Apple, Amazon, and Blockbuster are hot on Netflix’ trail. Result: The company’s stock price is down more than 12 percent since Jan. 1. Now the company is looking to turn the tide with a plan to deliver movies and television shows via streaming video free to Netflix subscribers (Windows/IE only for now).
Beware of the supposedly seemless installation process though.
First-time users of the service must download a special piece of software, which, if all goes well, also takes only a few seconds. (When a reporter tried the system at home, however, the process stalled because of a mismatch between the version of Microsoft’s antipiracy software expected by the Netflix viewer and the one loaded in the PC, and it took about 15 minutes to fix the problem with the help of a customer-support specialist. A Netflix spokesman said the problem was known, but occurred only rarely.)
Not exactly the sort of thing you want to see in an article on your exciting new product launch. And it’s not the first time the Netflix PR machine has misfired. CEO Reed Hastings had an embarrassing moment during his recent 60 minutes profile when he was unable to find his own company’s support number on his site.
The “60 Minutes” report introduced us to a couple in Northern Maine – Bob and Bobbi Henkel – who are big fans of the service, but who had a few problems along the way with delivery of their discs. They wanted to call to express their frustration, but couldn’t find a phone number for Netflix anywhere on the site.
When correspondent Lesley Stahl asked Hastings about that, he responded, “I’ll show you that here,” and then clicked on the site which was already open on his laptop.
And then he clicked. And clicked again. And again.
He couldn’t find it. “Ah… how do I contact customer service?” he asked, answering his own question by saying “Okay, it’s all by e-mail.”
A support number, 888-Netflix, was added soon after.
Another interesting bit from the launch article: Blockbuster’s online rental service is taking off.
With aggressive promotion of a new service called Total Access, which costs the same as Netflix’s service for three movies, and allows subscribers to exchange movies in stores, Blockbuster has added a staggering 700,000 subscribers since Nov. 1…“I wouldn’t be surprised to see our online subscribers double by the end of 2007,” John F. Antioco, the chief executive of Blockbuster, said.
Also, Netflix’ plan will be a pay-per-minute offer so users can test drive a movie.
Mr. Hastings said he chose the instant delivery afforded by streaming technology over downloads, which can take a while, because it would encourage subscribers to use the system to browse the catalog and discover new movies. If they do not like a movie, they can stop it and will be charged only for the minutes they actually watched.
If this model takes off, could it have an impact on how movies are actually structured? Will we see fewer slow-developing plots and more explosion-filled intros?
Related: Netflix nails it
brad
on 17 Jan 07Unless they’ve really figured this out, I have a hard time believing that watching a streaming movie is going to be a consistent experience. I have a reasonably fast Internet connection and yet I see slowdowns every evening when there’s a lot of traffic, and that definitely affects the quality of streaming video that I watch now.
One could argue that this model will fail for the same reason that subscription music models fail - people want to own their music not rent it - but that’s not really true for movies. I don’t buy DVDs anymore because I discovered that I watch most of them only a couple of times; I prefer to rent. So I actually like the idea of streaming them, I just wonder if it’s going to work well over DSL or cable.
beto
on 17 Jan 07If this model takes off, could it have an impact on how movies are actually structured? Will we see less slow developing plots and more explosion-filled intros?
Just the kind of thing Hollywood needs, as if most of its output these days weren’t crap already.
The future of home video, however, is undoubtely on Internet streaming, and Netflix isn’t the only player in the game right now. It will probably take some time for people to get used to it, but that’s where the video rental future is pretty much headed IMHO.
Chad
on 17 Jan 07Streaming movies to a computer is a step in the right direction, but I can’t see this taking off until Netflix (or somebody) develops a standalone piece of hardware that connects to my TV and network that allows me to browse, purchase (rent) and view movies all from the comfort of my couch.
Something like this would be ideal.
4point44
on 17 Jan 07i can order movies via comcast. and i’d love to do that, but i’m not paying $10 per movie. i don’t understand why it’s so expensive- it seems like it should be cheaper, if anything. there’s no postage, handling, counter people to pay, etc.
what’s up what that cable people?
Jordan
on 17 Jan 07Chad … I think this hopes to be the promise of Apple’s iTV. Now all we need are for these two teams, Apple and Netflix, to throw down together and knock the competition up side the head.
Darius K.
on 17 Jan 07“If this model takes off, could it have an impact on how movies are actually structured?”
Reminds me of back in the day when computer games were sold on a shareware model of “we give you the first N levels for free, and you can buy the rest.” Problem was that oftentimes the first N levels were awesome, and then the stuff you bought was horribly sub-par.
Chris Carter
on 17 Jan 07I’m not sure why people are criticizing Netflix for this – they are pioneering a new model for online movie distribution that acts completely differently than your standard “download, but use like a rental” model, much like they did with the postal delivery model. I know some people don’t like Netflix’s business practices, but they have been completely consumer centric when it comes to recognizing the writing on the wall and acting preemptively to support it.
I think the example of the support number is a perfect reason why I’m a big fan of theirs – the CEO exposes a major issue with their site (namely, not having a direct line to support posted), and instead of making excuses, they fix the problem.
Stephen
on 17 Jan 07Even if Netflix managed to perfect the streaming movie delivery system, I think I’d still prefer to use a DVD so that I can watch it in the living room.
Also, there are portability and playback options for DVD’s that don’t translate to streaming movies. Pause/rewind/chapters make starting and stopping DVD playback simple, but trying that with streaming video is pretty much impossible. Also, if I have a DVD in hand, I can watch that at anyone’s house on their DVD player without a concern as to whether their broadband connection can handle it.
Dave
on 17 Jan 07That is crazy. They start streaming media and then in a few months so will walmart for half the price. It is turning in to a comodity business…
BradM
on 17 Jan 07Stephen makes a good point about about pausing a movie. With a DVD, you can always ignore the phone, but sometimes the kids need something or there is someone at the door. There are a million reasons to pause a movie. If Netflix is pay-by-minute … that could be quite expensive.
May as well just buy it at Blockbuster or Walmart.
rick
on 17 Jan 07So by that model, Swordfish > Children of Men. Yikes.
Darrel
on 17 Jan 07“CEO Reed Hastings had an embarrassing moment during his recent 60 minutes profile when he was unable to find his own company’s support number on his site.”
That’s beautiful. 60 minutes needs to make that a regular bit. Have a CEO of a company try to contact a human support person at their own company.
As for the netflix deal, if it worked on a Mac, and had a few key Cable shows, I’d be dumping cable/sattelite in a heartbeat. I think they’re on to something if they can get the kind of show selection people would want.
Until then, though, I think a DVR is still much preferable to most online streaming. Apple is close with the iTV, but the cost per-show is a bit prohibitive to be a real replacement for the dish/cable coming into our home right now.
CJ Curtis
on 17 Jan 07If you ask me, Blockbuster has NetFlix over a big barrel.
When you are talking about such widely available consumer products such as DVDs, price and convenience pretty much make or break your business. Just ask WalMart.
Companies like Google competed with Microsoft (way back when) because they could argue that they were better, smarter, more innovative, etc.
NetFlix can’t exactly say they sell a better DVD. So if I can order Blockbuster movies online and either send them back or trade them for other movies at my local store…that’s what is called a no-brainer.
And until I can find a really good platform for serving movies from my PC to any TV in my house (in HD), paying for streaming movie content is kinda, well, dumb.
Amazing Rando
on 17 Jan 07The best thing for Netflix would be to have free previews of the movies in their library for the purpose of allowing the user to evaluate whether or not to stream (and pay for) the entire movie.
Allowing the user to stop mid-movie and not be charged for the whole film is great! I’ve shut off DVDs from brick-and-mortar rental stores because I didn’t like the film and never got a discount.
Soon the surge of people flocking to Blockbuster will realize that Blockbuster typically has a very shallow movie selection, especially in-store. And the chain is “family friendly”, which is the equivalent of what Wal-Mart does to music.
Shawn Oster
on 17 Jan 07You forgot Microsoft in your list of companies offering a streaming video service. Via the XBox 360 you can “rent” movies for up to 14 days, with many of them offered in HD. The Video Marketplace service even beat out Amazon’s Unboxing.
The best part is you can queue a movie for download, play a game for about 10 – 15 minutes while it downloads in the background and when it’s streamed enough you can start watching it while it finishes downloading. Plus you can do that all from your sexy HD TV instead of wandering over to a seperate software interface on the computer and dealing with getting it from computer to TV.
RJB
on 17 Jan 07I think the problem is that they are trying to answer Blockbuster’s “drop off your DVD rentals at the store” solution versus truly offering something better.
Why not have some sort of way to connect Netflix subscribers with each other so they could trade DVDs?
I have never perceived them as a software company, and it is hard to imagine they will have anything to do with the TV/Movies ala-cart movement…
I have trouble understanding what they plan for the future. Are they trying to develop something compelling here, that can stand on its own? Or just add a feature that may make some people a little happier?
Rob Sanheim
on 18 Jan 07Does anyone know of any reliable numbers comparing the online catalog of Netflix to Blockbuster. I know that if I go with BB, they’ll never have a huge catalog in store, but sometimes you just want something dumb and popular and finding that rare indie flick isn’t important. If BB can offer the convenience of local stores, and the depth that Netflix has online, they really have the advantage.
Darrel
on 18 Jan 07“When you are talking about such widely available consumer products such as DVDs, price and convenience pretty much make or break your business. Just ask WalMart.”
I’m still confused about this. One of the reasons that Netflix is around is that people hated both going-to and the selection-of the local BlockBuster store.
I suppose there’s a part of the market that DOES like getting in the car, spending a half hour looking for something semi-watchable, and then driving back home to watch it, but I think there’s enough of the rest of us-those that find sticking it in the mailbox infinitely easier-that netflix isn’t going to dissappear anytime soon.
Granted, they do have to get beyond the mail system at some point, as it’s inevitable that downloading will happen at a practical level eventually.
CJ Curtis
on 18 Jan 07NetFlix is a great business model, and obviously fits a hell of a lot of people.
But it’s not exactly a complicated one.
Blockbuster has answered with a mail service of their own. NetFlix can’t exactly go and build a store in every town in America, so they are trying to counter with something better and/or more convenient.
But I don’t think streaming video online is the answer. Not even close. Even satellites and digital cable lines have their occasional “bandwidth” problems. I find the notion of streaming a movie online extremely farfetched. There are just too many factors that could make the experience very poor for the user.
I don’t think NetFlix is going anywhere either, but for the time being BlockBuster has a definite competitive advantage. Not only do they compete with the NetFlix mailing service, but they also have the opportunity to attract people that wouldn’t necessarily use the NetFlix system to begin with (and I’m one of them).
All things being equal, providing customers with more choices is (almost) always better.
Eric Peacock
on 18 Jan 07I agree with this and will add that Netflix seems to have more momentum on it’s mail service having been a mail-based service from the start. I’ve been a member since 2000 and it’s the only subscription service I’ve ever used and liked. There is a one-day turnaround from when I mail back and get a new movie because I live a few hours from a distribution center.
Blockbuster burned me out long ago with their habit of charging a late fee even if the movie wasn’t late and your receipt said so. Lots of others I know feel this same way. Yeah, they’ve sort of apologized for that but the customer experience at Blockbuster was so bad in the past that I feel no need to try them again as long as Netflix is working fine.
And a big one is selection – As far as I know Netflix has way more titles than Blockbuster who appears to censor or ignores some titles. Supposedly Blockbuster doesn’t carry the recent documentary This Film is Not Yet Rated due to the controversy surrounding the film. So if you care for more than the mainstream, selection will matter. That also helps recommendations too.
Also Netflix has done some indie-content experiments with films like The Puffy Chair. They rented it exclusively for a time and this month there is a purchasable DVD of the film as well. The film is good (though not for everyone), it won Sundance last year but wouldn’t have had this sort of exposure normally.
Competition is good though, so I’m glad to hear that both camps are working on the next gen movie rental process.
This discussion is closed.