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Businesses Entertainment

Netflix Pioneers Industry To Get Left in the Dust? 374

Posted by Zonk from the brave-little-tailor dept.
prostoalex writes "The New York Times profiles Netflix, the company that pioneered subscription-based DVD plans where a disc is sent via postal service and no late fee is charged. It describes the company from May 1998, when it originally launched the Web site as a DVD-by-mail rental service (with late fees). Interesting factoids: Netflix operates 30 centers around the country and 11% of San Francisco residents subscribe to the service. Turns out, the company is not really afraid of Blockbuster, Wal-mart and Amazon moving into their markets, but they do consider on-demand Internet-download services to be a threat to their business model."
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Netflix Pioneers Industry To Get Left in the Dust? More

Netflix Pioneers Industry To Get Left in the Dust?

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  • TiVo, Netflix, ... (Score:5, Funny)

    by Anonymous Coward on Tuesday February 22, 2005 @10:51PM (#11752292)
    Who is the third?! Deaths always come in threes.

    • Re:TiVo, Netflix, ... (Score:5, Funny)

      by Bricklets ( 703061 ) on Tuesday February 22, 2005 @11:00PM (#11752345)
      TiVo, Netflix, Who is the third?! Deaths always come in threes.

      Apple. They pioneered the personal computer industry but are now dying a slo.... oh wait
    • Apple, duh!
    • Who is the third?! Deaths always come in threes.

      Well, we have a few candidates: Hunter S. Thompson [axcessnews.com]?(Fear and Loathing in Las Vegas).

      Or Sandra Dee [monstersandcritics.com](also known as Gidget)

      Or Arthur Miller [peninsulaclarion.com] (Death of a Salesman, The Crucible)

      FORTRAN [acmqueue.com]?

      SCO [fool.com]?

      Delicious Delicacies [mozilla.org]?

      Spreadfirefox.com [spreadfirefox.com]?

      The company project manager [theonion.com]?
      • I must admit I laughed for quite a while seeing how, claiming a up and coming "death" for SpreadFirefox you linked to a page talking about how they had temporary downtime because they had to upgrade their servers because of overwhelming popularity.

        I can't think of a single company who wouldn't want to die that way!

  • Internet? (Score:5, Funny)

    by nuclear305 ( 674185 ) * on Tuesday February 22, 2005 @10:56PM (#11752328)
    "but they do consider on-demand Internet-download services to be a threat to their business model."

    In the US? Please. With current broadband conditions I'd probably have to wait longer than snailmail to get a DVD.

    • Re:Internet? (Score:3, Interesting)

      by timeOday ( 582209 )
      I know you were joking, but IMHO downloading movies is not that far off.

      I have been downloading episodes of "Lost" because the quality is quite a bit better than my (analog) cable TV. Yet the files are only about 350 MB in size. That translates to a little over 1 megabit per second. In practice, my internet connection (Comcast) doesn't seem to have any problem exceeding 1 megabit per second. (It is 3 or 4 mbps claimed).

      If the music industry is any indicator, fear of piracy will be a bigger impedimen

      • Re:Internet? (Score:5, Interesting)

        by nuclear305 ( 674185 ) * on Tuesday February 22, 2005 @11:28PM (#11752498)
        " I know you were joking, but IMHO downloading movies is not that far off.

        I have been downloading episodes of "Lost" because the quality is quite a bit better than my (analog) cable TV. Yet the files are only about 350 MB in size. That translates to a little over 1 megabit per second. In practice, my internet connection (Comcast) doesn't seem to have any problem exceeding 1 megabit per second. (It is 3 or 4 mbps claimed)."

        Actually I was very serious. Who wants to watch a 750mb xvid movie on a 52" HDTV? I would expect to be downloading a near 1:1 DVD quality movie--which is typically 4.6-8.7GB.

        Now, I could probably easily download a full dvd within a matter of hours on my connection--but not everyone has the luxury of bandwidth and not restricted by transfer caps.

        How would these be distributed? I'd suspect a direct system such as FTP would be expensive considering most bandwidth at the minimum is $30/mbit when purchased in mass quantities (read: 100mbit->GigE) Bittorrent? Right...I love bittorrent as much as the next person but truthfully I rarely max out my line downloading something from bittorrent and I still find FTP faster when downloading linux iso's (some in DVD format...) Not to mention the fact that your average user will not be happy having to pay for a service and then sacrifice upstream bandwidth to feed a service like bittorrent.

        I would like to have a movie at the click of a button too...but it's not going to happen until the network infrastructure can handle the bandwidth requires, when the costs are affordable to users. And, I'll say it again--compressed video isn't going to fly.

        • Re:Internet? (Score:3, Interesting)

          by Shadow99_1 ( 86250 )
          Maybe you need to take a look at more Xvid and Divx converted content... Because most of that stuff in those DVD's is fluff (unless you need six audio tracks in 5.1+ surround, the extra 'content', etc which frankly I don't see a need for). Taking it down to a singlw AC3 audio track and going with high quality mpeg4 in either regular or widescreen nets about 300-500 MB per 30-40 minutes (it just happens to be most of what I download in that format are 30-40 minutes). You dont' loose anythign with those in my
    • Really? At 3-5mbit/s, you could get movie in 1-0.5x realtime. Most large broadband ISPs (Cox, Charter, etc) are at least 3mbps, so you can download 1 or 2 movies per night. Secuity is the biggest issue.

  • My biggest competition is time... (Score:4, Interesting)

    by NotQuiteReal ( 608241 ) on Tuesday February 22, 2005 @10:58PM (#11752334) Journal
    ... an the ability to think that $xx/month for any subscription is too much, if it is more than I have time to use it.

    Just wait until you have kids, if you don't feel this truth now.

    When I can walk by the bargain rack at Circuit City and pick up something I might like to see (again) like Zardoz for $6.99 it hardly makes sense not to own it. Or some deals at Costco.

    If I pick up a few of these deals, here and there, I start to have a backlog of stuff to watch, and never feel the need to commit to subscriptions or pay full-fare for something "new" and "hot".

    But that's just me. I am a cheap bastard saving for retirement and helping my kids thru college, but still trying to have a few toys...

    • I like Netflix because I can rent all kinds of things without feeling like paying for it directly. Will it suck? Doesn't matter because I don't feel like I wasted any money as I send it back to its home, only to be replaced by something else.

      Yes, it lacks the impusiveness that the rental store or bargan rack has, but I think that's a good thing. I'm just a poor college student and I should really be doing homework or something while I wait for a movie I really want to watch to arrive. A fixed amount of mon
      • I agree - for you, $18 (NetFlix) a month is probably a good deal. You only need to watch 4 or 5 DVD's a month before it is a good deal vs rentals.

        My point was, for some of us, finding time to watch 4 or 5 movies a month is hard to do, so If I rent a "current" movie, and buy a couple of bargains, I am better off - I see all that I can see anyhow, plus I end up owning the media for a couple of them.

  • Canadians! (Score:5, Informative)

    by Anonymous Coward on Tuesday February 22, 2005 @10:59PM (#11752336)
    Zip.ca is basically a Canadian version of Netflix. I'm really enjoying my subscription.

  • MPAA's Move (Score:5, Interesting)

    by TGK ( 262438 ) on Tuesday February 22, 2005 @10:59PM (#11752338) Homepage Journal
    So the question then becomes, what will the MPAA do? Netflix is probably right, as long as they run a open ended service w/out late fees, they're set. Blockbuster is still tied to a brick and morter establishment that prevents them from really running Netflix into the ground, Amazon and Walmart while in possession of huge amounts of $$$ aren't first to market on this.

    Fundamentaly, when someone thinks of mail delivered DVDs they think netflix.

    They're right, download on demand movies are the only real threat they face, and that decision remains up to the MPAA. A legal download option stands to one-up netflix simply because it removes the need for postage.

    Of course, there is still the bandwidth/time/storage problem to contend with, but time should solve those for any theoretical on demand download site.

    • A legal download option stands to one-up netflix simply because it removes the need for postage.

      Also the time to get the movie would be shorter. One of the problems with netflix is the scenario: "now what movie should we watch tonight?"

      • Re:MPAA's Move (Score:2, Informative)

        by crayz ( 1056 )
        Best way to do Netflix(or any of the "x movies at a time" services) is get the movie, immediately rip to a hard drive, and send it back. From there you can burn, play directly, rip to DivX, or whatever suits you. Lets you go through tons of movies a month and always have some "in the queue" to be watched
    • If Netflix has smart leadership, they'll be trying to kill their own business by being the first ones selling/renting movies online legally.

      If that's the case, the real threat is the MPAA waiting until the practice is common before allowing legal purchases.
    • They're right, download on demand movies are the only real threat they face, and that decision remains up to the MPAA.

      Really? I download movies all the time onto my cable box. They're $4.99 for new movies and $2.99 for older ones. There's just not a huge selection and I only have 24 hours viewing period. When HBO on Demand is factored in (which is free with my HBO subscription) I think it's pretty good.

  • Netflix vs Blockbuster and Walmart (Score:5, Informative)

    by crazyprogrammer ( 412543 ) on Tuesday February 22, 2005 @10:59PM (#11752342) Homepage
    I work as a mail carrier and I see a lot more netflix dvds than blockbuster or walmart dvd rentals. In fact I didn't even know walmart had dvd rentals until I delivered some to a house.

    Something I've noticed about netflix is that they always send dvds in groups of 3, where blockbuster and walmart might send one.

    • Re:Netflix vs Blockbuster and Walmart (Score:5, Funny)

      by michaelhood ( 667393 ) on Wednesday February 23, 2005 @12:21AM (#11752764)
      by crazyprogrammer (412543)..

      I work as a mail carrier

      "Actually I make more money selling magazines than I ever did at Initrode!"
    • So, how big is your DVD collection? I'm convinced that those Netflix DVDs that go missing wind up in some postal employee's collection... :-) Seriously though, sure I've had a bill or two go missing, but Netflix DVDs... a couple dozen have disappeared into the void over the years.

      Larry

  • Impact of Netflix seen in Blockbuster (Score:4, Interesting)

    by Staplerh ( 806722 ) on Tuesday February 22, 2005 @11:00PM (#11752346) Homepage
    While Netflix may feel that on-demand Internet-download services are a threat to their business model, it is truly signifigant that Blockbuster viewed Netflix as a threat to their physical-store business model.

    I believe the rise of Netflix was instrumental in their adopting their 'no-late-fees' policy (I know some exceptions apply), and this was mentioned by many pundits around the time of Blockbuster's move.

    Blockbuster's move and the related coverage for Netflix/zip.ca introduced a lot of people to the whole industry - the people that wondered why Blockbuster would do such a move. Great P.R. for Netflix and zip.ca.
    • Netflix *is* a threat to Bluckbuster, Hollywood, and other video rental chains.

      My wife is a perfect example. She's a movie junkie who was once a major renter from video stores and is now a total Netflix convert.

      The key to her Netflix loyalty is selection: While she can and does get major Hollywood releases through Netflix, at least 1/2 of her Netflix orders are for quirky films she might not otherwise see. The Netflix recommendation software also rates high with her; it's suggested many movies she wouldn'
    • They only allow you an "extra day or two".

      To quote their difficult to link to FAQ [custhelp.com]: "If you still have a movie or game seven (7) days after the due date shown on your receipt, we will convert your rental to a sale. The movie or game will be sold to you at the selling price in effect at the time of rental, which is either the retail price, or, when available, at the previously-rented selling price, less the initial rental fee you paid."

      I'll stick with NetFlix, Thank you.

  • Could it be? (Score:4, Funny)

    by porcupine8 ( 816071 ) on Tuesday February 22, 2005 @11:00PM (#11752348) Journal
    Amazon is joining the game? Maybe we'll FINALLY get a company doing this that's willing to rent out porn! Woohoo! They'll leave the others in the dust in no time.

  • Pre-emptive Strike (Score:2, Interesting)

    by Anonymous Coward
    If they are afraid of the online download distribution system (and they should be), why not pioneer it?

    I used to be a member of BMG [bmgmusic.com] but left after i discovered allofmp3 [allofmp3.com].
    • At the end of the article he basically implies that that's their plan - it talks about how they're constantly refining their website design and hope current customers will come to them later for video-on-demand.
    • Well.. MPAA needs to approve it.. Need to say more?
      • no they don't, many people sign up for netflix to get rare anime and stuff like that. a download subscription service which licensed their own anime from japan and licensed overseas TV and movies could do quite well, especially since web based services are much better at scaling down overhead costs thus reducing the number of required customers to stay in business.
  • "Netflix Pioneers Industry To Get Left in the Dust?"

    W... w... what? I can't even parse the grammar there. What does that mean? Who's getting left in the dust... Netflix? Industry? Pioneers? Typos in stories are one thing, but at least try to have the story titles make sense, okay?

  • A good Netflix alternative... (Score:5, Informative)

    by Avoid_F8 ( 614044 ) on Tuesday February 22, 2005 @11:05PM (#11752373)
    is GreenCine [greencine.com]. It has an enormous selection and actual customer support. It's not one of the huge corporations like Blockbuster or Amazon, but rather like your friendly local rental shop.

    I've found that Netflix "throttles" my rentals after a period when I rent too many movies for them to make a profit. They will delay shipments and change the wait status on your queue to absurd amounts of time. I'm led to believe that this practice will become even more common with the new price drop. This is, of course, against their terms of service, but it's extremely difficult to prove - the USPS bears much of the blame. Couple this with the nonexistant customer service, and the frequent movie renter is definitely at a disadvantage.

    Of course, if you only rent two or three movies a month, then Netflix is fine. But for those who really like film, I'd highly recommend supporting GreenCine.
    • but rather like your friendly local rental shop.

      Sorry, but I haven't seen a 'friendly local rental shop' in years ... the last one I remember was about 7 years ago, and it lasted maybe 3 months before going under.
    • I can't fathom how many movies you must rent for this to happen. I get upwards of 15 discs a month from them and have never seen any unusual delays.

  • Pioneers get the arrows... (Score:5, Funny)

    by mr_majestyk ( 671595 ) on Tuesday February 22, 2005 @11:07PM (#11752377)
    ...and settlers get the land.

  • Blockbuster's Coupons Are Great (Score:4, Interesting)

    by TheBashar ( 13543 ) on Tuesday February 22, 2005 @11:08PM (#11752380)
    I use blockbuster's online DVD rental service. Originally I was attracted by the cheaper price and the ability to rent a couple new releases in the stores every month. Recently though, I've found I prefer to use my two coupons a month to rent games. The game rentals are more expensive (but free with the coupon) and with Blockbusters new almost No Late Fees policy, I can basically have two two-week game rentals. It's cool to have almost a month to tackle a longish RPG for free with my online DVDs.
  • Of course, no /. discussion of Netflix could be complete without revisiting how Netflix discriminates against regular users by retarding delivery of their discs [slashdot.org] in favour of immediate availability for new members...

  • Trailblazing can be their advantage or their death (Score:3, Insightful)

    by chia_monkey ( 593501 ) on Tuesday February 22, 2005 @11:23PM (#11752479) Journal
    Depending on how they deal with this, Netflix could be THE de facto standard of DVD rentals...or they could be the ones that started the industry and then died out as others perfect their idea. The part that concerns me is how " the company is not really afraid of Blockbuster, Wal-mart and Amazon moving into their markets...". That almost sounds like the Apple of old...thinking you have a superior product and not fearing your competition can kill. If they take their competition seriously and strive to maintain their market share while improving their service before the competitors have a chance to catch up...that's when being the pioneer can pay off.

    • "the company is not really afraid of Blockbuster, Wal-mart and Amazon moving into their markets...".

      Blockbuster may have the new releases in quantity but don't seem to have a lot in variety. Variety may well be the edge that netflix has. A similar company, Webflix in Australia seems to have a very wide range instead of going for multiple copies of the same disk like Blockbuster does. I mainly joined up because of their large anime collection - they seem to know their market - even putting a banner ad on

  • You should know... (Score:3, Informative)

    by Anonymous Coward on Tuesday February 22, 2005 @11:30PM (#11752510)
    factoid means a piece of information that is repeated so often by so many that it is believed to be true, not a cute, interesting baby fact.

    From dictionary.com: The -oid suffix normally imparts the meaning "resembling, having the appearance of" to the words it attaches to. Thus the anthropoid apes are the apes that are most like humans (from Greek anthropos, "human being"). In some words -oid has a slightly extended meaning"having characteristics of, but not the same as," as in humanoid, a being that has human characteristics but is not really human.

    It's pretty ironic that the very definition of factoid has become a factoid itself.
  • ...still trying to parse that headline? Maybe a comma and the word "Only" could help? In which case... this is news? Pioneers rarely survive, let alone thrive. It takes someone outlandish to show that a new market exists somewhere, but they ususally aren't *that* great at business, so the giants swivel their heads and say "oh yeah, there *is* a market there" and attack with with economies of scale, experienced marketers, etc.

  • I hope Netflix prevails (Score:3, Interesting)

    by bat'ka makhno ( 207538 ) on Tuesday February 22, 2005 @11:33PM (#11752526)
    Blockbuster doesn't carry NC17 movies. Classics like Bad Lieutenant get chopped down to an R rating.

    Plus the search system on their site sucks. But that, unlike a patronizingly moralistic corporate attitude, can be remedied, I presume.

  • Yes, well, welcome to business (Score:5, Insightful)

    by afabbro ( 33948 ) on Tuesday February 22, 2005 @11:36PM (#11752538) Homepage
    They should fear competition, mainly because their service is very easily copied. There is little to differentiate them from competitors.

    Seriously: Netflix ships movies for a flat monthly fee. So does Blockbuster and companies X, Y, and Z. What makes it better? Nothing? Well, then we compete on price and margins go out the window.

    It's basic business 101: if you have a strong differentiator (my product is better and no one else can sell it), you can charge more and make money. If you can't, you wind up in a commodity market and you make a lot less...or get trampled by a larger competitor, go through a consolidation wave, etc.

    A good example is Tivo. First to market. Good product. Not really anything unique or hard to copy. Now facing stiff competition.

    Yes, good customer service should matter, but honestly in these kinds of businesses it's really a self-service kind of deal. Sure if they ship you Patch Adams III when you were waiting for Back Door Housewives Vol 14 you will call up and complain but you're not building a real relationship here.

    • Seriously: Netflix ships movies for a flat monthly fee. So does Blockbuster and companies X, Y, and Z. What makes it better? Nothing?

      How about the fact that Blockbuster seems to lose movies all the time? We had the free blockbuster 3 week trial. A week after we mailed back our movies we had to go to the site and click "I mailed it in". They mailed out new ones, only to have those get lost in the mail as well.

      We cancelled our blockbuster subscription and switched to Netflix (blockbuster obviously has

  • Netflix Pioneers Industry To Get Left in the Dust? (Score:3, Insightful)

    by alphakappa ( 687189 ) on Tuesday February 22, 2005 @11:36PM (#11752546) Homepage
    Not to be a troll, but that title has nothing to do with the article summary...

  • As a pre-emptive comment.. (Score:3, Informative)

    by jvagner ( 104817 ) on Tuesday February 22, 2005 @11:59PM (#11752656)
    ..I run a mail-order business and the variability of shipments between two static addresses is huge. I'm seeing a lot of complaints about Netflix "holding" movies, and though I've been a mostly happy member for 2 years, I don't think they're doing this.

    More importantly, I think they need to increase manageability and sorting features on their website. The fact that you can't more easily manage new releases, sort by release date, etc., frustrates me.
  • the reason i have netflix besides anybody is they have a very large collection of documentaries. Seriously, that is a very real advantage (atleast for me)....
  • I watch movies for free by using our local library (Washington, King County library system). One less monthly bill, yaw!
  • there may be other factors that impact the commercial success of netflix, but video on demand is not likely to be one of them. many vod tests, in this country and england, have failed for lack of consumer support. the vod model of searching titles is totally unsatisfactory to the consumer pattern of search and shop. the vod model is a tree structure, a binary search across categories and sub categories. netflix has done an interesting job of pioneering a non hierarchical recommendation process now avail

  • I rent from both, for now... (Score:4, Insightful)

    by chipset ( 639011 ) on Wednesday February 23, 2005 @12:17AM (#11752741) Homepage
    I have been with NetFlix for about a year. I have enjoyed the service and find the website easy to use. I am a tab browsing addict and open a ton of pages at once. Browsing one page at a time is too slow, even over broadband. So, the Netflix site rules for ease of navigation.

    I return movies the day after I receive them, most of the time. A few months ago, I decided to try BlockBuster. The net service is a little cheaper and I can also get two instore rentals a month. The big advantage is the games.

    So, I am finally catching up on movies and I need to decide which service to keep. Here's the kicker: Both places have service centers in Denver. So, my movies go to Denver no matter what. However, BlockBuster's service is constantly faster. They claim the post office notifies them of which movies are sent for return and cross ship. This gives me a couple more rental periods each month.

    For example, after Christmas, I sent 6 movies back to NFLX and BB on the same day. All three BB movies arrived before the first two from NFLX. What gives?

    So, for me, after I receive my last two movies in my queue, I am cancelling the NFLX account. However, I do wish BlockBuster.com was easier to navigate...

    I root for the underdog, but I am also a capitalist. Therefore, I go with the cheaper service that gets the movies to me fastest. And on both accounts, it is currently BlockBuster.

    just my two cents.
  • Amazon doesn't have quite the same idea as netflix, they have a few limits installed (6 per month etc) and so netflix does seem to have the customer happy approach. I have been itching to sign up for netflix or amazon for AAAAAAAAGES but where I recently moved to I cannot. Which sucks.

    Now, remember what you bought a couple years/months ago? yep, a DVD player. Complete with menus, extras, frame advance, remote control, sofa, favourite cushion.

    Do I want to watch movies on my office chair? )I am getting an R

  • Start with a smarter shipping system (Score:4, Interesting)

    by UserChrisCanter4 ( 464072 ) on Wednesday February 23, 2005 @12:42AM (#11752850)
    While paying for DVDs takes some cash, Netflix's largest expenditure is shipping costs, IIRC.

    A mail carrier further up mentioned that Netflix DVDs tend to be delivered in sets of three. There's a pretty easy explanation for this: Netflix processes on Monday through Friday. The mail service ships Monday through Saturday. There are probably more people watching on the weekend then the week, so the likelihood of a collection of DVDs being mailed back on Monday is probably higher. Additionally, assuming you mail out to them and your DVD arrives on a Friday or Saturday, your chances of that DVD being processed on a Monday are fairly high, which increases the chances of that being grouped with another movie that made it to their center on Monday.

    The point in all of this is to simply explain why the discs arrive in triplicate so frequently. Given this, why doesn't Netflix have some sort of slightly larger envelope that they stuff with return envelopes and discs? It would seem to me that sending that bigger envelope (it only needs to be a little bigger, so no postage increase) with two or three DVDs for the same postage would cut costs tremendously.

  • Comment removed (Score:3, Interesting)

    by account_deleted ( 4530225 ) on Wednesday February 23, 2005 @12:55AM (#11752899)
    Comment removed based on user account deletion

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