Just As Record Labels Resented Apple For Dragging Them Into The Internet Age, Movie Studios Resenting Netflix

from the amazing dept

Fri, Dec 3rd 2010 2:00pm — Mike Masnick

It's been about five years since we posted a story about how the record labels were pissed off at Steve Jobs and Apple for building such a successful online music store in iTunes. The whole thing sounded counterintuitive. Prior to iTunes, the record labels had tried a series of dreadfully awful online music stores with horrible selection, crippling limitations, and ridiculous prices. While iTunes still isn't the savior that some in the industry think, it did drag the industry forward. And... for that, the labels resented Apple. It was basically because Apple had become the gatekeeper -- the position they were used to holding.

These days, it sounds like the movie studios are going through the same sort of experience with Netflix. A recent story highlighted how the heads of major studios are getting upset about how successful Netflix has been with its online streaming offering. They literally are complaining that Netflix has been too good at getting customers to use online streaming:

"The problem is that Netflix is not the company we thought it was when we started doing these deals a few years ago. It has changed," said a studio executive who requested anonymity because the studio's discussions were confidential.

Of course, as was the case with the labels and Apple, what's really going on is that the studios want a bigger cut. It's a case of overvaluing the content, and undervaluing the service. What the studio bosses refuse to admit is that it's the service that is working. There have been many attempts at offering streaming or download movies, and none of them did well, because they all sucked. They had the same content (or, in some cases better content), but since the services were so bad, no one used them. That seems like pretty clear evidence that it's the service that made this a success -- but they can't bring themselves to admit that. So, instead, they rag on Netflix and talk about how "unfair" it is that Netflix isn't paying them enough. And these are the same execs who complain about customers having an "entitlement mentality"?

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Filed Under: internet, movies, resentment, streaming
Companies: netflix

38 Comments

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Anonymous Poster, 3 Dec 2010 @ 2:21pm

Welcome to the future, movie/TV studios.

Get used to it, or get busy digging your own graves next to the RIAA's.
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big al, 3 Dec 2010 @ 2:30pm

diggin your graves???
hell the graves are dug...the service read...just waiting for the "Guest of Honor"...i'll even help fill in the hole..lol
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Anonymous Coward, 3 Dec 2010 @ 2:36pm

And of course, the funny part is that if they had embraced it themselves, they'd be the ones raking all the cash and controlling the situation.
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Anonymous Coward, 3 Dec 2010 @ 2:38pm

http://www.google.com/finance?q=netflix

185.45

http://www.google.com/finance?q=walt+disney

37.59

Good luck, movie studios!
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Anonymous Coward, 3 Dec 2010 @ 2:40pm

Re:
http://www.google.com/finance?q=netflix

Mkt cap: 9.69B

http://www.google.com/finance?q=walt+disney

Mkt cap: 71.18B

You were saying?
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Anonymous Coward, 3 Dec 2010 @ 2:50pm

Re: Re:
I didn't know Netflix streamed Happy Meal toys?
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Zebra Williams, 3 Dec 2010 @ 3:03pm

Content is King
I wouldn't dismiss the movie studios... they have survived numerous advances in tech which they deemed threatening to their business. At the end of the day, Netflix needs the studios more than the studios need Netflix.
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johnny canada, 3 Dec 2010 @ 3:05pm

Next case given will be book publishers and ebooks.

Will they ever learn
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jjmsan (profile), 3 Dec 2010 @ 3:13pm

Re: Content is King
Which would seem to call into question the studios actual ability to determine what is a threat.
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Anonymous Coward, 3 Dec 2010 @ 3:13pm

The new studios:

Google Pictures
Microsoft Pictures
NetFlix Pictures

This whole Netflix thing will force tech giants to produce their own content, Microsoft is quietly doing just that, they bought a lot of small successes recently and are bankrolling others, they are entering the production pipeline because they know they will not get any deals out of the legacy players without any leverage, and if Netflix don't want to end up like blockbuster they too should start financing the production side of things, they are the new gatekeepers because they are the ones that understand how to make money on the internet(well maybe not Microsoft yet).

It may take some time, but the old school studios and record labels are going under unless they drastically reinvent themselves which seems unlikely.

Other players are ISP's that will try desperately to acquire content providers, but they probably will sink their newly bought "assets" trying to make them look like ISP's offers and not internet companies.
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Anonymous Coward, 3 Dec 2010 @ 3:32pm

So the 28 day delay wasn't good enough now they have to bitch about streaming too? I was happy to see Netflix lower my rate because I never got DVDs from them anyways. Now it's only $7.99 a month for the streaming only plan and you get all the movies currently showing on Starz which costs more than $8 a month on either satellite or cable. The ability to turn on my Xbox and stream tons of movies and TV shows instantly is well worth $8 a month.
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Fanic, 3 Dec 2010 @ 3:48pm

It would be Great if the big Movie Studios and Music Companies failed. Other then the HUGE loss of jobs I think people would spend less time on there butts watching TV and doing something more constructive.
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chris g, 3 Dec 2010 @ 3:50pm

Re: Re:
look look I can play that game too!!!

http://www.google.com/finance?q=netflix
EPS :2.65

http://www.google.com/finance?q=walt+disney
EPS 2.03

You were saying?
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average_joe (profile), 3 Dec 2010 @ 3:50pm

Re:
It's great. We just signed up Netflix and got a couple of Roku boxes to stream it to our TVs. I couldn't be more satisfied.
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Eugene (profile), 3 Dec 2010 @ 4:09pm

Re: Re: Re:
My turn!!!

http://www.google.com/finance?q=netflix
Gives me movies whenever I want

http://www.google.com/finance?q=walt+disney
Locks their movies in "vaults" until they decide I'm allowed to watch them

;D
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The Groove Tiger (profile), 3 Dec 2010 @ 4:11pm

Re: Re: Re:
http://cyborg.namedecoder.com/index.php?acronym=disney

D.I.S.N.E.Y.: Digital Individual Skilled in Nocturnal Exploration and Yelling

http://cyborg.namedecoder.com/index.php?acronym=netflix

N.E.T.F.L.I.X.: Networked Electronic Technician Fabricated for Logical Infiltration and Xenocide
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Eugene (profile), 3 Dec 2010 @ 4:13pm

Re: Content is King
That's true, but Netflix isn't exactly struggling here. Quite the opposite, it's wildly successful. And honestly, the movie studios suck at content distribution. They always have. So, what? They pull away from Netflix causing it to fail, and then try it on their own and also fail. That's a lose-lose situation if ever I've heard one.

They can grumble and whine all they want, but at the end of the day, Netflix is getting them tons of money that they don't have the means to get themselves.
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Anonymous Coward, 3 Dec 2010 @ 4:16pm

On a different note, have anyone played the latest games?

Wow! was my impression Gran Turismo 5 is cinematic and some are complaining it is to real.

Some of the actions games are so beautiful and full of life that I wonder why people what movies at all.

Top 5 games of 2010
http://www.youtube.com/watch?v=RQwPsDIoYyc
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Anonymous Coward, 3 Dec 2010 @ 4:17pm

Re: Re: Re: Re:
Even better:

http://www.boingboing.net/2010/12/03/walt-disney-world-ca.html

The Services Trade Council workers at Walt Disney World are still negotiating for a fair contract and a living wage. They've released a longer version of the "MouseTrapped" video they put out earlier this week. It details more the living conditions for long-time Walt Disney World castmembers, some of whom are forced to supplement their groceries with donations from church food-banks.``
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Alexthedogman (profile), 3 Dec 2010 @ 4:38pm

Netflix+Comast=the same thing
Don't shed too many tears for Netflix. They are all about making a profit and NOT profit-sharing. At the moment they are the only game in town, but as online distribution/delivery evolves, hopefully other more progressive companies will emerge to offer competition and fair returns to those who create content (and aren't named Sony, Warner, etc.)
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AW, 3 Dec 2010 @ 6:36pm

Re: Netflix+Comast=the same thing
Are you SERIOUS? No you can't be...because that would mean you're a moron. Netflix provides a far better service, that keeps even difficult customers like me happy. I've never once thought man I wish they would do X(aside from Linux streaming which they can't offer). They have always been ahead of every gripe I've had. They offer a good product at a fair price, Comcast gives you less for almost 3 times the cost...where is the comparison?
If you're looking for more money for content providers, there are plenty of other options out there, not the least of which is doing it yourself, don't blame Netflix because they are a business, the deal would be far worse for you going through Comcast.
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Anonymous Coward, 3 Dec 2010 @ 7:44pm

Re: Re: Netflix+Comast=the same thing
Name calling isn't necessary, but perhaps that is all you are capable of. He was just making a point.

I agree that Netflix sucks.
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PaulT (profile), 4 Dec 2010 @ 12:04am

Re: Content is King
"they have survived numerous advances in tech which they deemed threatening to their business"

...by first fighting them tooth and nail, and then trying to enforce artificial restrictions such as windowing until they finally realised what their customers really wanted.

Their record might be a little better than the RIAA's, but their past has hardly been enlightened.
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Anonymous Coward, 4 Dec 2010 @ 3:00am

You Snooze, You lose. Plain and simple.

Good Job Netflix

Happy Netflix Customer!
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The eejit (profile), 4 Dec 2010 @ 4:25am

Re: Netflix+Comast=the same thing
You mean, like MS offered to IBM back in the early 90's? Yeah,t hat's real pregession.

Go back into your hole.
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Jay (profile), 4 Dec 2010 @ 6:19am

Hulu
Hey, no story about Hulu's "success"?

Funny, I was just thinking that hey, the studios might do even more to make Hulu a crappy choice.
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Christopher Gizzi (profile), 4 Dec 2010 @ 10:20am

Netflix Gets It
I always thought Netflix really new how to build and grow a business. Having watched them from their early days (and as a customer myself), it seemed as if they knew they were the underdogs and worked hard to organically acquire customers. I got impatient with the lack of streaming knowing full well it probably wasn't their fault with the licensing issues and all. Fast forward a few years to today where I can get Netflix on my iPhone, iPad, & PS3.

But what impresses me now is how Netflix still operates with the customer in mind. From their algorithm contests to the multi-platform streaming options, they make sure they're the best at what they do. And just this morning, I read that Netflix spends a lot of time and money on interface design and custom programming to ensure a great product. They experiment and try new things.

The article is here: http://mashable.com/2010/12/03/netflix-html5/

The reason they succeed is because they try new things and have the user in mind.

The reason the labels fail is because they don't care about the user as much as they care about more ways to control.
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Anonymous Coward, 5 Dec 2010 @ 7:22am

It's the price. iTunes or Netflix didn't do it any better, they did it cheaper. They sell at a price that people feel they can afford. Make Netflix $14.99 and watch the subs desert ship. TV advertisers are starting to get it. Anything $10.00 or under is a much easier sell. Most people have 10 bucks for an impulse purchase.
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Anonymous Coward, 6 Dec 2010 @ 6:27am

Re: Re: Re: Netflix+Comast=the same thing
Do you now or have you ever actually used it?
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Christopher Gizzi (profile), 6 Dec 2010 @ 7:17am

Re:
I disagree. It's the service. Subscriptions are simple and easy. One price, one product. You choose your plan and that's it. Simplicity is part of the service.

Second, their customer service is fantastic. If they nickel and dimed their customers, they wouldn't be so successful.

Third, they designed their interface to be as simple and user friendly as possible. Their APIs let 3rd party developers create their own interface - which adds value to the service.

Fourth, the convenience; it's also a part of the service. Streaming is on demand - a service people love which adds value. But the queue is a fantastic way to "set and forget." Add movies as you can and they're sent in that order. There's little thinking involved. If a title is rented out, the next movie in line shows up. No fuss, no lines, no travel time, no store clerks to deal with, no stress. Easy. Valuable.

Netflix loves the subscription method because its constant money. Blockbuster has to kick, scream, and fight for someone to walk into their (expensive to maintain) stores. Target, Best Buy, and others - including Amazon - have to do the same to get buyers. They don't get a constant revenue stream from customers and its easy to see why Netflix has had an easier time of it. The whole business model is setup for success.

And as long as their service is the best, people will pay reasonable fees to them. And I would venture there are plenty of users who willingly pay more than $15 a month. BTW, does anyone know if Netflix discloses their average subscription dollar amount in their 10k filings? I'm sure it could be calculated if it isn't.
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Killer_Tofu (profile), 6 Dec 2010 @ 7:33am

Re:
It would be a lot more worth it if I could turn on subtitles all the time. Got pretty used to watching anime & foreign films and now even for the english movies I prefer subtitles be on. It has been years yet Netflix still will not give us the option.
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BigKeithO (profile), 6 Dec 2010 @ 9:36am

Re: Re: Re: Netflix+Comast=the same thing
Would simply pirating movies and TV shows be preferable to Netflix for everyone? Netflix gives people the option of going from a "pirate" to a paying customer. It is an on-demand solution for a reasonable price, exactly what the customers are looking for these days.

The only thing I can see Netflix sucking at is the streaming selection and that isn't their fault. Why do you agree that Netflix sucks?
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nasch (profile), 6 Dec 2010 @ 12:13pm

Re:
If it were all about the price, they wouldn't have any subscribers, because it's all available for free.
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nasch (profile), 6 Dec 2010 @ 12:15pm

Minor correction
"said a studio executive who requested anonymity because the studio's discussions were stupid."
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anothermike, 6 Dec 2010 @ 3:35pm

Re: Hulu
I love Hulu! They got their advertising right (could use a bit more variety). As opposed to the way NBC Universal, Syfy, et al work or rather don't. NBCU's providers are all on the AdBlockPlus blacklist. No I won't turn it off and I won't troubleshoot their site. Even the few Hulu ads that get an ABP block, Hulu fails around it and still delivers the content. Ads on Syfy? The whole stream fails, content and all.
Long live Hulu.
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anothermike, 6 Dec 2010 @ 3:41pm

Re:
News, books, music, movies... all publishing really. Overhead costs are plummeting to marginal while supply is approaching infinity. And they have no idea how to deal with that because their industry's history was defined by high start-up costs and capital expenses and limited supply. Now that it's reversed- high supply and limited expenses- they're lost.
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anothermike, 6 Dec 2010 @ 4:11pm

Re:
It can't be just about price. All of Netflix' competitors undercut them at some point and yet Netflix is the market leader in 'videos by mail' and now 'streaming movies' too.
Blockbuster should have squashed Netflix. Videos would come through the mail from your queue or you could pick up and drop off at any Blockbuster store for that extra convenience. And all at a lower price than Netflix. Their mistake was not seamlessly integrating the stores into the offering; there were too many glitches. Now Blockbuster is an also-ran in the entire video rental market.
Remember that Netflix had to build out their own distribution network. Sure they piggy-backed on the Post Office for branch and last mile but Netflix had to build out their own warehousing and routing structure. Wal-Mart entered their 900 pound gorilla in the ring with one of the largest and most efficient distribution networks in the world. What happened? No idea; probably a mix of too little and too late. Wal-Mart eventually ended up contracting out their rentals to Netflix before handing everything over and leaving the video rental market entirely.
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nasch (profile), 6 Dec 2010 @ 4:26pm

Re: Re:
Hang on, are you saying execution is more important than idea? ;-)
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