On Sun, Sep 25, 2011 at 10:14 PM, PGage <[email protected]> wrote: > On Sun, Sep 25, 2011 at 6:29 PM, Wesley McGee <[email protected]>wrote: > >> Finally, good news for the beleaguered Netflix, they struck a deal with >> Dreamworks Animation, beating out HBO to get first airing of their films. >> >> >> http://www.nytimes.com/2011/09/26/business/media/netflix-secures-streaming-deal-with-dreamworks.html >> ? >> > > I would say this is a down payment on exactly the kind of promise (or > gamble) Netflix has been making over the summer. These are the kinds of > content deals Netflix is going to have to make (and they will have to make > more, and more expensive ones than this, going forward) if they are to > thrive. It was in an attempt to give themselves as much cash as possible to > pursue these deals that they did what they did to its customers. > > For now, more important than the actual content from DreamWorks, is the > vote of confidence in Netflix and their model that this represents from a > major player like Jeffrey Katzenberg. > > A few choice excerpts: > > "The Netflix accord, which analysts estimate is worth $30 million per > picture to DreamWorks over an unspecified period of years, is billed by the > companies as the first time a major Hollywood supplier has chosen Web > streaming over pay television. > > It is also a bet by Jeffrey Katzenberg, the animation studio’s chief > executive, that consumers in the near future will not distinguish between > the two. “We are really starting to see a long-term road map of where the > industry is headed,” Mr. Katzenberg said in an interview. “This is a > game-changing deal.” > > (SNIP) Signaling support for Netflix, John Weiser, president of domestic > distribution for Sony Pictures Television, called it an “important player > and a great customer,” and said the two companies were “actively discussing > producing original programming together.” > > Netflix is already spending $100 million to create a series called “House > of Cards" and acquiring the American rights to overseas properties." >
The problem is customers don't care about soon-to-be improvements. Right now, Netflix is becoming a worse service (and the Dreamworks deal doesn't start until 2013). And very rarely has a business successfully sold a price-hike on the argument of "well, things are not great *now* but with this price increase, we hope to make the service better *two or three years from now*." Customers will generally say, "well OK, then. In two or three years, *maybe* I'll consider subscribing again." That is the argument you give to potential investors. And thanks to Netflix mixing up the investor argument with the customer argument, the investors are selling the stock, rightly fearing Netflix has annoyed the customer one too many times. -- TV or Not TV .... The Smartest (TV) People! You received this message because you are subscribed to the Google Groups "TV or Not TV" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/tvornottv?hl=en
