On Fri, Oct 14, 2011 at 7:34 AM, Wesley McGee <[email protected]>wrote:
> On Fri, Oct 14, 2011 at 1:51 AM, PGage <[email protected]> wrote: > >> This does nothing for me, the only show I have ever seen even one episode >> of is Ringer, and I only saw 2 of those. But again, this is the reason >> Netflix did what it did this summer. The Variety article gives the mistaken >> impression NF had to do this to put the bad juju of the price increase >> behind it; more accurately, NF judged that the bad juju was worth it >> precisely so that they could afford deals like this. >> *********************************** >> >> http://www.variety.com/article/VR1118044366 >> >> > Well, as the excerpt noted, you wouldn't be seeing that show on Netflix > this year, anyway. It won't arrive until *next year*. They are going to need > to improve their game -- and it was still poor planning to spring for the > price increase *before* closing on the deals. It is not like they have to > pay cash-in-full-today to close these deals. (I hope they aren't under the > impression they have to pay cash-in-full-today.) Even *one* good deal > announced in the summer in conjunction with the price increase would have be > a salve. Because as you noted, the story-line in the press is "Netflix has > to make up for the mistakes over the past several months, starting with the > price-hike." It's basic message-management. > I know we approach this from somewhat different angles. My argument is not that they needed the actual cash on hand to pay for these deals, but that they needed to fundamentally restructure their business model. NF was structured as a mail-order disc company that did some online streaming on the side; as it became clear streaming was the future, they had to basically get out of the mail order business - not necessarily literally out of it (though I think that is only a matter of time), but they needed to make sure that they were no longer investing any capital in that side of things. All capital investment had to be for the streaming deals, and they were going to have to invest more than they ever had in the past. All of this came clear as their first generation content streaming deals were getting ready to expire, and it also became clear that much deeper pocketed companies were going to be bidding against them. A lot of these deals could not be made before now for various reasons (the CW deal for instance has been in the works for more than a year). Meanwhile, they did not want to be in a position of having to invest significant (or really, any) capital to deal with higher cost of shipping, or whatever hard and soft ware is needed to manage the acquisition, storage and shipping of discs. I imagine that they have a model now in which the mail order side of the business completely pays for itself, plus a small profit, while the streaming side pays for its operations, but is going to have huge deficits over the next few years counting investment in new content rights. In the midst of all this, pissing off 100,000 subscribers was not seen as a major downside (though I think they have realized they risked longer term damage to their brand). Still, as I have noted before, 18 months from now NF will either be a major distributor of online content, and be successful, or it will have not gotten enough distribution deals, and it will be out of business. The short term irritations of a minor fraction of their current customer base was not a major consideration. The point holds, it is not true that NF made the CW deal in a desperate effort to make frustrated customers happier. Rather, they pissed off those customers this summer so that they would be able to make deals like the one with CW (which if things work out for them, there will be many more). -- 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
