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Comment by Steko | Hacker News Reader

I don't think you get it.

Starz isn't turning it's back on the internet, Starz realizes the internet is where it's financial future lies and so it wants more money from the internet. And it's betting that it can take Netflix for more then Netflix wants to pony up today.

And maybe Netflix will pay a higher price to keep that content or maybe they can get by without it (see my link to Reed Hastings' comments). But even so this pattern is going to repeat over and over with every other media deal Netflix has as internet tv mainstreams and cash rich Amazon, Apple and friends bid up the price of net based content deals.

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If this is their plan I think they're smart to simply want more money from Netflix now that viewership has increased. However, this wasn't the impression I got from the Starz executive's quote. What I got was that they felt their internet streaming deal with Netflix was cannibalizing their cable business model. I agree with the original comment's guess that most of the people who cut the chord are not going back, defeating their plan to get these customers to subscribe to their cable channel.

I'm sure they have actual data that strongly points to Netflix cutting into their margins. They could have asked for more money, but that would probably mean longer agreements, pushing them out to 2015 or 2016, by which time I'm sure they'll want to have a more direct customer relationship.

Only a small fraction of Netflix subscribers are cord cutters. They will undoubtedly see a benefit (short term) of this move. Long term internet TV is going to be a lot like cable TV is today. There won't be aggregator services. Starz will have it's own "app" on all of these boxes that you subscribe to outside of Netflix. NBC will probably have their own as well. CBS will be one of the last holdouts, their audience is old enough that the internet is having a softer affect.

Us early adopters have had it really good for the last few years, surely you didn't think it was going to continue? Surely you didn't think you'd be getting a large and continually growing catalog of movies (many of which are fairly recent) for only $8 a month forever? Like it or not but businesses like Starz hold all of the cards.

They don't hold shit. If it isn't more convenient to use their service than it is to get the content for free, they lose. Netflix is there, but just barely.

It didn't sound like this was a negotiating tactic, they made a firm announcement without apparently talking to Netflix about it.

What they might be thinking is to start an online VoD service themselves, they could offer it as a bonus to cable subscribers as a way of enticing subscribers.

They probably saw what HBOGO was doing and got greedy. Only HBO has their own great content and IP in addition to movies. The smart companies like AMC are actually starting to make their own as well so they become a destination. I'd love to just subscribe to HBOGO for my $15 rather than cox so HBO has cable companies firmly in check.

Netflix, and even companies like STARZ, may have issue when internet TVs take over completely and all studios/channels can easily setup their own 'channel' to stream content rather than having to join services that have a foothold on consoles, devices and TVs currently. The middle man is getting worked out of many markets. Why wouldn't the movie companies that license to STARZ want to collect from all that content? STARZ may just have killed themselves off.

Hbo is owned by time warner, a cable company.

Time Warner and Time Warner Cable are now two independent companies. So, HBO isn't owned by a cable company, but they owe a major share of their revenues to the cable companies. HBO doesn't offer a stand alone internet service probably because they don't want to upset existing relationships with cable providers.

Netflix has more subscribers than the largest cable company and the content that Starz provides is available from multiple sources (other than the two or three shows that they make).

Yes, but they probably get a pittance per Netflix subscriber compared to cable. In their minds they're probably asking themselves why would anyone pay $15/mo for the Starz cable broadcast when they could pay $8 for Starz on demand via Netflix? The fact is Netflix needs Starz more than Starz needs Netflix. The Starz content dramatically improved the streaming library, and Starz obviously feels like it's at the expense of their cable market.

Maybe they are right. Maybe they are wrong. My opinion is that they have the stronger position. I think Starz content will be back on Netflix when either the timing is better for them or the get better terms from Netflix.

I have stated several times in the past that by the time Netflix has the selection that cable does it will cost about the same price. If people were upset by the recent price increases they should prepare themselves for the future.

Netflix without their ingenious DVD distribution mechanism is just a Starlight movie player on top of S3. Yes, that is a gross oversimplification, I don't see what's stopping somebody with deep pockets like Starz from coming along and building essentially the same thing. Why not cut out the middle-man?

Because unless those deep pockets actually release functioning players on Wii, PS3, XBox, iPad, OSX, Win 7, Samsung Blu-Ray players, then I wont be using their service. That's quite a barrier to entry. Not insurmountable, sure. Then they have to make sure I hear about it. Then get my credit card number. And you have to do all this in a recession when consumer sentiment is at an all time low. I'd love someone to do it, I just don't think its gonna happen.

In contrast there's itunes, where in theory I can watch movies that aren't on Netflix. But I don't. I'm not buying an apple TV when my TV is already overloaded with input. And because I can't watch it on my TV, I've never bothered to figure out how to do it on my Mac or my iPad. I have watched plenty of Netflix on my Mac though. Unfortunately, a new release movie for $9.99 is just not that much better than an old movie included in my monthly fee. $9.99 to rent a movie? Fuck. No.

Because people like us would go work for Netflix as developers because we know we'd be treated like first-class citizens. Starz? Who's leaving a job at Google to go work for Starz?

Hmm. I remember reading a lot of bad developer sentiment about the culture at Netflix. Any Netflix devs care to chime in?

It really is just like the "freedom and responsibility culture" slide deck at http://www.netflix.com/Jobs

That deck isn't just aspirational, it's how the company actually runs.

So the answer is that Netflix is not for everyone. High performers and those who can take smart risks tend to like it. Those who prefer lots of process or are more risk averse tend not to.

I'm the engineering lead on the Silverlight player at Netflix. Honestly, I love it when people underestimate the complexity of the player. To me, it means we're doing a good job. 3+ years of releasing every 2 weeks and still no settings dialog. It always just does the right thing.

Regarding S3, S3 is not a CDN.

To your point about disintermediation, it's a good question. A direct to consumer play by the content owners would cut out Starz as well as Netflix. The last time the studios did that, it didn't end so well: http://en.wikipedia.org/wiki/Paramount_Pictures#1941.E2.80.9....

I can think of a couple good reasons it wouldn't work out today, either. I'd predict that the business model of a content silo would be less profitable than the current system. Studios make more money when they have multiple distribution channels; distributing their own goods would give rise to conflicting incentives. Also, you need the DNA of a software company to compete in the streaming space. Studios are built to make movies; Netflix (and Amazon) are built to make software, and it's software that powers streaming. Even if that software is almost invisible.

How come all of your objections (as well as US v Paramount) haven't applied to online game developers as well? Making movies is one hell of a lot easier than developing modern PC/console games, and the game studios are having no qualms with the direct-to-consumer model. Companies like Valve and EA were game developers and publishers long before they started offering services like Steam and Origin.

Ultimately, the same Internet that will kill the cable companies will also kill Netflix. (I have more confidence in Netflix to reinvent itself when the time comes, of course, since you've already done it once.)

Valve and EA were software companies with experience delivering content over the internet before they started offering direct download services, though.

Sure, but the point is, his "DNA" argument is a complete non-starter. Game studios have to do a ridiculous number of things that have nothing to do with the core business of game design, like rendering, physics, networking, tool development, and so on. The same's true of a few movie studios who've led the way for the rest. Are we supposed to believe that a Pixar or a LucasArts or a James Cameron is somehow incapable of developing and deploying a simple networked Silverlight player?

I hope that Netflix's long term business model doesn't depend on the answer to that question being "No, that's not in their DNA."

I agree that each content provider developing their own digital distribution system would be inefficient and confusing to the consumer, who desires a simple, centralized menu and search function to locate and view content.

It's nice that so many websites offer some kind of streaming video, but the friction of moving from site to site, each with their own navigation and search functions of varying quality, seems like as much trouble to most consumers as getting up and walking across the room to change channels on their TV.

Netflix has done a good job in aggregating content, although I don't believe they have a format and business model that is sustainable into the next decade.

My comment about software DNA is not central to my point, so I take that back.

Regarding the game business, it's not a good comparison. Selling games is like the DVD business: games are produced at a fixed cost and sold at nearly zero marginal cost. This is true of games sold on disc as well as games sold online through Steam.

But this is not how the movie streaming business works. Content is licensed, not sold. It's licensed to a single buyer for a fixed window of time. After that, it's licensed to someone else. This is why HBO, AMC, and Netflix will never be showing the same movie at the same time.

This is a profit maximization strategy by the studios. I doubt that major studios would make more profit with a direct to consumer model, at least not with one that would replace the windows in which Netflix typically buys content. It could potentially work for new releases, though. I'll leave the exact reasons why as an exercise to the reader.

Yes, that is a gross oversimplification, I don't see what's stopping somebody with deep pockets like Starz from coming along and building essentially the same thing

Less space than a Nomad, no wireless. Lame.

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