[jonKranked]

I have to say I agree with JK on this one. There's no way physically handling and distributing media can be cheaper that digitally. And their infrastructure costs will go down as communications companies upgrade and are more easily able to supply the bandwidth. Video quality will plateau at some point where no matter how much better they make the quality, it won't matter since humans won't be able to discern a difference. Ten years ago GB drives were ridiculous. Now, you can buy a 4GB thumb drive for almost nothing. 20 years ago, did anyone think that in present day companies would be giving away solid state drives with company logos for free that have more storage space that most servers did at that time? Technology marches forward. The studios either get on the train or get hit by it.

here, lets break it down:

Disc Mailing service:
-cost of physical disks
-cost of replacing damaged/stolen/lost discs
-cost of machines to sort/scan discs when they are received from consumers
-cost of second set of machines to sort/scan discs to see if they need to go back out
-cost of employees to maintain these machines
-cost of employees to pack discs into mailers
-cost of disposable mailers
-cost of postage for discs
-cost to maintain distribution centers (utilities, property tax, etc)


now multiply all these by 60 (the latest number of known netflix distribution centers) and add in the cost of maintaining the backend network infrastructure that handles their inventory and user queues, and you have a sh*t load of money

cost of streaming:
-IT group
-servers
-bandwidth

My details on their streaming service are more sketchy, but I do know that while they maintain their own data centers, most of the actual service (streaming the video) is handled by amazon's cloud service.

*note: i excluded licensing costs from the above lists because they're necessary for both distribution models

 

[loco-gringo]

same. i don't know why everyone is sh*tting bricks, even with the price increase its still the best value in entertainment.

It pains me to agree with your stupid ass.

 

[N8 v2.0]

Dear N8 v2.0,

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

 

[dante]

So.... I'm guessing that Netflix realized that thumbing through page after page of "DVD-only" selections on Netflix.com when you're looking for something to stream might *not* be such a great promotional tool?

It's not the explanation, it's the fact that you *doubled* the price in just under a year with zero new content and possibly the loss of current content through your failed Starz deal.

 

[IH8Rice]

and possibly the loss of current content through your failed Starz deal.

you keep bringing up Starz but wtf do they have to offer??

 

[jonKranked]

So.... I'm guessing that Netflix realized that thumbing through page after page of "DVD-only" selections on Netflix.com when you're looking for something to stream might *not* be such a great promotional tool?

It's not the explanation, it's the fact that you *doubled* the price in just under a year with zero new content and possibly the loss of current content through your failed Starz deal.

go cry somewhere else, luddite.

While this move isn't unexpected (separating disc and streaming services into their own business units), I'm surprised it happened this soon.


edit: seriously, is it REALLY that hard to click on the "watch instantly" tab to browse only the streaming titles?

 

[Pesqueeb]

you keep bringing up Starz but wtf do they have to offer??

Toy Story 3!


Video Game option intrigues me. Be interesting to see the selection.

 

[IH8Rice]

Video Game option intrigues me. Be interesting to see the selection.

if it turns out to be good, with all the titles like Gamefly has, i will obviously be canceling Gamefly

 

[N8 v2.0]

Suprised Netflix doesn't have a porn option. Seem like it'd be a money maker.

 

[dante]

go cry somewhere else, luddite.

Yeah, because HULU, ESPN3, bittorrent or any of the sites that offer (free) streaming tv are so "dark ages". It's hilarious that everyone here defends Netflix, but the very night that each Top Gear episode debuts in the UK everyone's on finalgear.com to grab it. Nobody's waiting the 8+ months for it to (finally) debut as part of the season pack on Netflix, or worse waiting the 5+ months for the 42min version to appear on BBC America.

Netflix streaming was fine for the "I'm bored and willing to watch anything, let's browse through what's available" times (oooh, Tosh.0!), but if you wanted to watch a specific movie that night, chances are you were sh!t out of luck.

As my wife said, after years of appearing to have learned from the whole internet music debacle, studios are going completely backwards and making the exact same mistakes. People weren't willing to spend $18 on a cd, and with no easy and economical way to get it online people just pirated it. Studios originally seemed to have learned this, making streaming videos relatively easy (HULU) and relatively cheap or free (Netflix or HULU, respectively). Now they're going the other way, jacking up prices or not allowing them to be streamed legally *at all* until after a certain period of time has gone by... iTines showed that when people were offered the chance to spend a small amount per song and have just about everything available to download, people would take the legal option every time. Compare that to the streaming video industry today where prices are continuing to increase and selection is pathetic.

And apparently ~1m other Americans also feel the same way...

 

[dante]

Suprised Netflix doesn't have a porn option. Seem like it'd be a money maker.

Can you really not find porn on the internet?

 

[douglas]

http://www.qwikster.com/

 

[IH8Rice]

And apparently ~1m other Americans also feel the same way...

and 19m dont

 

[jonKranked]

Yeah, because HULU, ESPN3, bittorrent or any of the sites that offer (free) streaming tv are so "dark ages".

>75% of the streaming I do is on my tablet, and none of the examples you posted are available options.

Also, I still pay for the 2 disc option, with blu-ray, and streaming. Its $25 a month. That's about $5 more than it would cost for Liz and I to go see a movie in a theater. That extra $5 scores me:

-not driving to a theater
-not having to deal with other NJ wankers, and a-holes on their cell phones during the movie
-whatever food i want to eat without being price gouged
-drinking beer
-pausing the film when i have to piss
-"safety breaks"
-seeing more than one movie a month with out having to shell out another $20


I really don't care about seeing first run movies. Occasionally I'll go out to a theater, but only for something really good (like 3d imax stuff, but it has to be a good movie too).

 

[IH8Rice]

-"safety breaks"

is that your term for sex?

 

[Silver]

Stock price is dropping like a rock, we have to do something!

They just did something. Now, I get the "same" service for the same price, but I have to manage two separate queues. That's not the same service. So, they hike prices without making anything better, and then they make the service worse and keep prices the same.

MBA genius at work here.

#firstworldproblems

 

[Sandwich]

I find it hilarious that people are even vaguely complaining about movies that just came out. Has hollywood released anything in the past 3 years that's worth seeing so bad you can't wait an extra month for it? It's all sh.t, I like netflix because I can finally watch that awesome film from whenever that I totally forgot about, like Sixteen candles or
Robot Jox.

And also PS, bittorrent is free because it's FRIGGING ILLEGAL. I'll give you hulu, but the one time I used it, there were so many commercials that I got bored and changed the channel (ha).

 

[dante]

And also PS, bittorrent is free because it's FRIGGING ILLEGAL. I'll give you hulu, but the one time I used it, there were so many commercials that I got bored and changed the channel (ha).

I'll keep that in mind the next time you post in the Top Gear thread...

 

[IH8Rice]

or Robot Jox.

i was excited to see that movie again after RMers helped me remember the name, but after i saw it again i realized how cheesy it was.

 

[N8 v2.0]

I'll buy into 'streaming' when it's the same picture quality as a BluRay disc. Until then, streaming is out for me.

 

[Sandwich]

I'll keep that in mind the next time you post in the Top Gear thread...

eh I haven't watched anything on there in over a year, but I understand it's illegal when I do. I'd gladly sit through commercials to watch top gear, but it's on one channel at off hours so I can't even sit through advertising if I wanted to. Pretty different than regular piracy, but I see your point.

 

[IH8Rice]

I'll buy into 'streaming' when it's the same picture quality as a BluRay disc. Until then, streaming is out for me.

waiters gonna wait.....a while

 

[jonKranked]

I'll buy into 'streaming' when it's the same picture quality as a BluRay disc. Until then, streaming is out for me.

it's not BD quality, but they can and do stream HD with surround sound up to 5.1, the bigger problem is that a lot of the source content isn't an HD format.

 

[Sandwich]

I watched a movie on my puter and was very impressed with the video quality. Came across on microsoft silverlight or whatever? I thought it looked HD on my 24" monitor.

 

[N8 v2.0]

I watched a movie on my puter and was very impressed with the video quality. Came across on microsoft silverlight or whatever? I thought it looked HD on my 24" monitor.

Let me know when it's true 1080p on a 52" LED screen.

 

[jonKranked]

Let me know when it's true 1080p on a 52" LED screen.

I can get 1080p on my 61" screen, when the source is HD.

 

[IH8Rice]

I can get 1080p on my 61" screen, when the source is HD.

not through netflix

 

[jonKranked]

not through netflix

According to Netflix Tech Support, Netflix's content library is encoded into three bandwidth tiers, in a compression format based on the VC-1 video and Windows Media audio codecs. The lowest tier requires a continuous downstream bandwidth (to the client) of 1.5 Mbit/s, and offers stereo audio and video quality comparable to DVD. The middle tier requires 3 Mbit/s, and offers "better than DVD quality". The highest tier requires 5 Mbit/s, and offers 720p HD with surround sound audio. As of December 2010, the PS3 is the only device able to stream Netflix at 1080p resolution.

http://en.wikipedia.org/wiki/Netflix#Internet_video_streaming

 

[IH8Rice]

5 mb/s 1080p?

 

[syadasti]

not through netflix

And I doubt the motion resolution is 1080p, even today most HDTV cannot resolve 1080p motion resolution PERIOD.

 

[jonKranked]

5 mb/s 1080p?

i forget your out in the boonies.

 

[IH8Rice]

i forget your out in the boonies.

that "article" said their top tier streaming plan requires 5 mb/s..1080p @ 5mb/s is comical
thats bordering what a standard DVD disc offers

and btw, Comcast has some of the fastest internet available.

 

[syadasti]

that "article" said their top tier streaming plan requires 5 mb/s..1080p @ 5mb/s is comical

and btw, Comcast has some of the fastest internet available.

A bluray drive requires a 54Mbps data transfer rate to handle the 36Mbps data stream. 5 mb/s won't be even close in quality though you could save a bit by just streaming CD quality stereo audio rather than 5.1.

 

[jonKranked]

that "article" said their top tier streaming plan requires 5 mb/s..1080p @ 5mb/s is comical
thats bordering what a standard DVD disc offers

and btw, Comcast has some of the fastest internet available.

fvckin' miracles



i know i can't hit those speeds (i'll check when I get home tonight what I can pull). I was spoiled in college, we were hitting 10-15mb/s, and that was in 2007.

 

[IH8Rice]

Netflix might want to buy this guy out since its technically not cyber squatting right?
http://twitter.com/#!/Qwikster

 

[woodsguy]

Netflix C.E.O. Apologizes for Handling of Price Increase

http://finance.yahoo.com/news/Netflix-CEO-Apologizes-for-nytimes-1236689230.html?x=0&.v=1

 

[stevew]

^

will the white folks with pitchforks and torches quit bitching.....probably not...

 

[dante]

Netflix C.E.O. Apologizes for Handling of Price Increase

Already posted by N8 up above, but it still cracks me up that the CEO/Wall St thinking is "lets apologize for how this was handled" as opposed to "lets apologize for what we did". It's like we'd all understand if they'd just been a little clearer about how they're making $250m more in the 2nd qtr 2011 as they had been in the 2nd qtr 2010, and quarterly income was up by ~$25m, but that still wasn't enough, so we'd all have to practically double our payments to them as a personal favor to this guy... It's not the handling of the situation, it's that you're trying to charge us double for worse service.

And I was trying to think of other instances where just practically doubling the price in less than a year wouldn't truly piss people off (there was another increase last November or so)... "Hi, welcome to Starbucks, our Venti Latte is now $9" or "2012 Camry, exactly the same as the 2011 version, but we're pricing it at $37k instead of $20k". It hit me, then that this was almost identical to what Charter Cable did to me that made me switch to U-Verse a couple years ago.

We were paying ~$90 for cable/internet, and over the course ~7mo it went up to $150. It wasn't even one big increase, but like 4 smaller ones. First they eliminated the package we had, and automatically put us in the (almost identical) one that was $10 more. Then they increased the amount paid per month for the box/remotes, then something else, then our "promotional pricing" ran out for anther big increase. I was so pissed that they'd just been increasing the price without even bothering to let me know (they did send out a notice about the elimination of the package deal, but that was it) that I basically said "fvck you" and went to someone else. So apparently my threshold for saying "fvck you, I'm leaving" is about a 60-80% increase in a year....

 

[jonKranked]

Already posted by N8 up above, but it still cracks me up that the CEO/Wall St thinking is "lets apologize for how this was handled" as opposed to "lets apologize for what we did". It's like we'd all understand if they'd just been a little clearer about how they're making $250m more in the 2nd qtr 2011 as they had been in the 2nd qtr 2010, and quarterly income was up by ~$25m, but that still wasn't enough, so we'd all have to practically double our payments to them as a personal favor to this guy... It's not the handling of the situation, it's that you're trying to charge us double for worse service.

And I was trying to think of other instances where just practically doubling the price in less than a year wouldn't truly piss people off (there was another increase last November or so)... "Hi, welcome to Starbucks, our Venti Latte is now $9" or "2012 Camry, exactly the same as the 2011 version, but we're pricing it at $37k instead of $20k". It hit me, then that this was almost identical to what Charter Cable did to me that made me switch to U-Verse a couple years ago.

We were paying ~$90 for cable/internet, and over the course ~7mo it went up to $150. It wasn't even one big increase, but like 4 smaller ones. First they eliminated the package we had, and automatically put us in the (almost identical) one that was $10 more. Then they increased the amount paid per month for the box/remotes, then something else, then our "promotional pricing" ran out for anther big increase. I was so pissed that they'd just been increasing the price without even bothering to let me know (they did send out a notice about the elimination of the package deal, but that was it) that I basically said "fvck you" and went to someone else. So apparently my threshold for saying "fvck you, I'm leaving" is about a 60-80% increase in a year....

 

[zdubyadubya]

It hit me, then that this was almost identical to what Charter Cable did to me that made me switch to U-Verse a couple years ago.

I basically said "fvck you" and went to someone else. So apparently my threshold for saying "fvck you, I'm leaving" is about a 60-80% increase in a year....

You are lucky you had another option. In most places the cable provider is the only one in the area. That's what made me drop Comcast. They pissed me off so bad that I went without (even internet ) until we moved into a house with FIOS.