Over at Digital Society they have done a little math based on recent statements from Netflix chief content officer Ted Sarandos. The numbers they looked at tell us how much Netflix spends to get video content in front of your eyeballs. It turns out, that it costs the company 20 times more to mail you a disc, than it costs to stream the content to you. No wonder they're pushing for a streaming-only model.
Netflix is currently spending about $1 round trip to mail you a DVD movie. Streaming that same content to your connected device only cists them 5 cents in bandwidth. With over 2 million discs going out each year, that comes out to about $700 million spent every year on postage. This is why the higher license fees for streaming content make sense for Netflix. The cost of delivering the content is so much lower, the company can still make a killing.
We understand that the streaming options are less than perfect much of the time, but Netflix seems to be working to change that. With numbers like these, we expect they are trying very, very hard.
Netflix has made no secret of its intention to be primarily a streaming company. Although, much of the content out there is only available in disc form. Netflix's recent decision to limit the ways customers can add those discs to their queue has caused quite an uproar. Users can no longer use connected streaming devices, like the PS3 or iPad, to add items to their DVD queue. These are now streaming only devices with no ability to manage the DVD queue.
Many users who commented on the Netflix blog post about the change accused the company of moving to dismantle their disc rental business in favor of streaming. It does fit with the recent addition of streaming-only plans, and the increase in price of disc rental plans. The change in queue management may have also been done in part because the new streaming-only users don't even have disc queues to manage.
Netflix for its part said, "We’re doing this so we can concentrate on offering you the titles that are available to watch instantly. Further, providing the option to add a DVD to your Queue from a streaming device complicates the instant watching experience and ties up resources that are better used to improve the overall streaming functionality." While that may be true, we have a hard time believing this isn't also another step in phasing out discs.
You have to really put a lot of effort into setting up a home theater without some form of Netflix integration, even if you're not an account holder. Netflix, now primarily a streaming service, has muscled its way onto a plethora of home entertainment devices, including gaming consoles, set-top boxes, televisions, Blu-ray players, and more. The only thing missing at this point is a dedicated button on your remote control.
That won't be the case for long. Announced at CES, Netflix said it's working with hardware manufacturers to implement a red button sporting the iconic logo on remote controls for "certain new Blu-ray disc players from a vareity of companies including Best Buy's in-house Dynex brand, Haier, Memorex, Panasonic, Samsung, Sharp, Sony, and Toshiba."
In addition, Netflix says Sharp, Sony, and Toshiba will also place a Netflix button on select Internet-connected TVs. The button will offer one-click access to Netflix and underscores just how big the company has grown in the streaming media sector.
We suppose technically the inability to search through the Netflix streaming catalog on Google TV isn't a flaw, but to us it is. Thankfully we can stop bitching about it now that Google addressed that annoying shortcoming with its first Google TV update since rolling out the platform two months ago, the search giant announced in a blog post.
In addition to search functionality, Google TV viewers can add titles to their DVD queue. In other words, the Netflix app is no longer woefully (and inexplicably) behind the curve, finally catching up to how it's implemented on other home theater devices.
The update also includes a Dual View feature allowing you to watch TV and browse the Web at the same time. As Google explains, maybe you want to "watch Conan while tweeting about him on Twitter," and now you can. There's a remote control app for Android phones with integrated voice search available for download (see video below), and finally the update installs a new movie results page that shows all films associated with the title.
Roku recently rolled out new firmware -- version 2.9 b1509 -- for all models of its popular Roku player. The updated software introduces a handful of changes, including:
1080p support for XR units
Hulu app optimizations for quicker trick play navigation and start of playback
Improved Hulu playback performance on networks with higher latency
The update also addresses a handful of bugs and quirks. For example, Roku says installing the software fixes "a subtle audio playback issue in UFC streaming," and it also squashes a bug that could result in a crash if an app tried to load an image greater than 1280x720.
In a recent New York Times Interview with Time Warner CEO Jeff Bewkes, the subject of Netflix came up. Bewkes held firm to the assertion that Netflix is actually a very small player with no power to affect the industry. He compared the disc rental and streaming company to the Albanian military, strangely. "It’s a little bit like, is the Albanian army going to take over the world?" Bewkes quipped. "I don’t think so."
The Time Warner chief continued to rail against Netflix claiming they had undermined the video rental industry. We would have to agree with that, considering the state of Blockbuster. Still, Bewkes maintained that Time Warner did not know Netflix would cause consumers to shift away from purchasing and renting from brick and mortar stores. We're struck by how well Mr. Bewkes manages to lay out Netflix's notable impact, while at the same time saying they are not significant in the market.
All this comes back to the Starz deal that allows Neflix to stream many newer releases. Time Warner owns Starz, and Bewkes insinuated they might not renew the deal when it expires in a few years. Whether or not production companies see Netflix as a major player, the service is winning over consumers. When the Starz deal, expires, content companies might have no choice but to deal with the juggernaut that is Netflix. Some, like Bewkes, have demanded that Netflix charge more to better support content licenses. How much would you pay for Netflix streaming, assuming more licensing deals came through?
Barry McCarthy, the Netflix CFO with one foot out the door, will end his tenure at Netflix on Friday and leave the company at least $40 million richer than he began. That's because McCarthy sold off large portions of his Netflix stock, not once, but twice in the last month, CNet report.
At the beginning of the month, McCarthy sold over 130,000 shares, netting more than $21 million. And then days before Netflix announced he was leaving the company, McCarthy sold another 100,000 shares for around $200 per share. Should we be concerned that this long-time CFO is abandoning a seemingly successful company and cashing in on over $40 million in stock?
"You should be confident that I'm leaving the business in good shape," McCarthy said at a tech conference. "There is nothing that I know that you don't know that would cause you to be sleepless about your position in the stock."
Whether McCarthy's comments come as any consolation to nervous investors remains to be seen, but it could be that he was simply looking to have cash on hand to fund whatever new venture he gets into. According to a report in Dow Jones, McCarthy said Wednesday that he wants to run his own company.
Netflix announced today that they have acquired streaming licenses to a plethora of ABC and Disney owned TV shows. The entire run of Lost will be available, and will popular programs like Desperate Housewives and Grey's Anatomy. For the younger crowd, Netflix is also getting access to many Disney channel shows. New episodes of many of these shows will be available on Netflix 15 days after their original airing. That might sound a little lengthy, but nothing compared to the DVD-length waits many series carry.
It is unclear if Netflix is paying anything approaching the $100,000 per episode rumored last week. We would imagine not, as ABC and Disney have been more receptive to streaming deals with the company before. It's good to see a new range of content hitting the service, and we can only hope that more companies get on board with streaming. Check out the press link to see the full list of new additions. Anything there look particularly interesting to you? Well, other than the Hannah Montana -wait, we mean action movies, manly action movies.
At some point, you have to imagine a company will step into the ring with Netflix and duke it out for online supremacy in the streaming media game. Could OnLive be a contender?
There's a good chance we'll find out. The cloud-based gaming service has every intention of expanding its business model to include streaming movies and TV shows, and is already in talks with bigwig studio heads, Reuters reports.
"Streaming technology is available to anybody," OnLive Chief Executive Steve Perlman told Reuters. "We want to work with the studios. All of these guys want to offer content, we're just here to distribute it. OnLive can deliver any experience Netflix can."
Whether or not you buy into that last statement depends on how you define "experience." Netflix has been brilliant in laying the groundwork for its streaming service, which is now accessible through a host of entertainment devices, everything from gaming consoles to tablets PCs.
But one advantage OnLive has over Netflix is its gaming service. For a flat rate of $10/month, OnLive subscribers get unlimited access to its limited (but growing) catalog of games, accessible via a $100 Micro Console with controller and a free game. And it's not is if OnLive is standing pat -- the company just recently rolled out a free app for the iPad in which users can login and spectate live games.
After more than a decade of service, Barry McCarthy is stepping down as the Chief Financial Officer (CFO) of Netflix in order to "pursue broader executive opportunities outside the company," Netflix announced on Tuesday. Taking his place is company finance veteran David Wells, who will step into his new role at the end of the week.
"We are lucky to have an executive with David's proven financial skill and operating impact within the company and I am confident he will continue to serve Netflix extremely well as CFO," said Netflix Co-Founder and CEO Reed Hastings. "At the same time, we offer both great gratitude and sincere best wishes to Barry. Over the last few years, Barry has balanced his affection for Netflix – and the excitement all of us have felt by the tremendous growth of the company – with his personal desire for broader professional opportunities. Barry concluded that now is the right time to seek out those opportunities, and we will be cheering for him."
It's hard to imagine wanting to jump ship at this point as Netflix makes the transition from primarily a DVD-by-mail company into mostly a streaming service, and where McCarthy goes from here, only he knows. Netflix currently serves nearly 17 million subscribers in the U.S. and Canada, many of which pull streaming content from their laptops, gaming consoles, Internet connected TVs, Netflix-enabled Blu-ray players, iPads, and more.