but not fatal. Netflix has its issues, but the business has scale and can be defended against rivals.
In partnership with Ricoh Doc's final thoughts
DocDoc has to agree with Christopher on this one. Only the death of Netflix may not be long and painful, it could be short and painful. As Christopher points out, this is a public company and subject to the whims of the market along with the whims of customers. The company’s stock has already dropped from a high of near $300 to $90 per share – that’s a stunning loss of corporate value.
You only have to look at the fate of video-rental mega-chain Blockbuster to see this movie play out. At its peak, Blockbuster had over 43 million members in the United States, over 6,500 stores worldwide, 60,000 employees and $4 billion a year in revenue. But then technology changed, the market was not kind, and in April Blockbuster was purchased out of bankruptcy by Dish Networks for $320 million. Yes, it’s still around, but is a shadow of its former self and clearly no longer the leader in video rental, streaming or anything else (despite trying very hard to make the appropriate transitions).
Netflix worked because it was the right service at the right time. There is no guarantee that the new streaming model for Netflix will be successful, despite the company’s 28 million subscribers. People dropped their loyalty to Blockbuster pretty quickly when something better came along so Netflix needs to be careful. It’s a fast moving world and customers will go where there is convenience, good pricing, and the right technology. Today’s Netflix could easily be tomorrow’s Blockbuster. Brand loyalty isn’t what is use to be.
More from "The Great Debate"
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.
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.
I don't think they will face pain until Xbox/Apple TV replace our DVR's. Until then, they are doing just fine, and will continue to do so.
In the early 20th century music publishers thought that radio was a threat to their business model and didn't want their songs played on the radio. Congress passed laws instituting compulsory licensing schemes so that radio stations could play any song they wanted so long as they paid royalties at the reasonable rate that congress had specified. It turned out to be a "win" for everybody. Compulsory licensing is the only way I see that streaming movie services could succeed. But I just don't see Congress doing anything about it. Congress is bought and paid for by big business and the movie studios are much bigger players than the streaming upstarts.
subscribers: 28,000,000
Per month average: $10.00 (just a guess)
Per month revenue: $280,000,000
Hmmm... I am sure content companies want a piece of revenue... Just have to see who gives in first
a) consumer
b) netflix
c) content owners wanting piece of $280,000,000 EVERY MONTH
Not to mention that I can watch Netflix on my computers, phone, tablet and even some DVD players!
Has anyone tried using Amazon's video service? I love Amazon, but their video selection stinks ... and you have to pay for the good movies anyway. No doubt it will improve.
Competition is GOOD for this market. Instead of predicting the downfall of Netflix, we should be glad to see the market splitting up between several competent content-providers. But let's get real. Netflix MAKES MONEY. And in the end, that's what matters for a business' survival.
If you are sick and want to watch at say a 3 at a time DVD level because your hospital bed does not have streaming, you as a customer should get more streaming when you arrive home 2 weeks later to convalesce than a college kid on a 1 at a time rental plan.
So heal yourself Netflix and get back in touch with the real world or I along with another 500,000 people will blow you off for being net-stupid.
Personally, I'm all for Verizon and Comcast getting into content and favorably pushing their video over IP versus competitors. How many times does the government have to break up the production/distribution trusts before Hollywood gives up. Comcast can barely stand on fair use monopoly now. Cap and charge Netflix while leaving Hulu/NBC free reign puts them squarely in the sights of the DoJ. Stupid.
Netflix said it will take losses in early 2012 to expand in the U.K. and Ireland. Is that the right move?
---
No, it's a total waste of money, pushing water uphill.
Amazon UK own http://www.lovefilm.com/ which have the same business model as netflix, but they are the established player dominating the market for many years - indeed Amazon closed and folder their own DVD rental business into it 4 years ago, and eventually bought LoveFilm last year.
There is also the addition of Sky TV, the dominate Pay-TV satellite broadcaster, which have 10million subscribers and offer free streaming at the same level as your Satellite subscription, and top-up Pay-per-view..
http://www.sky.com/shop/tv/anytime-plus/
... and the BBC with the iPlayer in UK and Internation guises.
http://www.bbc.co.uk/news/technology-14322604
Debate remians very US oriented.
NetFlix and Hulu are North American only. Amazon, Google and Apple scale globally, and are winning the war with the studio's on divisive and restrictive rights.
Agree
Time will tell
I have been a member of Netflix for a very long time, and my disappointment with them comes mostly from the change in policy regarding DVDs. I have had released movies stuck at the top of my list for over a month because they apparently have cut back on the number they get. My subscription has been on hold for over a month and I don't miss it yet. That being said, Netflix is still far more reasonably priced than cable, and much of the "Free" content for On-Demand at nearly $100/month is not available unless you pay for the premium channels. As many others have said, Netflix's streaming has little quality content other than Starz, so it doesn't work for me.
.
Of course NOT, you just proved it does not work, but it looks cool!
Of course NOT, you just proved it does not work, but it looks cool!
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time will tell
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RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?
Agree
Time will tell
RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?
RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?
RE: Great Debate: Will Netflix emerge from its big collapse a long-term winner?