Comment by Cherian_Abraham | Hacker News Reader

Comment by Cherian_Abraham | Hacker News Reader

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Cherian_Abraham

Does anyone share my opinion that Netflix should have taken this opportunity to clarify as to why these price hikes are inevitable, due to the sky high content licensing costs they themselves have to pay to the content providers to keep streaming possible. I didnt see any mention of this in their entire PR release and I think at least the community would have read that and not perceived this announcement as a "more money grab" and as Netflix doing what it has to, to keep offering the best content available for streaming.

I think it threw away that chance and left the door open to a lot of these "entitlement" type comments that harp about how Netflix used to charge $8 per month and can never ever change that. Ever.

I for one, plan to stay with Netflix and opt for the Streaming option as long as it makes sense. As for DVD/Bluray, I will go to my neighborhood Redbox.

Blockbuster? You, I havent yet gotten over the $4.99 rental fee, so you stay in the shit list for a little while longer.

You sure this is a licensing thing? Maybe they are just putting spin on it, but it sounds like they are saying they were taking a loss on the DVD side of things (or just making minimal profit) in anticipation of DVD's going away, and have discovered DVD's aren't going away as fast as they planned.

I mean, really, post is something like $0.40 these days. Unless a postal service gives them a price break, the $2 DVD fee is entirely consumed by the cost of mailing you (and you sending back) 2.5 DVD's per month.

> and have discovered DVD's aren't going away as fast as they planned.

I think they are being dishonest about their "bafflement" over the persistence of DVDs. I think the real reason is the quality of their streaming collection. There a few gems but it is filled with a lot of sub-par, unwanted, titles. I for example, have watched all the streaming videos I want for a while. Now I am just waiting for the new ones to appear and watching real DVDs I get in the mail.

But to give them the benefit of the doubt, it would be interesting to see how they determined that streaming just isn't that popular. They could have judged by the total # of subscribers that have ever setup or watched a streaming title? The best way would be if they focused on titles offered both in streaming and non-streaming form, then investigated which form people actually choose.

Definitely agree that it's easy to burn through the good streaming material and hit a roadblock where it's only worth checking news additions. I think in addition to that, there are certain people that still go online on Sunday/Monday to order a physical DVD for the next weekend: namely my parents.

I got a Roku for them a few years ago to make it easier for them to stream. Last time I was there I noticed it was gone. When I asked about it they said that once they got a new TV they didn't really want to set it up and gave it to my sister (I didn't take any offense, and at least it's being used now).

I actually enjoyed it since it was a good reminder of how everyone has a threshold for the new/innovative/convenient vs. the familiar/comfortable.

This doesn't change the crux of your comment, but the post office does give them a price break; in fact it gives everyone a price break, all you have to do is sort your mail by zip code.

The way it works is if you send enough mail to the same zip code, then you pay a certain discount (a few cents per mail piece) if you package all of that mail together. The amount of the discount varies depending on if you sort by 5 digit zip code, or just 3 digit zip code prefix.

Actually, there have been some serious issues with NetFlix mail causing problems for the USPS.

http://marketplace.publicradio.org/display/web/2007/11/30/ne...

This is a bit outdated, but I couldn't find anything that indicates this problem has been fixed (if anyone is aware of that, please let me know).

Is it possible they're contractually obligated not to discuss licensing specifics with the public?

Yes. Their contract could specify that. They could also specifically state which titles can be streamed and which can't ( I think that is actually the case, that is why their streaming selection is not as good ).

I keep seeing Redbox mentioned. Financially, it's a rational decision to split consumption between Netflix and Redbox. But I believe that most of the appeal in Netflix is the convenience of getting the movies at home, without having to go outside. It's 87F here in NY right now -- do I REALLY want to leave my AC'ed room and go get a movie? Probably not. Disclosure: I'm a VERY early adopter of Netflix streaming, first through the browser and then through a bluray player I purchased 3 years ago.

The appeal is in the long tail. Most discs I get from Netflix can't be found at a Redbox.

The streaming prices didn't change, so this isn't a licensing issue.

http://money.cnn.com/2011/07/08/technology/netflix_starz_con...

"Netflix has another year or two on most of these contracts, and then the game completely changes," says Michael Pachter, analyst at Wedbush Securities.

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

Michael Pachter is an analyst for a private equity firm. Google for some choice opinion and meta-analysis.

And for all we know, Wedbush is short on NFLX.

People have been parroting this guys opinion as if it's fact. It's worthwhile analysis, perhaps even correct, but they've got money in this game on one side or the other and without knowing which, this opinion is useless.

Your skepticism is well-reasoned and fair.

All I'm saying is, Netflix's actions today would seem to point to Pachter being correct.

Yes it did. It increased 4x for a large portion of their users (including me). My 12 bucks a month for 1 blu-ray and unlimited streaming is now 8 + 10. So if the cost of one blu-ray a month is 9.99, I was getting streaming for 2 bucks. Now it costs me 8.

You could look at it the other way and say that I was getting 1 blu-ray a month for 4 bucks and now it's costing me 10. But since Netflix historically has been about the DVDs, with the streaming as an addon (historically = before 2010) I think my first price comparison makes more sense.

No, but it could be netflix helping the acceleration of the DVD's demise. Also, I'm sure the additional monies made from those who still rent DVDs will be used to help support the ever increasing cost of streaming content.

Movies have already been disappearing from Netflix's streaming service, so I'm sure licensing issues are at least part of the reason for raising the prices.

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