Netflix might kick up hi-def prices

[stratman]

Netflix's Chief Financial Officer Barry McCarthy has hinted that prices might go up for blu-ray rentals if on-going battles raises costs.

"If a winner emerges and we experience some margin compression, if a large numbers of subscribers rent in high-def, we'll weigh the options of increasing prices."

Margin compression? Hmmm, let's see if there's a winner (bluray), and if too many customers rent (bluray), we'll think about kicking up prices so our margin (profit) will skyrocket. In plain English, "we're going to stick it to you once the bluray format really takes off."

Speaking at an internet and telecom conference, Mr. Mc Carthy also said that internet downloading won't be a threat to DVD until prices drop and the content is accessible through multiple devices. DRM interoperability? For now that's almost improbable.

Netflix for it's part has seen subscriber growth flatten, and has been busy fending off competition from Amazon.com's internet downloading service UNBOX and Apple's iTunes, which started their movie download service last month. And don't forget Blockbuster's Total Access. Netflix has plans to begin offering movie downloads to Apple owners (Instant Watch) later this year.

 

[aberkowitz]

I see Netflix at the same point where Amazon was once Barnes & Noble seriously got into the online game and started compressing their margins. They had to make the decision as to whether or not they wanted to sell their business and get out, or to move away from being a pure "dot-com" business and make some serious investments in warehouses, distribution networks, and other infrastructure.

Quick Amazon story- In the early days of the company you used to have executives filling the orders at the end of each day- the place was totally run as an "all hands on deck" type of shop.

Netflix is running into the similar problem that almost all web based businesses do- commodity products have little to know margin, and once the rest of the world (e.g. existing brick & mortar competitors) catch up it is VERY hard to continue to make money. Netflix, like Amazon, has an advantage because they have a great physical distribution system. The driver of that business, once the thrill of online rentals went away, has been its distribution system. The issue there is that the only way to make money off of a distribution system is to have very high volume (like Amazon) of a wide variety of items and to be able to do it cheaply.... this is where Netflix differs.

I don't see Netflix being successful as an online movie streamer/download supplier because that's not what they do well. The amount of investment that will be needed to sustain that business over the next 5-10 years until A) Technology catches up from a broadband and storage perspective, and B) A sustainable segment of consumers view it as a true substitute is going to be very large and I don't see Netflix being able to support it.

If I'm the owner of Netflix, now is the BEST time to sell. I don't think the company will ever be worth more, from a business and a brand perspective, than it is right now- the state of the rest of the economy be damned.

 

[MUDSHARK]

Netflix's Chief Financial Officer Barry McCarthy has hinted that prices might go up for blu-ray rentals if on-going battles raises costs.

"If a winner emerges and we experience some margin compression, if a large numbers of subscribers rent in high-def, we'll weigh the options of increasing prices."

Margin compression? Hmmm, let's see if there's a winner (bluray), and if too many customers rent (bluray), we'll think about kicking up prices so our margin (profit) will skyrocket. In plain English, "we're going to stick it to you once the bluray format really takes off."

Speaking at an internet and telecom conference, Mr. Mc Carthy also said that internet downloading won't be a threat to DVD until prices drop and the content is accessible through multiple devices. DRM interoperability? For now that's almost improbable.

Netflix for it's part has seen subscriber growth flatten, and has been busy fending off competition from Amazon.com's internet downloading service UNBOX and Apple's iTunes, which started their movie download service last month. And don't forget Blockbuster's Total Access. Netflix has plans to begin offering movie downloads to Apple owners (Instant Watch) later this year.

The national slide-rule company announced today that calculators were not a threat until prices dropped, Integrated Circuits? For now impossible.

 

[rgriffin25]

Perhaps if they charge more there would be more copies available? I have put my nexflix account on hold for one reason.. Which is the lack of availability on the Blu-ray movies I want to see. It has gotten to the point either you time it just right and get a new release or you sit and wait a couple of months to see it.

 

[Alamar]

With the costs of BD & HD-DVD media these days it will be NetFlix or nothing for me. But if NetFlix raises their prices I'll have to sit out longer until prices come back in line ....

Every time I think about getting a hi-def player there's always some other fly-in-the-ointment ....

 

[Duffinator]

With the costs of BD & HD-DVD media these days it will be NetFlix or nothing for me. But if NetFlix raises their prices I'll have to sit out longer until prices come back in line ....

Every time I think about getting a hi-def player there's always some other fly-in-the-ointment ....

Not sure what you are waiting for, BD has won. BTW, Netflix has had BD and HD DVD's available for no additional charge for at least one year. If Netflix raises prices it will be a buck or two, which will bring their prices back up to what they were two years ago. If that's a deal killer for you I'd hate so see what $3.00 per gallon gas is doing to your budget!

 

[Alamar]

Not sure what you are waiting for, BD has won. BTW, Netflix has had BD and HD DVD's available for no additional charge for at least one year. If Netflix raises prices it will be a buck or two, which will bring their prices back up to what they were two years ago. If that's a deal killer for you I'd hate so see what $3.00 per gallon gas is doing to your budget!

What I'm waiting for is:

1. For prices of BD movies to fall dramatically. [40%+?]

2. For a BD 2.0 stand alone player that is on par with the PS3 in quality terms.

3. To find out how much NetFlix is going to gouge people [if they do at all]. While I would think they aren't going to do anything they could of course charge 5$-10$ extra per month which would defeat a lot of the purpose.

4. For the clear majority [>85%] of the movies that I'd like to see on BD.

*****************************************************

Right now I'd get much better bang-for-my buck by upgrading my substandard subwoofer, speakers, and receiver. Once I've got all those handled then I could either get into BD if the price penalty has disappeared othewise I'd probably be happier upgrading my display. After all that's done hopefully we still won't be looking at 400$+ BD players and 30$+ BD movies being the [non-sale] rule-of-thumb.

 

[Buckeye_Nut]

Not sure what you are waiting for, BD has won. BTW, Netflix has had BD and HD DVD's available for no additional charge for at least one year. If Netflix raises prices it will be a buck or two, which will bring their prices back up to what they were two years ago.

That's what I was thinking.....

I'd happily pay a little more for shorter wait lists on new releases.