Netflix is bluffing and it will be their downfall

“In case you haven’t noticed, wannabe Hollywood analysts, er sorry, I mean tech bloggers the world over, are breathlessly opining and propagating news about Netflix CEO Reed Hastings estimate that Amazon is spending up to $1 billion annually on content for Amazon Prime,” Armando Kirwin writes for TechCrunch. “Meanwhile, outside of the Silicon Valley Distortion Field, a.k.a. back in Hollywood, everyone who hears the exact same statistic is thinking: ‘So… what’s the big deal?’ …Amazon spending $1 billion on content isn’t all that surprising. You can expect more of that in the years to come.”

“But here’s the kicker, and the real lesson for you, dear reader: Netflix is going to die. Realistically speaking, Netflix is not magically immune to the same forces everyone else has to deal with. And it’s not just the cost of content acquisition they have to worry about,” Kirwin writes. “Death also lurks in the race to the bottom caused by an ever-increasing quagmire of streaming competitors (especially from those who can make money elsewhere) regardless of whether they’re subscription or VOD.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Brawndo Drinker” for the heads up.]

39 Comments

  1. And the race to the bottom includes extreme video compression to lower the delivery costs… which is why I’ll stick with Netflix’s home delivery service…. not instant, but quality worth the wait.

    1. Sounds like an argument for Macs to support Blu-ray. Blu-ray quality does indeed blow away streaming video but streaming video does have its place and a big future.

      In my opinion, Netflix is the best deal out there. We dropped cable TV and now rely on over-the-air (OTA) and streaming video — and are saving $100 per month.

      We had Amazon Prime and dropped it. We have Hulu+ and that is close to being dropped. We have Netflix and my family would kill me if we dropped that. The whole family is using it.

    2. Agreed on the home delivery. Looking at my queue, less than 10% is available as “Watch Now”. YMMV. So until everything I want to see is available online, I’m sticking with DVDs.

    3. I don’t know how you’ve experienced Netflix streaming, but on my Mac or on my Apple TV, I’m getting 720p HD. Better than the DVDs you’re getting with the home delivery service.

      ——RM

  2. This really pisses me off. I am “this” short of dropping Netflix. They are the most pervasive of the streaming providers, yet they have a lot of crap movies. Any of the good movies okay, but not interested in watching them now. However movies I do want to watch are only on Amazon Prime. Hulu sucks balls, too.

    If it wasn’t for a full year upfront cost, I would be switching to Amazon Prime, technically it’s cheaper, plus free 2 day shipping.

    The fact that Netflix cost $7.99/mo streaming, and they have all the Star Trek series, keeps me glued. But when I am done with Star Trek, bye bye…

    Get better content, relevant and worth watching. B movies only go so far.

    I mean, it’s Christmas. Get some relevant Christmas movies, like, “The Christmas Story”, National Lampoon’s Christmas Vacation, Santa Claws, Home Alone. You know, those annual favorites.

    If it’s the studios fault because of licensing unreasonableness, then Netflix either needs to figure out what they are doing wrong, or they are the hated kid on the block and better shut their doors, because there’s no hope.

    1. I have been a subscriber to Amazon Prime and NEVER use their movie service. First of all, the better or more recent movies are not free, you have to pay for them. They only offer a terrible selection of B movies for free. Everything else you have to pay for. Second, their UI for their service is the most awful thing I have ever seen. Netflix at the moment is far superior to Amazon by a long long shot.

  3. I love Netflix. Great price and great service. They do need more content though, and at the moment their selection is much better than Amazon. For Amazon to compete for my dollar they NEED to do whatever it has to to stay in the race. At the moment there is no competition and Netflix is in no danger of dieing at the hands of Amazon. Not by a long-shot.

  4. only a billion? HOW QUICKLY WE FORGET that Netflix paid A BILLION merely for a 5-year streaming window of EPIX films (Paramount, MGM, Lionsgate) and most of those were CRUD. Of the 5,500 title MGM library, there’s 200 good and noteworthy pictures. When I analyized libraries for hedgefunds our joke used to be a library is only worth it’s top 100 films…turned out to be true. movies are more disposable then every before now that DVDs have cratered and physical media is going bye bye…

    Netflix has reached critical mass, folks… the pickens are slim. For a while they were the only game in town and that is changing rapidly… Hulu is now offering cash for films and Amazon is spending a fortune… There doesn’t need to be only one player – due to the integration of the television (smart tv, roku, apple television whenever that is mass produced ((not the apple tv box))

    I use this as an example:

    How would you go rent CASABLANCA?

    Netflix doesn’t have it.
    Hulu doesn’t have it.

    only Amazon has it. Prime members get to stream it for free, if not a prime member you pay $2.99 for the streaming rental.

    Your MSO (cable operator) also has it available on PPV for anywhere between $1.99 or $3.99 in HD…

    That’s ONE title (a major title) available streaming only on Amazon…

    good luck to the consumers looking for specific titles in the future who only subscribe to one SVOD system (nflx, amzn)

    -jon

      1. $3.99 is for SD. HD is $4.99.

        Just rented Safety not Guaranteed last weekend, and while it was obviously not Blu-ray, it looked and sounded really decent on my high-end system.

        Totally acceptable for many kinds of movies, and is definitely an option as part of the mix of content we watch.

        SC

  5. They are negotiating the whole thing backwards to begin with.

    They shouldn’t be licensing anything from the studios. They should be streaming everything a studio has and paying the studios ‘per view’ fees or some other packaged rate for the content that is viewed by the customer.

    Who cares if its available? Its sitting there like a DVD on a store shelf generating no revenue until its bought.

    Netflix or anyone in the streaming video business should be pushing a structure that gives them everything a studio has available and paying the studio for viewed content.

    That would allow a lot more content to hit the services and give the studios incentive to crank out good product. Just like the box office, if your movie is good you’ll see a lot of ticket sales, if it sucks well that is the way the cookie crumbles.

    If done correctly video services would see less up front costs and good studios will see greater revenue from streaming services.

    The whole industry is backwards right now.

    1. That’s a good idea, IMO. But Netflix would have to balance that rental payment strategy against its $7.99 fixed price subscription service. On average, Netflix would have to keep rental costs down to a few dollars per month in order to turn a profit.

      If done properly, this rental strategy could work for everyone. But greed is a powerful foe that will likely derail cooperation for years to come before things settle down.

  6. In the end competition is good. We win!

    I cut the cable a few months ago and save money with netflix and iTunes subscriptions to tv shows. I like watching current content.

  7. In the UK, I have been with LoveFilm’s DVD rental service for two or three years. (LoveFilm is an Amazon offshoot.) It’s great and includes streaming video. But their iOS app won’t display on my TV when connected by cable, whereas the Netflix app will. We haven’t quite finished watching the SF series Jericho on Netflix. I have started paying for the Netflix streaming service so this month I’m paying for both services and have yet to decide which I’m going to keep.

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