I already predicted that the content providers were going to try to squeeze Netflix out of the premium content for streaming and move it all to pay per view where they think they can make more money. The content providers are okay with the less popular material on the Netflix all you can eat buffet, but they don’t want the Filet Mignon on there.
I dropped the streaming after the price change and just use DVDs by mail. I’m worried that the USPS is going to start cutting back on home delivery which is going to make it impossible to turn turn disks around twice a week.
I read comments like this all the time and I wonder if the people asking this question ever turn it around: When will people “get” that streaming isn’t as great a revenue generator as many argue? A simple revenue comparison can show this one way or the other…
The entire I-tunes store generated $1.4 billion in revenues in Q1 2011, including music, books, apps, videos, TV shows, etc.
In comparison, Starz! had revenues of $403 million in Q2 2011, 1/3 of iTunes, with a much smaller selection of TV shows and movies (and no books, apps, or music).
ABC had the same revenues as iTunes, $1.4 billion, and again, did this with no apps, music, book sales, etc.
So the businesses “get” streaming just fine - it’s a last gasp measure when all else fails.
And this is where Netflix could test the a la carte thing that many people have been wishing cable TV providers would do. I’m not sure what Starz content is, but if it was something I really wanted to hang onto, I’d probably be willing to pay an extra dollar or two per month for it. Still beats the heck out of $120 a month for commercial-heavy Dish Nutworks or Comacast.
While I won’t argue that streaming isn’t a great revenue generator, I don’t think you’re argument is terribly strong.
The iTunes store generated $1.4B in revenues (assuming you are using the right term, that is the top line). They have to pay licensing fees and programming costs, but for the most part, they are letting others pay for the creation of the content they sell. If Apple was producing the content themselves, it would be much more expensive, forcing higher prices. Hard to tell what effect on revenue that would have, though. At what point are people going to stop buying? As it is, any price increase sends a certain %age to piracy (because Og forbid anyone do without something they don’t want to buy, but that’s a debate/rant for another place).
Starz makes the bulk of its money in the same way that iTunes does. It gets the majority of its contents from others and streams it, via cable TV. Netflix came along, and offered them an additional revenue source. So, beginning in April, Starz will need to replace that revenue source to satisfy its investors.* Not only that, but if I’m an investor in Starz, and $300MM was on the table, that is the revenue that needs to be replaced, not the current contract (which everyone knew undervalued the content). Where is Starz going to get that? Cable/satellite revenue has been relatively flat. That is a huge chunk of revenue to leave on the table.
ABC is a different story. ABC/Disney creates much of its original content, bearing the costs, taking the risks, and reaping the hopeful benefits. The revenue stream is entirely different. The only real comparison is that they are both measured in $$. Like every other network, the past ~two-three decades have seen their viewership (the main driver of their revenue) slashed due to the ever growing entertainment options available to people. Along come iTunes and Netflix, and they offer ABC an additional revenue stream. Not great, but when your other sources of revenue are under attack, ABC should not discount the value of the new streams. Not only that, but it allows ABC to monetize old, somewhat forgotten properties that might never have earned additional revenue. I loved Pushing Daisies when it was on, but not enough to buy the two seasons on DVD, and two seasons will never get it into syndication. Netflix, however, has given a dead property a chance to bring in some additional revenue.
Netflix might not be a great revenue generator, but neither should it be discounted. The problem (that I hope doesn’t happen) is that all the content owners believe they can make more money off these properties without Netflix than with Netflix. Then, if I want to rewatch Pushing Daisies, I have to pay a fee to ABC/Disney, but when I want to rewatch Stargate SG-1, that’s NBC Universal. In that instance, at least from me, neither will get anything. Is NO revenue generation better than small-to-moderate revenue generation?
That was over a lawsuit. The Beatles founded Apple Corps Ltd. in 1968 to handle all their publishing deals and other business dealings. Apple Computers was founded in 1976 and incorporated a year later. In 1978, Apple Corps Ltd. launched a lawsuit on the basis of trademark infringement which resulted in an out of court settlement with part of that being that Apple Computers would never get into the music business. Well guess what happened? You can all about the long saga of lawsuits that resulted here on the wiki article.
Will I drop Netflix over this? Hey, I’ve been meaning to watch Spartacus–one Starz show available on streaming. Sounds like I’ve got a few months to watch it–the show won’t disappear immediately. What other Starz shows stream on Netflix?
I’ve got a large Netflix Streaming queue; enough movies & TV shows to keep me happy for a while. Deciding a bit late–might also keep at least one DVD at a time.
The ABC television network is dependent upon advertising sales for its revenues and the reported revenue figures do not include revenues brought about by content generation. Disney breaks down content generation revenue (i.e., sales of TV shows via outlets like DVD’s, Hulu and other streaming services, sales to local stations, inter-division sales, theatrical revenues, etc) into a separate business unit, the Studio Entertainment segment.
Starz is currently making $30 mil/year from Netflix. It was Netflix who cancelled the agreement as Starz demanded that they create a tiered pricing service to offer their shows. Therefore, Starz must replace just $30 million, not $300 million as argued.
As to your final question, it honestly depends: do you sell for a pittance today something that you can sell for a premium tomorrow? Apparently, for Starz, the answer is no. That might not be the right answer (time will tell, of course), but that’s the answer they chose.
Speaking as if I were an investor in Starz, Starz just left $300MM/year on the table. Therefore, they don’t have to replace what they were earning yesterday, they have to replace what they were guaranteed to earn tomorrow had they signed the contract. Investors are concerned with future revenues, not what was done yesterday. One would invest in Starz (actually, Liberty Media) expecting Netflix to shell out significantly more money once the current deal ends, and that would be priced into the investment. That said, the move had much less an effect on Liberty Media, likely due to their variety of income sources and larger size.
Technically, Netflix didn’t ‘cancel’ the agreement; it was set to expire and the parties cannot agree on renewal terms. The news article I read had Starz walking away from the talks, not Netflix, due to Netflix refusing tiered pricing, as you noted.
Yeah, I’m sitting here wondering what exactly the $30m brought to Netflix, but apparently there’s a rather large market for whatever Starz produces/airs.
Recent Disney and, until recently, Sony movies. Just about any big recent US movie streamed on Netflix (such as Tangled) was a result of the Starz deal. It was really important when streaming was just starting, as it provided the bulk of the content - especially if you liked westerns. I’m worried much of the movie catalog will diminish, and Netflix will just be a dumping ground for old TV shows (the kind where anyone who was going to buy them on DVD already has).
I must be the only person on Earth that watches a show because it’s available on Netflix and not the other way around. No Starz? Then I’ll find something else to watch.
If anything I’ve been IMPRESSED by Netflix. It seems as if their BluRay selection has tripled since the price changes. Probably about 1/3 of my queue is now either available on BR or will be soon.
Yup. I was looking up some fiilm information on IMDB & made the mistake of reading a bit of their Forum. Makes this place look like the Algonquin Roundtable!
I had read the article earlier, but not the comments. Going back to read the comments, I don’t think they are that far off from what we get here, just a higher ratio of wingnut to sanity on PC World. IMDB, Yahoo, and a host of others seem to be just the opposite of the SDMB with the ratio, and maybe even a higher ratio of wingnuts. That’s why I stay away from those comments sections 99.9% of the time. The stupid is so strong it might be contagious.
While I have a Netflix related thread on the front page I wanted to warn people who switched to streaming only back in August to check your account. We received a DVD yesterday after changing over. Not only did we receive a DVD but it was a DVD we had seen back in June. It wasn’t on our queue anymore and I know it wasn’t because I cleaned the thing off myself. This morning everything was back on the queue with that movie (Machete, which was excellent by the way!) showing as being at my house. I went to my account and saw that on September 7 I’d been charged 6.98 to “upgrade”, and on the same day switched back, effective the first of next month. I was told it was probably a computer error. Probably. Ya think?
It was no big deal, just a phone call to customer service fixed it all up (hopefully!) but if I hadn’t noticed I’d have been pissed at the overcharges.