Death of a Threat: Netflix CEO Joins Facebook Board… It Matters (NFLX)

Netflix, Inc. (NASDAQ: NFLX) was under some worries before when Facebook announced that it was going to get into video delivery of selected movies.  In a SWOT analysis, the Facebook issue always fell under the O and the T as opportunity and threat alike.  This no longer appears to be a threat.  Facebook has announced today that Reed Hastings, CEO of Netflix will join the Facebook board of directors.

MarketWatch has a full backgrounder on the news here.  Facebook is obviously gearing up its team for an upcoming IPO.  It is one of our Top 17 IPOs To Watch in 2011.

Why this matters is complex, yet simple enough.  There was a thought that it is only natural for Facebook to get into digital distribution of films.  The outfit has even announced some limited streaming deals already.

If Facebook wanted to get deep into the video distribution business, it has hundreds of millions accounts already.  The movie studios have already shown over and that they are all just about willing to take the arms-dealer business model and deal with anyone who will pay under a contract to deliver movies.

The only real difference is over who gets the new releases first.  For Facebook to get into the video delivery business, all it has to do is to buy more bandwidth.  Still, partnering with Netflix is a no-cost or low-cost solution that could come with extremely high margins.

June 25, 2011
Categories: News you can Use, Technologies, Vendor News . Tags: , , . Author: MyMotorways . Comments: Leave a comment

Can’t Find it on Netflix On-Line? Here’s Why

Reed Hastings has a message for anyone looking for a comprehensive catalog of streaming movies and TV shows: Don’t go to Netflix.

Speaking at the All Things D conference in California, the Netflix founder and CEO celebrated his company’s success and outlined its ambitions, but he also stressed its limitations. In May, Netflix found its share of U.S. broadband traffic was larger than that of the file-sharing service BitTorrent for the first time. And Hastings has plans to launch his streaming service around the world, country by country, starting with Canada.

“We have an opportunity to build a very large global company,” he said. “All of those 5 billion people [with mobile devices] like video.”

But Hastings does not think Netflix can ever afford to make that streaming video selection — Netflix Instant — comprehensive. Despite the growing amount of content that is available for streaming, the company does not expect to have a complete “watch now” library. The licensing fees are simply too pricey for its business model.

“At $7.99 a month, we can’t provide unlimited content,” Hastings said. “We compete for a very specific and small part of the pie. We don’t have everything, but we have a great bargain. That’s what we want the brand proposition to be … Apple and Amazon are very good at being comprehensive.”

Indeed, when an audience member asked Hastings about a specific movie he couldn’t find on Netflix, Hastings testily directed him to pay for it on iTunes or Amazon.

Netflix is facing increasing financial pressure from its providers, who are noting how much profit the service is making from their content. For example, Netflix’s 2008 deal with the Starz network cost $30 million; analysts claim its renewal will cost $200 million, or 6% of Netflix’s revenue. Hastings did not dispute this cost estimate.

The online movie giant may have seemed like it was moving into the content-making business itself after a well-publicized deal in March to make House of Cards with Kevin Spacey and director David Fincher. But Hastings stressed that Netflix was just the distribution arm of that deal. “We’re just a channel,” he said. “The only difference with this content is it’s exclusive.”

June 1, 2011
Categories: Technologies, Vendor News . Tags: , , , . Author: MyMotorways . Comments: 1 Comment

Netflix Now The Largest Single Source of Internet Traffic In North America

Netflix video streaming is now the single largest source of peak downstream Interent traffic i the U.S., according to a new report by Sandvine. The streaming video service now accounts for 29.7 percent of peak downstream traffic, up from 21 percent last fall.

That puts Netflix above HTTP websites (18 percent), BitTorrent (11 percent), and YouTube (10 percent) as a source of downstream traffic during peak times in North America. (BitTorrent still accounts for half of all upstream traffic). As whole, “real-time entertainment” (which is mostly video streaming) accounted for 49 percent of downstream traffic in March, 2011, versus 19 percent for P2P file sharing, and 17 percent for Web browsing.

May 20, 2011
Categories: Inside Hollywood, News you can Use, Technologies, Vendor News . Tags: , . Author: MyMotorways . Comments: Leave a comment

Miramax Movies Coming to Netflix

As if Netflix (NFLX) couldn’t grow any larger.  

In another impressing showing of the company’s ability to scoop up digital licenses, Netflix said on Tuesday it inked a multi-year deal to stream hundreds of Miramax films.

Starting in June, Netflix will offer several hundred Miramax titles through its instant-viewing service, with dozens of movies being added on a rotating basis. The offer marks the first time Miramax titles have become available through a digital-subscription service.

Through the partnership, Netflix claims its library gains a variety of movies that collectively have earned 284 Academy Award nominations across 83 films, with 68 wins. The studio is responsible for iconic movies such as “The English Patient” and “Shakespeare in Love,” both “best picture” films, as well as “Pulp Fiction,” “Kill Bill,” “Good Will Hunting,” and “The Piano.”

Financial terms of the deal weren’t disclosed. The Wall Street Journal previously reported that Miramax and Netflix were close to a five-year deal worth more than $100 million.

Netflix has been looking to transition to a streaming-only business model in an effort to save on shipping costs, but its streaming service still offers a smaller selection than the traditional red envelope DVDs.

Its efforts to capture digital licenses for the service have helped the company snag Web traffic from search engines, according to a new study by Sandvine. The study found that in North America, Netflix has 29.7% of peak downstream traffic and has grown to become the largest source of Internet traffic overall.

Its growing share of the market is evidence that its services are taking hold in households across the U.S. and Canada. The company had 23.6 million subscribers as of the end of March.

I love Netflix and it keeps getting better!

May 17, 2011
Categories: Inside Hollywood . Tags: , , . Author: jamagno . Comments: Leave a comment

Netflix earnings Way up despite Growing Competition

Netflix revealed this week that its earnings are up 88% compared to this time last year. The subscription movie service reported a net income of $60 million on its Q1 report.

More than 3 million new subscribers have signed on to Netflix since January, pushing its total number of viewers to 23.6 million — more than those buying Comcast cable alone. (Comcast still has many more subscribers than Netflix does if you count the customers who buy video service alongside voice and Internet.)

Netflix’s earnings have benefited from a price increase on its hybrid service that took effect with its pure streaming plan in November. While the changes were made in Q4 of 2010, they took effect in Q1. Meanwhile, Netflix set a new company record for marketing spend.

Netflix is reaping the benefits of establishing a post-Blockbuster model of video rentals. Several competitors have launched to challenge it in the last 12 months — Hulu Plus and Amazon’s Prime Instant Video. Dish Networks, which purchased Blockbuster in April, will likely launch a subscription streaming effort under that brand.

The competition helps explain why Netfix has a new focus on original content. It has made exclusive partnerships with CBS and Lionsgate, as well as a non-exclusive agreement with Fox in Q1.

“Our competitive strategy relative to other streaming services is simply to grow as fast as we can, so we can afford more content, more marketing, and more R&D than our competitors,” explains Netflix’s Q1 letter to its shareholders.

April 27, 2011
Categories: Inside Hollywood, News you can Use, Vendor News . Tags: , . Author: MyMotorways . Comments: Leave a comment