Calm the ‘Flix down! It’s all gonna be alright.

netflix-rates-increaseSo yesterday, a scrappy little company called Netflix made a little announcement that caused a huge uproar.  They’d lost 800,000 of their 20+ million subscribers.

Who says America doesn’t make anything anymore?  This company has carved out a niche of making bonehead business moves.

While they clearly can’t PR their way out of a wet paper bag, I still don’t fully understand what all the uproar is about.  Yes their price structure changes suck if you still like doing the physical disc rental thing, and Qwikster will become the pejorative du jour for business model implosions for years to come.  But again I ask… what’s the alternative?  Where are the Netflix killers?  Who outdoes the bearers of the red envelopes?  I submit few, if any.

Firstly, there’s the disc-by-mail business.  Once innovative, it’s a dinosaur business by today’s standards.  Prices are only going to balloon when it leans on the crutch of the already deep-in-debt postal service.  There’s been one serious competitor in this arena, namely Blockbuster.  However I’ve always found service from Blockbuster By Mail to be extremely lacking.  Delivery is slow.  The website’s clunky.

The only saving grace when the service first started was the fact you could return discs to your local Blockbuster brick-and-mortar store.   (Hey, remember those?)  But they kept scaling back the number of times you could exchange in store.  They tweaked their model numerous times and no one said ‘boo.’  That’s also saying nothing of the fact that it’s not necessarily cheaper to get Blockbuster By Mail, especially if you don’t care about Blu-ray discs.

There’s also Redbox, which is barely a direct competitor to Netflix anyways.  The whole appeal of Netflix is I don’t have to get in my car and go somewhere to get a movie.  The price is decent.  The website and online reservation system is superb, but they suffer the same fate as Netflix in the dreaded 28-day waiting period for new movie discs.  That waiting period may now be changing to 60 days, so that the studios can give a competitive boost to direct sell-through and brick and mortar rental stores.  (Hey, remember those?)

Now let’s look at streaming.  Leaving Hulu Plus out of the equation as their movie library (save for Miramax and Criterion) is sorely lacking, who else does what Netflix does in the streaming space?  Blockbuster limped out a streaming service but locked it down to Dish Network subs.  (Doesn’t corporate synergy just suck sometimes?)  There’s VUDU, but despite Walmart’s takeover, they’re largely a non-starter.  Even retailers like Best Buy have streaming services like CinemaNow, but they’re not gaining traction at all.  Like VUDU, iTunes or Amazon Video On Demand, who wants to pay $4 or more to stream one movie, despite how new it is?

Amazon is getting close with its streaming service tied to Prime memberships, but these services all suffer one major problem — device support.  It probably won’t be long before my toaster starts streaming Netflix.  There’s literally dozens of devices that stream Netflix.  Apple products.  Android products.  Game consoles.  Blu-ray players and home theater systems.  HDTV’s.  Dozens of other devices like Roku and TiVo.  Hell, I’ve even seen an alarm clock that streams Netflix.  Throw a rock in your home and chances are you’ll hit something can play your Instant Queue.  Other competitors have some device support, but nowhere near the broad reach that Netflix has.

There’s also the programming.  Sure Netflix streaming doesn’t have everything.  They may not have new releases right away, but try getting Mad Men or The Walking Dead on Amazon Prime streaming or Hulu Plus. (Hulu Plus doesn’t even give you access to everything they stream on their website, which is a huge annoyance!)

They may shoot themselves in the foot weekly and they may be slowly bleeding subs, but I think a lot of the ire over Netflix’s pricing will slowly subside.  As a Netflix sub since the start, I’ve weathered my share of changes over the years, but on the whole cannot say too much bad about them.  Business models evolve.  Mistakes are made.  To forecast a swift implosion at this point seems a bit ridiculous though.  Whatever strides they’ve made to this point are surely forebearers of better things to come in the future.  I just hope they shake loose a few million from their programming fund and devote it to PR.  They sure could use it.

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