Octopus Overlords

Chaz wrote:As of Sept 1, streaming and discs will be separate plans, and there's no discount for having both. Basically sounds like the current plan with one disc at a time with bluray access that I'm paying ~$12 for (already higher than I'd like), will be going up to $18 on Sept 1.

This kind of shit is really starting to sour me on Netflix. Looks like I'll be ditching discs altogether.

msduncan wrote:Canceling netflix

That spells trouble for Netflix's streaming content costs.

"Netflix has another year or two on most of these contracts, and then the game completely changes," says Michael Pachter, analyst at Wedbush Securities.

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold.

Isgrimnur wrote:And with that, you can hear the sound of the studios sharpening their axes, getting ready to slaughter the goose that laid the golden eggs.

LordMortis wrote:Whose golden egg? How much do the studios make on this? How much does Netflix make?

Smoove_B wrote:

LordMortis wrote:Whose golden egg? How much do the studios make on this? How much does Netflix make?

The golden egg that is allowing movie and TV show producers to get content to the end user through a single (or small) conduit. But now that they all see how much we all like Netflix Streaming, they don't want deal with the Middleman anymore. See: HBOGo and the current battle between STEAM and EA Games Online (a.k.a. Origins).

In an effort to try and capture more money, the market is going to fracture and your choices for diverse streaming content are going to diminish severely.

LordMortis wrote:
But the question is still, how much money is being made now and by whom. Obviously if 10 million people are paying $10 a month, there's 100 million a month being made but who is seeing that money? If I'm netflix and I'm not getting the lion's share of that 100 million a month after all of these years and I've established the model and driven my competition under then it's time to start making my goose show off her fertility or kill her as a failure trying.

Archinerd wrote:

msduncan wrote:Canceling netflix

Thinking about it.

noxiousdog wrote:I looked up netflix's financials and they are doing fantastic. Very high ROE.

Ralph-Wiggum wrote:This likely is why the prices are going up:

That spells trouble for Netflix's streaming content costs.

"Netflix has another year or two on most of these contracts, and then the game completely changes," says Michael Pachter, analyst at Wedbush Securities.

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold.

Our consolidated net income of $60.2 million and diluted EPS of $1.11 were at the high end of our guidance range due to the earnings outperformance in the U.S discussed earlier. As we’ll discuss later in the letter, our international loss in Canada was right in-line with our guidance, with lower costs offsetting slightly lower-than-anticipated subscriber revenue.

# The price of your Unlimited Streaming + 3 DVDs out at-a-time (Unlimited) plan will change to $23.98 (plus any applicable tax) a month starting with your next billing period on or after Sep 01, 2011.
#
You are currently in the Unlimited Streaming + 3 DVDs out at-a-time (Unlimited) plan with unlimited time to watch instantly.
# Your current period price is $19.99 plus any applicable tax.

Kraken wrote:

# The price of your Unlimited Streaming + 3 DVDs out at-a-time (Unlimited) plan will change to $23.98 (plus any applicable tax) a month starting with your next billing period on or after Sep 01, 2011.
#
You are currently in the Unlimited Streaming + 3 DVDs out at-a-time (Unlimited) plan with unlimited time to watch instantly.
# Your current period price is $19.99 plus any applicable tax.

Hmmm. Apparently there is no DVD-only option for 3-at-a-time. Looks like either I have to pay an additional $4 to keep our existing plan or downgrade to 2 disks + streaming for the same price. Or maybe drop to 2 disks with no streaming to save $8.

My wife has been streaming movies to her computer lately, but I never use that feature at all.

(edit) Scratch that; I found more plans hidden under a link. 3 disks with no streaming is just $15.99, so it looks like we're in for a price cut. Whee!

LordMortis wrote:

noxiousdog wrote:I looked up netflix's financials and they are doing fantastic. Very high ROE.

High enough to sustain this?

Ralph-Wiggum wrote:This likely is why the prices are going up:

That spells trouble for Netflix's streaming content costs.

"Netflix has another year or two on most of these contracts, and then the game completely changes," says Michael Pachter, analyst at Wedbush Securities.

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold.

I'm not too clear on things but

http://files.shareholder.com/downloads/ ... olders.pdf" target="_blank

makes it sound like they net about $60 million per quarter

Our consolidated net income of $60.2 million and diluted EPS of $1.11 were at the high end of our guidance range due to the earnings outperformance in the U.S discussed earlier. As we’ll discuss later in the letter, our international loss in Canada was right in-line with our guidance, with lower costs offsetting slightly lower-than-anticipated subscriber revenue.

Already not a lot for what they provide IMO but now they have to come up with another $1.7 billion out of the $240 million a year they are making.

Now should production companies scream for that much money? If I were making $300 million dollar movies, I'd probably start wanting more too.

Of course, I just pay for basic cable and I'm screaming bloody murder that cable and Internet are up to $67 a month for me and I'm thinking about canceling. And I compare $7 a month streaming to $30 a month for basic cable and I'm thinking streaming is a huge discount for media way more current than what I'm generally getting. So what do I know?

Our core strategy is to grow our streaming subscription business within the United States and globally. We are continuously improving the customer experience, with a focus on expanding our streaming content, enhancing our user interfaces and extending our streaming service to even more Internet-connected devices, while staying within the parameters of our operating margin targets.

By continuously improving the customer experience, we believe we drive additional subscriber growth in the following ways:

• Additional subscriber growth enables us to obtain more content, which in turn drives more subscriber growth.
• Additional subscriber growth leads to greater word-of-mouth promotion of our service, which in turn leads to more subscriber growth at an increasingly cost-effective marketing spend.
• Additional subscriber growth enables us to invest in further improvements to our service offering, which in turn leads to more subscriber growth.


Our business has and continues to evolve rapidly. In 2010, we passed a significant milestone with the majority of our subscribers viewing more of their TV shows and movies via streaming than by DVD. Going forward, we expect we will be primarily a global streaming business, with the added feature of DVDs-by-mail in the U.S. We believe delivery of entertainment video over the Internet will be a very large global market opportunity, and that our focus on one segment of that market—consumer-paid, commercial-free streaming subscription of TV shows and movies—will enable us to continue to grow rapidly and profitably.

The increasingly long-term and fixed-cost nature of our content acquisition licenses may adversely affect our financial condition and future financial results.

In connection with obtaining content, particularly for streaming content, we typically enter into multi-year, fixed-fee licenses with studios and other distributors. As of December 31, 2010, we had over $1.2 billion in such contractual commitments covering payments due over the next several years. Furthermore, we plan on increasing the level of committed content licensing in anticipation of our service and subscriber base continuing to grow. To the extent subscriber and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of these content licensing commitments and our flexibility in planning for, or reacting to changes in our business and the market segments in which we operate could be limited.