The Netflix Bull And Bear Debate Continues [View article]
Great analysis. While I'm long, I'm not convinced that the domestic consumer value proposition is as clear for the rest of the year. While you can characterize the Starz termination as titles being removed, it's the lack of new movies being added that is more of an issue. While there seems to be some fluidity in studio licensing, it's not clear that Netflix has many options to improve the flow of new titles that will attract new subscribers and keep existing ones. Of course, the TV content mitigates this somewhat.
The Netflix Bull And Bear Debate Continues [View article]
Extrapolating based on traffic, social signals and comparing to historical Canadian stats, as well as Virgin Media broadband data and UK competition commission reports.
The Netflix Bull And Bear Debate Continues [View article]
We may have already seen Split 2.0 in the form of Netflix separating their DVD and streaming search databases. Previously, when a streaming-only sub searched, they'd get both streaming and DVD results. Now they get just streaming results. There were several reasons to do this, the most pressing in my view was the negative customer sentiment that flowed from people perceiving that Netflix was playing a bait and switch game with them when a streaming title expired. You don't see those complaints anymore. Nonetheless, it makes it easier to offload the DVD business, but I don't think that was their objective. The idea is to migrate people to streaming, so why give those customers to someone else?
In terms of competition, I subscribe to the rising tide dictum. Every new option people get on their Xbox, PS3, Apple TV, Wii, Roku, iPads merely serves to drive more people away from the cable/sat box. And no service is more ubiquitous on these streaming devices than Netflix. It's the core -- the "basic cable" if you will -- of this new Internet-based method of viewing video entertainment.
I think this quarter is the one where the market's attention will begin to be drawn to the international opportunity. US streaming may be slowing, but not by much due to the rising tide. Besides, compared to cable channels, Netflix's growth is positively meteoric.
International is growing nicely, with Canada providing a good model for what to expect. Since launch in fall 2010, they've reached 10% to 15% of the market, won a pay 1 output deal from a major studio, and established themselves as a good alternative for kids entertainment. Latin America will be challenging, but the opportunity is huge. In three months, UK & Ireland is already where Canada was after nine months, and it's gaining steam ahead of NowTV's launch.
Definitely things are murky short-term, but longer term I wouldn't bet against the tide.
Netflix's CEO Is Trying To Use Net Neutrality To Deflect The Real Issue, Competition [View article]
If you want to "leak" something, you don't post it on a channel that has 123,000 subscribers, which is how many subscribe to Hastings' public Facebook posts. That's more people than will see their next earnings release.
Netflix's CEO Is Trying To Use Net Neutrality To Deflect The Real Issue, Competition [View article]
If almost no one goes over the caps anyway, why even have them? Why set them at 250GB and not 500GB? Why not throttle abusers instead of cap everyone?
Because caps encourage people to use xfinity and Comcast's sales people can tell customers that using Netflix, Hulu, MLB.com, NHL.com, Crackle.com, HBO Go etc counts against their caps, making them wary of using these OTT/authenticated services lest they end up being cut off or charged for overage.
Again, it has nothing to do with technology and everything to do with Comcast abusing its market position.
Netflix's CEO Is Trying To Use Net Neutrality To Deflect The Real Issue, Competition [View article]
Wasn't the point really that Comcast shouldn't treat channels I pay them for differently depending on whether they deliver them via their private network or the public bandwidth I'm also paying them for? If I watch Game of Thrones through the Xfinity app on Xbox, it doesn't count against my cap. But if I watch it through the HBO Go app, it does count against my cap. In other words, I pay them twice -- for access to HBO, and for the bandwidth to watch the show on HBO's own app. Technically, it would be a simple matter for Comcast to unmeter HBO Go since I've already paid them for it. So, yeah, in that sense they're not being neutral. They're favoring their own Xfinity app over the HBO Go app. While they may have their reasons for doing this, those reasons are not technology related.
Netflix: A Strong Buy, Despite Changing Market [View article]
Just to put the 1.4 million Netflix Canada customers in perspective, the combined total subscribers for HBOCanada/Movie Central/The Movie Network is 2.8 million. So, not bad after 18 months and an "embarrassingly slim library," eh?
Multiple Cable Operators Say They Are Not In Talks With Netflix To Bundle Services [View article]
Milkweed conveniently ignores the fact that Hastings was actually responding to a question put to him at the Morgan Stanley Technology, Media & Telecom Conference on Feb. 28th. In part, the question was, "is there a model that could work for you as part of a bundle from an MVPD?" It's at 21 minutes in the webcast if you'd like to check http://bit.ly/w8z0FS
Reuters is the source of the BS on this story, not the company's CEO. If he has any credibility, Milkweed will retract his baseless claims that "Hastings stooped to spreading this rumor." If he stooped to anything, it was to answer a valid question from investors seeking to develop their understanding of the company's business. When CEOs cease doing so, we all lose.
Multiple Cable Operators Say They Are Not In Talks With Netflix To Bundle Services [View article]
Yeah, Reuters overplayed it. As you've described it is how Reed Hastings framed this topic at the Morgan Stanley conference. He was clear that nothing was planned for the near term.
In the long run, though, it is logical that Netflix will be picked up by the MSOs, particularly as Netflix continues to acquire more Pay 1 movies and exclusive series.
The interesting question is, would you rather be an OTT like Netflix with its huge web footprint looking to pick up new subscribers via cable, or is it better to be an HBO, Starz or Showtime looking to add an OTT component?
Netflix Unlikely To Survive Competition From Deep-Pocketed Rivals [View article]
1. Netflix, which is spending $1 - $2 billion on content annually, is the one with the deep pockets here. That's why their US streaming service is far better than any other from the consumer's perspective. And it'll be getting even better because their content deals are increasingly exclusive. All the competing products merely amplify for consumers that US Netflix is best of breed.
2. This Comcast service is much less of a substitute or threat to Netflix than HBO Go is. And yet Netflix has thrived despite HBO Go, even though HBO Go is free to the very same customers who just add HBO to their Comcast bill for $10 per month.
3. Requiring consumers to buy a $45 package of stuff they don't want just so that they can get a $4.99 service they probably won't want (because the content is so dismal) is a non-starter in this era.
Netflix: Major Recapitalization Or Bankruptcy In 2013 [View article]
Your argument is stronger when you allow for some domestic sub growth. Clearly they've made a massive content spend bet based on subscriber growth projections that they themselves undermined with the pricing fiasco. Are the past two quarters' trends the new normal for Netflix, or was that a self-inflicted aberration and the company returns to the growth it was seeing before July 2011? Even if they do half as well as they were in the first half of 2011 (which is how they've guided thus far), a lot of companies would kill to have that kind of growth.
Netflix: Major Recapitalization Or Bankruptcy In 2013 [View article]
Thanks for the clarification. I understand your assumptions better around the DVD subs. Netflix keeps most of them as streaming subs, which management prefers because streaming is a more profitable business than mailing physical DVDs (let's not get into that debate, though).
On your streaming assumptions, I'm confused. You're looking at Q4, which included two months -- October and November -- of massive disruption due to the Q3 price increase), and you're assuming that's the new normal. Management has guided to 1.7 million net domestic streaming sub adds in Q1 2012, which you seem to suggest is not going to happen at all. They're also saying they'll end Q1 with up to 3 million international subs, but you're predicting just 2.5 million for 2012 and 3.5 million for 2013.
Every short case I've read is predicated on stagnant streaming growth, but it's never explained why streaming won't grow. Are you saying that the domestic streaming market is saturated and there's no scope for growth, even though you agree the SVOD market is big?
Or are you saying competition later in the year will crimp streaming sub growth? Which brings up this point about why others aren't competing against Netflix. They are, and it's one of the reasons shorts predict Netflix's streaming subs won't grow. So others do see an attractive market, just not one they might be able to enter given Netflix's dominance.
I can understand all the other elements of your argument, but I can't fathom the no-growth streaming subs assumption you're making.
Netflix: Major Recapitalization Or Bankruptcy In 2013 [View article]
Interesting analysis, for which I thank you. However, your subscriber projections seem to me totally out of touch with reality.
You're forecasting a huge drop in DVD subscribers and no rise in streaming subs. So where are those DVD consumers going to go if not to streaming? Do you expect that they'll go from a vast library of DVDs to a very limited selection at Redbox? Will they choose to spend 10x more for digital downloads from iTunes, Vudu or Amazon?
Don't you think it more likely that they will choose a SVOD service? And which of the available SVOD's will most go with? One with the best content selection, low price, excellent technology and broad device availability, or one of the others (which have yet to really emerge)?
Finally, how big is the addressable market for SVOD services? Is it the same size as the cable TV market where the starting cost is around $45 p/m (how many 20-somethings are buying that?), or could it be somewhat larger given that the cost is $8 or less?
The Netflix Bull And Bear Debate Continues [View article]
The Netflix Bull And Bear Debate Continues [View article]
The Netflix Bull And Bear Debate Continues [View article]
In terms of competition, I subscribe to the rising tide dictum. Every new option people get on their Xbox, PS3, Apple TV, Wii, Roku, iPads merely serves to drive more people away from the cable/sat box. And no service is more ubiquitous on these streaming devices than Netflix. It's the core -- the "basic cable" if you will -- of this new Internet-based method of viewing video entertainment.
I think this quarter is the one where the market's attention will begin to be drawn to the international opportunity. US streaming may be slowing, but not by much due to the rising tide. Besides, compared to cable channels, Netflix's growth is positively meteoric.
International is growing nicely, with Canada providing a good model for what to expect. Since launch in fall 2010, they've reached 10% to 15% of the market, won a pay 1 output deal from a major studio, and established themselves as a good alternative for kids entertainment. Latin America will be challenging, but the opportunity is huge. In three months, UK & Ireland is already where Canada was after nine months, and it's gaining steam ahead of NowTV's launch.
Definitely things are murky short-term, but longer term I wouldn't bet against the tide.
Netflix's CEO Is Trying To Use Net Neutrality To Deflect The Real Issue, Competition [View article]
Netflix's CEO Is Trying To Use Net Neutrality To Deflect The Real Issue, Competition [View article]
Because caps encourage people to use xfinity and Comcast's sales people can tell customers that using Netflix, Hulu, MLB.com, NHL.com, Crackle.com, HBO Go etc counts against their caps, making them wary of using these OTT/authenticated services lest they end up being cut off or charged for overage.
Again, it has nothing to do with technology and everything to do with Comcast abusing its market position.
Netflix's CEO Is Trying To Use Net Neutrality To Deflect The Real Issue, Competition [View article]
Netflix: A Strong Buy, Despite Changing Market [View article]
Netflix: A Strong Buy, Despite Changing Market [View article]
It just takes one wrong data point to discredit your thesis because it shows you've not done your homework.
August 2011: Netflix announced 1 millionth Canada customer.
Feb 2012: Canada subscribers hit 1.4 million
How do you get "decline" out of that math?
Online Brokerages See Spike In Web Traffic [View article]
Multiple Cable Operators Say They Are Not In Talks With Netflix To Bundle Services [View article]
Reuters is the source of the BS on this story, not the company's CEO. If he has any credibility, Milkweed will retract his baseless claims that "Hastings stooped to spreading this rumor." If he stooped to anything, it was to answer a valid question from investors seeking to develop their understanding of the company's business. When CEOs cease doing so, we all lose.
Multiple Cable Operators Say They Are Not In Talks With Netflix To Bundle Services [View article]
In the long run, though, it is logical that Netflix will be picked up by the MSOs, particularly as Netflix continues to acquire more Pay 1 movies and exclusive series.
The interesting question is, would you rather be an OTT like Netflix with its huge web footprint looking to pick up new subscribers via cable, or is it better to be an HBO, Starz or Showtime looking to add an OTT component?
Netflix Unlikely To Survive Competition From Deep-Pocketed Rivals [View article]
2. This Comcast service is much less of a substitute or threat to Netflix than HBO Go is. And yet Netflix has thrived despite HBO Go, even though HBO Go is free to the very same customers who just add HBO to their Comcast bill for $10 per month.
3. Requiring consumers to buy a $45 package of stuff they don't want just so that they can get a $4.99 service they probably won't want (because the content is so dismal) is a non-starter in this era.
Netflix: Major Recapitalization Or Bankruptcy In 2013 [View article]
Netflix: Major Recapitalization Or Bankruptcy In 2013 [View article]
On your streaming assumptions, I'm confused. You're looking at Q4, which included two months -- October and November -- of massive disruption due to the Q3 price increase), and you're assuming that's the new normal. Management has guided to 1.7 million net domestic streaming sub adds in Q1 2012, which you seem to suggest is not going to happen at all. They're also saying they'll end Q1 with up to 3 million international subs, but you're predicting just 2.5 million for 2012 and 3.5 million for 2013.
Every short case I've read is predicated on stagnant streaming growth, but it's never explained why streaming won't grow. Are you saying that the domestic streaming market is saturated and there's no scope for growth, even though you agree the SVOD market is big?
Or are you saying competition later in the year will crimp streaming sub growth? Which brings up this point about why others aren't competing against Netflix. They are, and it's one of the reasons shorts predict Netflix's streaming subs won't grow. So others do see an attractive market, just not one they might be able to enter given Netflix's dominance.
I can understand all the other elements of your argument, but I can't fathom the no-growth streaming subs assumption you're making.
Netflix: Major Recapitalization Or Bankruptcy In 2013 [View article]
You're forecasting a huge drop in DVD subscribers and no rise in streaming subs. So where are those DVD consumers going to go if not to streaming? Do you expect that they'll go from a vast library of DVDs to a very limited selection at Redbox? Will they choose to spend 10x more for digital downloads from iTunes, Vudu or Amazon?
Don't you think it more likely that they will choose a SVOD service? And which of the available SVOD's will most go with? One with the best content selection, low price, excellent technology and broad device availability, or one of the others (which have yet to really emerge)?
Finally, how big is the addressable market for SVOD services? Is it the same size as the cable TV market where the starting cost is around $45 p/m (how many 20-somethings are buying that?), or could it be somewhat larger given that the cost is $8 or less?
Your subscriber assumptions make no sense to me.