Netflix CFO talks Watch Now selection, competition
by Ben Drawbaugh 
posted May 19th 2009 at 5:59PM
The initial reaction to Netflix's Watch Now feature is "wow this is great," but when the reality of the selection kicks in, the appeal fades away. Obviously this isn't news to Netflix and according to the CFO Barry McCarthy it isn't a question of new vs old, but one of good vs bad. That sounds great and all, but the reality is that no matter how bad a movie is, people want to see new movies. Evidently the problem is that access to new movies via a subscription model is already spoken for by cable operators. He goes on further to explain that the cost of winning these contracts away are dependent on Netflix's ability to grow the subscriber base. Now if you're thinking, why not offer the movies via PPV? According to Barry, only the subscription model makes economical sense to Netflix as ad-supported services such as Hulu generate "scant incremental revenue." He even gets a little feisty when he says the "big question" is what are Apple and Amazon going to do when they realize the PPV model they are chasing now is not successful?
Reader Comments (Page 1 of 1)
Ray Casey @ May 19th 2009 6:35PM
People do not necessarily want to watch movies. They are looking for content with fewer interuptions. This raises two interesting points:
1. content does NOT have to come from traditional content providers anymore. We are all used to snippets and reality shows, so it will not be too long before you find content aggregators that will start to do distribution of thematic content (like car crashes, stupid videos, wedding drama's or grass root versions of "Cheeters", etc... ) that will leverage PC + TV for playback (in the living room) and the internet supply chain for distribution (to the living room). All of the components in that supply chain FLANK traditional actors, studio's, networks and distribution mediums. Where is netflick in that chain?
2. As ASP look to diversify there annuity income and revenue stream, plus leverage their captial investment in infrastructure and storage, look for THEM to form buying groups to become the next local "virtual" video store. The constraint of the PPV infra model is the cost off the equipment and infra... ironically that infra is ALL OVER THE PLAC to support the ASP model. So look for something to break there. the only challenge right now is DRM. Looks like the empire may have that in place and all we need now is to get the PC to the TV or the XBOX to the TV. Eitherway, that's the future mr. Netflicks... Nice to see you are on the bandwagon early... now mix up your content and grandfather those content aggregators and start to publish your own online TV shows....
gamedude360 @ May 19th 2009 7:08PM
http://www.videobusiness.com/article/CA6659176.html
"Still, the company is looking to attract more video-streaming customers by broadening its content beyond its 12,000-plus digital titles. Netflix, which last October reached an agreement to stream from the 2,500 titles in the “Starz Play” broadband-subscription service, is looking to further boost its digital inventory by reaching agreements with such distributors as the Epix Channel, which Viacom, MGM and Lionsgate are set to launch later this year, McCarthy said.
“I’m confident that there’ll be a number of announcements between now and year-end on the content front,” said McCarthy, adding that the company would be “delighted” to license content from Epix." netflix CFO Barry McCarthy
Joshua Taj Bozeman @ May 19th 2009 7:38PM
I've never understood the argument against the selection on Watch It Now. I have over 400 movies/TV shows in my watch it now queue, and I've always found great stuff to watch...indies, hollywood hits new and old, etc. With Starz Play, it's even better. I use it all the time, and I've never had a problem with the selection...for an unlimited service as part of another service, you just can't beat it.
NorthCranky @ May 19th 2009 8:33PM
To me its torture.
chumley @ May 19th 2009 8:47PM
I agree with Joshua. I have a over 100 programs in my instant queue, and I'm very happy with the instant streaming as it is today. I see it as an added "bounus" which supplements the material that I receive on DVD. For newer releases, I'm usually more concerned about picture/sound quality, so I prefer to get those on DVD. The lack of newer releases available via streaming doesn't bother me.
sek @ May 19th 2009 9:32PM
Someone should sue Netflix for not providing all their content via Watch Instantly. I know it's the content providers, rather than Netflix who are holding back the content, but perhaps if someone sued Netflix, a ruling would eventually come down that there is no difference between a physical DVD and streaming. We should be able to view via which ever media format we choose.
minimalist @ May 20th 2009 2:32AM
You've got to be kidding. Sue Netflix? For what?
Is there some sort of constitutionally guaranteed right to media streaming that I am unaware of? Netflix is free to offer whatever content they desire. So are the studios (they own it after all).
Just because there is demand for an item does not mean that companies are legally bound to supply it. Whether its a wise move on the part of the studios to withhold content is another issue, but its still their decision to make regardless of how stupid it may seem.
minimalist @ May 19th 2009 10:24PM
Netflix streaming was like a shiny new toy when I first got it.
Then I realized that my queue is full of a bunch of crap that I would have never bothered to watch on DVD n the first place. Browsing the watch now collection is like rummaging through a fire sale bin. Instead of coming home with one item you really wanted you wind up with a grocery bag full of stuff you bought just because it was there.
A little of that goes a long way for me. Just give me the movies already.
Brian @ May 20th 2009 12:46AM
I have to agree with him 100%. I only am still actually with Netflix because of the Watch Now. Otherwise I would have left awhile ago. Now they just need to get it to work in Windows 7.
Aaron @ May 20th 2009 10:27AM
I think he's missed the point that the majority of Apple's digital download offerings (audio, video, iPhone software) are tools to sell hardware. I think it's pretty much proven across the board over time that the iTunes Store on the whole does not generate profits - it runs itself and sells hardware.
Zach @ May 20th 2009 10:46AM
I would definitely love more selections of course, but there is plenttttty of good stuff on there! Starz Play rocks and I hope they get more stuff like that.
cc82 @ May 20th 2009 11:38AM
The selection of tv shows is excellent on watch instantly... I watched the first 2 seasons of 30 rock (not available on Hulu), and am planning on starting Weeds soon.
Also, it's a good source of older movies that you wouldn't otherwise get around to watching.
Rob @ May 20th 2009 1:14PM
My big problem with Watch Instantly is that none of the offerings seem to be in HD (at least, that's what i concluded last night after browsing through the offerings last night—I didn't see any labeled "high definition").
Ordeith @ May 20th 2009 1:55PM
HD requires an Xbox 360
gamedude360 @ May 20th 2009 3:20PM
or the bluray players that have netflix, or the roku player, all do hd