Print
It's no secret Netflix would like to see its DVD-by-mail business go the way of the Dodo so it can focus its attention entirely on the streaming scene, and with streaming subscribers almost twice as profitable as DVD customers, who can blame 'em? Company CEO Reed Hastings jumped the gun when he attempted to put Netflix's DVD business out to pasture by spinning it off into a separate company (Qwikster), a move that sparked an intense backlash from its customers, but if he's patient, it will die off all on its own, and in fact that's exactly what he anticipates will happen.
During an earnings call to discuss the company's fourth-quarter financial results, BTIG analyst Rich Greenfield asked Hastings at around the 37-minute mark if he expects the number of DVD subscribers will decrease throughout 2012.
"Yes, Rich, we expect DVD subscribers to decline steadily every quarter, forever," Hastings said.
In case that message is not heard loud and clear, Hastings and Co. also indicated it will not market the DVD service in 2012. Due primarily to costs associated with physical media, as well as postage, it was revealed that DVD subscribers are barely more than half as profitable as streaming subscribers, so if it comes down to the two, Hastings would much prefer a customer choose streaming over DVD.
That doesn't mean streaming is a walk in the park. In a letter to shareholders, Hastings indicated HBO Go is the biggest threat to Netflix's long term business model.
"As we’ve often said, we see the biggest long term threat as TV Everywhere, and in particular, HBO Go, the leading implementation of TV Everywhere to date," Hastings said. "HBO has some great content, particularly their original series, but today for most people it is locked behind a linear interface, or at best, behind a DVR interface and in all cases tethered to a linear subscription plan. As HBO Go grows and becomes the primary way that consumers experience HBO, it will become a much more effective competitor for viewing time."
Netflix currently has 21.67 million streaming subscribers in the U.S., and another 1.86 million internationally, compared to 11.17 million DVD-by-mail subscribers.
Image Credit: screenrant.com
Comments are closed on this article
SummitTechnology
April 05, 2012 at 1:56am
This page contains information that is totally appreciative and I just flattered on your blog. Thanks for sharing it. I often search such pages with best information.
http://www.summittechnology.com.au
optical storage disks
Holly Golightly
January 26, 2012 at 10:38pm
Optical discs are environmentally unfriendly. People should see this from a green perspective. Why continue ordering these primitive discs in the first place? They are only 480p. Streaming is the way and that's that.
dgrmouse
February 03, 2012 at 10:08pm
According to Speedmatters.org, a website devoted to promoting adoption of broadband, the median download speed in the US is about 3 mb/sec. Downloading a Bluray over a 3 mbps connection takes roughly forty hours. In my town, you pay $0.10 a MB for internet access up to a cap of $200. After you hit the $200 cap, your speeds are throttled to an extent that you can barely check your e-mail. In many markets, Netflix can deliver a Bluray disc in one business day - I believe that they can reach anywhere in the continental US in two days. I'm very happy that the streaming option works for you, but it's a pretty narrow viewpoint to assume that it works so well for everyone else.
POMF2K
January 26, 2012 at 9:18pm
The DVD option can't die soon enough. It's archaic. Not to mention a total hassle. The guy knows what he's doing. It's unfortunate he's got to make some people unhappy to improve both his business and the entertainment industry in general. It's amazing to me that we still pay cable companies for their pitiful services. I am cancelling my Comcast cable this month. I would pay triple what I pay them for their internet service, but the tv. . . not even worth $20 a month. There is no reason all programming should not be made available via the internet.
My only issue is that netflix streaming options are still pretty lacking. But again, they are encountering some roadblocks. Thanks a lot cable people!
RUSENSITIVESWEETNESS
January 26, 2012 at 6:33pm
Dickhead just wants to take another shit on his DVD subscribers--the people who made the stock valuable in the first place.
Since the streaming selection is probably less than a tenth of the DVD selection, why doesn't someone fire this asshole before he craps all over the stock again?
Seriously, dude, STFU.
Goolashe
January 26, 2012 at 9:23pm
He has a point, though. I don't think it will go down as fast as he thinks until they get their streaming catalog up, but it's definitely going to fade out.
vrmlbasic
January 26, 2012 at 1:35pm
Netflix has a point--DVDs by mail is just a primordial version of online streaming. A tediously slow and expensive version of streaming, and a version which defies the basic concept of streaming: not having to download the entire file before being able to watch. DVD-by-mail is, speed wise, roughly equivalent to downloading a DVD rip by dial-up modem. Something so archaic has no place in 2012. Why would I wait 1-2 days for a dvd when I can instantly stream content to any of my devices (including my phone) at comparable quality? Shoot, I can even hook my devices up to an HDTV and stream to the big-screen instantly with at least DVD quality. (I love the blu-ray HD content, but honestly most of what I'm watching wasn't filmed in HD, and I'm not going to suffer archaic mailing services and a monthly surcharge for the few that I do watch)
I loathe Reed Hastings as a person, but I support the Netflix idea. They really need to get their catalogs synchronized, by which I mean that everything they offer on DVD by mail needs to also be available on instant streaming. I'm saddened that HBOgo is their biggest competition, due to the HBO original content, which makes no sense. HBO offers exactly one current show worth watching (Game of Thrones), and even if you disagree HBO still only has a handful of original shows, whereas Netflix has thousands of shows to watch. How can they be offering competition?
8 bucks a month for thousands of shows and movies on-demand makes sense (Netflix). Over 8 bucks a month, on top of the cable bill, for HBO to then get HBO Go makes no sense.
As for streaming not being able to deliver current blu-ray quality due to ISP bandwidth problems, I counter that with Verizon FiOS, which can. Mmmmmmm, FiOS. ;)
RUSENSITIVESWEETNESS
January 26, 2012 at 6:35pm
"Something so archaic has no place in 2012"
Flying cars? What?
Carlidan
January 27, 2012 at 12:56am
Did you even read, or did you just stop reading after
""Something so archaic has no place in 2012""
Because I've read his comment and does make some valid points.
Fnord
January 26, 2012 at 1:07pm
No. I spent a lot of money on my home theater. Streaming looks fine, until you watch the same thing on a Blu-ray. ISPs just can't provide enough speed for streaming to give a Blu-ray experience. The video bitrate is so much higher on a Blu-ray. Don't even get me started on the audio quality differences. Blu-ray will not last forever, one day they will be replaced by an even higher quality form of media. By 2020 I believe streaming of Blu-ray quality media is possible, at least I really hope so, but by then a newer and much larger form of media will be out. Try streaming 200GB in two hours, to the people who don’t live in a large city… good luck.
vrmlbasic
January 26, 2012 at 1:39pm
Current blu-ray bitrates are met by current ISPs. See Verizon FiOS.
With gigabit internet slowly creeping through the country even the proposed new blu-ray's higher bit rates should be streamable.
I contend that with Comcast having virtual monopolies in many major cities that even if Comcast had the speed for your streaming scenario, it wouldn't be prudent to do so as then you'd only have 50 more gigs to use for the whole month. (Comcast should be run out of town for its paltry 250 gigabyte limit.)
Though I see your point, current Netflix streaming is awesome but it pales to native HD blu-ray content on the big screen.
Phrish
January 26, 2012 at 1:07pm
Well we all know Reed Hastings is an unmitigated idiot. I'm speaking here as a stockholder as well as Netflix subscriber. Seriously I don't know how that moron is still employed there after that hot, steamy dump he took on his company's stock.
That said, I wouldn't personally mind going streaming, if 100% of their titles were available. They're not... way, WAY far from not. Hastings was years and years away from being able to pull the plug on this. I think of him like a 16 year old boy in the back of his mom's caddy with his prom date... he just came to the streaming party way too soon.
Oh, and I think this article needs one correction. The sentence should read...
"Yes, Rich, we expect our stock, company value, and customer loyalty to decline steadily every quarter, forever," Hastings said.
praack
January 26, 2012 at 12:55pm
I'd say well over half thier catalogue if not more is in dvd, many titles though they were hits never were made streaming- and with the poor relations with the studios - never will be.
i still have a DVD sub but had to cut back due to the cost- but what will also kill the dvd side is that they are not replacing them when the dvd is unusable.
So a tv series is not in the streaming library - you anxiously await disc 4 and it comes cracked- and there is no replacement. - that is all too common now.
I no longer recommend netflix- i don't recomend anything actually - but netflix for streaming is not worth it and dvd is - well rapidly hitting the "not worth it " point to
bling581
January 26, 2012 at 10:47am
I'd love it if Netflix went to all streaming if they were able to switch over all their titles. The fact is that they offer so many titles only on disc and continue to get new ones in all the time. When they stop adding new titles on disc and only offer streaming is when DVD mailing will be dead. Otherwise don't expect everyone to just drop it. They probably did a good job making people switch when they hiked the price, but they'd have to do it again to get everyone to quit.
Scatter
January 26, 2012 at 10:55am
I agree. Probably 1/3 of all the movies that I find that I'd like to watch from their website seem to be DVD only.
ApathyCurve
January 26, 2012 at 9:58am
I don't know why everybody seems so surprised about this; Netflix published their 10-year business plan to the web a couple years ago and it clearly defined their goal to be streaming-only by 2020. In fact, the plan won a lot of accolades in business circles, both for presentation and content, and led directly to a jump in their stock value.
I suspect all the noise is being made (as usual) by the typical basement-dwelling rabble who wouldn't even know how to read a business plan, let alone write one. They simply like to kvetch and gripe and kick rocks.
DVD-by-mail is a long-term declining revenue stream; you don't need a Ouija board to figure that one out. Netflix are just getting ahead of the game by getting out of a future loser. They are shifting their business model, and there are always pains in that process. I expect to see rent-by-movie streaming soon, a la Apple TV, and probably various levels of premium accounts.
If you're determined to rent DVDs, go to a grocery store or McDonald's and stand in line for the Redbox. Or maybe you can find a Blockbuster still standing somewhere. I've got broadband and a comfy living room, and I'm living in the 21st century, not the 20th.
vrmlbasic
January 26, 2012 at 2:12pm
"I've got broadband and a comfy living room, and I'm living in the 21st century, not the 20th."
Exactly! This is the attitude I espouse, and frankly am surprised that so few people are espousing it on MaximumPC, and are instead expressing a yearning for the luddite method of DVD-by-mail.
Not only can I stream to my computer and tv at home, but when I'm in a car or train I can stream to my phone, and when I'm traveling I can instantly stream to my laptop or hotel TV (via laptop/phone) during some down-time. This convenience and accessibility is something that DVD-by-mail can't ever hope to touch.
I agree that Netflix needs to get its "rear into gear" and get everything it has on DVD on streaming, but I can't agree that that there's any reason to persist with the archaic dvd-by-mail paradigm. As bandwidth increases, even bluray-by-mail will be fully antiquated.
dgrmouse
January 26, 2012 at 11:25am
You are downright obnoxious.
For many of us, the only "broadband" option costing less than $2,000 a month is via 3G or Satellite. The available speeds and bandwidth caps make watching Youtube an expensive proposition, let alone feature-length films. Netflix, at one point, provided an inexpensive and convenient way to enjoy a vast library of films. To complain about losing such a service shouldn't subject one to being called a "basement-dwelling rabble" or any of the other libelous names you spew.
vrmlbasic
January 26, 2012 at 2:16pm
"For many of us, the only "broadband" option costing less than $2,000 a month is via 3G or Satellite."
I dispute this statement. The majority of people live in cities, cities where even pathetic Comcast service is readily available, service that is vastly superior to either 3G or Satellite.
I acknowledge that there are people in the predicament that you describe, but they're the minority, not the majority. People who live in areas so desolate and isolated that respectable broadband would cost >=$2000 must necessarily be in a minute minority. The internet connectivity problem you describe is so abhorrent that it is almost worse than that found on the International Space Station.
BTW, shouldn't the (Can't be "a") "basement-dwelling rabble" be in an area with respectable broadband? I assume this means the classic "living in your mom's basement" retort, and while I don't know about every mom, mine lives in an area with FiOS ;)
Verizon FiOS: "Hail to the Residential Internet King, Baby."
dgrmouse
February 03, 2012 at 9:47pm
I said that many folks are unable to get broadband. That's not an opinion, it's a fact. I'm not sure if you're arguing because you read "many" as "most" or if you're just making incorrect assumptions about the state of broadband availability in the US, but you're wrong here. Consider, if you will - in the last four years, the government has shelled out over seven billion dollars in stimulus packages geared towards rolling out broadband in under-served rural areas. That's right - the US Gov. is /paying/ ISPs to sell broadband to us. Please, stop making assumptions and check some statistics on broadband coverage in the United States. Do consider, too, when you research that the FCC definition of broadband is a measly 3/4 of a megabit per second - roughly 1/20th what folks who enjoy cable internet are accustomed to. Thus, the situation is even worse than the statistics imply, as many of the folks (like myself) who are counted as having broadband access are in fact stuck with slow and expensive services that are wholly incapable of supporting streaming video.
bling581
January 26, 2012 at 10:49am
"If you're determined to rent DVDs, go to a grocery store or McDonald's and stand in line for the Redbox."
When they can come close to offering the selection Netflix has you let me know.
Tyger
January 26, 2012 at 9:14am
LOL, I've never seen a man more determined to run his business into the ground. :)
LatiosXT
January 26, 2012 at 9:09am
Well, they're shooting themselves in the foot. I guess Red Box can enjoy a hefty lead then.
firefox91
January 26, 2012 at 9:19am
I don't know that they are. If physical media is not profitable enough, they are taking some risks in hopes for later reward. Me personally, I never had the DVD service except a few years ago on a free trial. I'm spoiled and I like some aspects of the on-demand world. Going to Redbox and getting DVDs mailed to me is kind of a pain in the ass. I just like going online, surfing through the library, and start watching right now. I love the Netflix streaming so I hope they are successful at expanding it the way the want to.
vrmlbasic
January 26, 2012 at 2:18pm
I concur. Why are there so many people embracing the Luddite option on MaximumPC?
