Movie Studios May Be About To Learn That Netflix Has The Leverage

from the over-and-over-and-over-again dept

You know how movies studios keep making the same movie over and over and over again with just slight changes? It seems that the entertainment industry simply has a problem recognizing that doing the same thing repeatedly won't lead to different outcomes. In particular, the entertainment companies continue to think that because they own the content, that they somehow have leverage against the new generation of distributors -- missing out on the fact that it was always the distribution side of things that gave them the leverage, rather than the content itself. That is, they're overvaluing the content and undervaluing the services that make that content useful. That's why the record labels were unable to realize that they handed Apple tremendous power over digital music sales. It's why the record labels still don't seem to realize that they need YouTube more than YouTube needs them.

Now it's the movie studios' turn.

Jeff Nolan points out that the movie studios are apparently pissed off at Netflix, saying that they're trying to renegotiate deals on tougher terms. As Nolan points out, those studios may discover they have a lot less leverage than they think. If a studio pulls its movies from Netflix, those studios may find that it hurts them a lot more than it hurts Netflix, which has increasingly built a dominant position in the movie distribution space. Yet, of course, because these firms overvalue the content, they don't seem to be able to see this coming, despite all the foreshadowing...

Filed Under: leverage, movie studios
Companies: netflix

Oh Look, Another Set-top Box For Streaming Movies

from the heard-this-one-before,-I-think dept

One tech idea that simply won't go away is the set-top box for streaming movies. It's been tried plenty of times before (Netflix, Vudu, Akimbo, Moviebeam, and more) with little success, thanks to technical problems, poor content, bad business models, or some combination of all of them. Each iteration takes a slightly different tack, but the end result usually ends up the same: the dedicated set-top boxes go out with a whimper. Now, there's yet another one coming out, called ZillionTV, with its own take on things. It's the same basic idea: you hook the box up to your TV and your broadband connection, then use it to stream video content. The business model's a little different, though: it will be sold in partnership with ISPs, and users will be able to choose between pay-per-view content without ads, and ad-supported video, including both films and network TV shows. The usual bugbears seem to apply, including worries about the streaming quality and lack of a wide range of content. The ad-supported model, which will be based on targeting ads to users by tracking their viewing habits and other data, is interesting, though TiVo was playing around in a similar space a few years ago and their efforts seem to have gone quiet. What's a bit odd, though, is that the company says the box will cost $100, because "consumers didn't respond as well to free." That's puzzling -- especially if the company really hopes to make its money from advertising. In any case, we definitely won't hold our breath to see if ZillionTV can succeed where so many others have failed.

Filed Under: set-top box, streaming movies
Companies: akimbo, moviebeam, netflix, vudu, zilliontv

Ocean Tomo Patents Being Used To Shake Down Companies That Have Online Recommendations

from the ebay-for-patent-trolls dept

Ocean Tomo is a company that's been around for a few years, trying to establish itself as the auction house for patents. I've already made clear how troubling I believe its business model to be, but the company always tries to put a friendly face on it, claiming that it's not about aiding so-called "patent trolls" but actually reducing the problem of patent trolling. However, that (of course) isn't what's actually happening. A patent on personal recommendation systems ("if you bought x, you'll like y") was bought via Ocean Tomo by what seems likely to be a bunch of lawyers under the company name Quito (though, it's not entirely clear who's involved) and is now being used in a lawsuit against thirteen big internet companies that employ any type of rating system. The companies being sued are: Netflix, Amazon, Yahoo, RealNetworks, last.fm, Pandora Media, Slacker Inc., Veoh, Hulu, NBC Universal, CBS, News Corp., and Strands.

As you look through that list, you'll recognize that some have done significantly innovative work in taking the concept of an online recommendation system and actually making it useful. The simple idea of doing recommendations is pretty straightforward. Making it work well? Not so much. Hell, that's why Netflix is offering $1 million to anyone who can improve their recommendation engine by just 10%. The basic ideas expressed in the patent are not where the value in these recommendation systems lies. It's in the actual effort of figuring out how to make them work better. This patent has nothing to do with the actual success of a recommendation system, but the holders of it may now get a pay day just for holding the patent, thanks to Ocean Tomo's auctions. And, of course, this means that all of those companies that were actually innovating will, at the very least, now need to spend legal dollars defending against this massive innovation blocker.

Filed Under: patents, recommendations
Companies: amazon, cbs, hulu, last.fm, nbc universal, netflix, news corp., ocean tomo, pandora, quito, realnetworks, slacker, veoh, yahoo

Today's Ridiculous Lawsuit: Wal-Mart, Netflix Sued Over Conspiracy To Create A Monopoly

from the ugh dept

Way back in 2002, Wal-Mart decided to enter the online DVD rental business, launching an almost exact replica of Netflix. Of course, Wal-Mart quickly discovered what almost every other player in that marker discovered: just offering a competing service to Netflix isn't enough to get anyone to use it. Wal-Mart had a lot of difficulty signing up customers (and keeping them once they signed up). The whole project was going nowhere fast, and eventually, Wal-Mart decided that it was a waste of time to throw more money into a project that was pretty far removed from its main business, and decided to simply let Netflix take over its online DVD rental service. This was a reasonable business move.

However, nearly four years later, a lawsuit has been filed claiming that Netflix and Wal-Mart "conspired to create a monopoly" in the online video rental market, and as a result of that monopoly, Blockbuster raised its prices. Read that sentence again. Netflix and Wal-Mart are being accused of creating a monopoly -- and because of that monopoly another major player in the space raised its prices.

If there's another major player in the space, there is no monopoly.

Besides, the folks bringing the lawsuit are going to have to convince a judge that the relevant market is online DVD subscription services, rather than any kind of home movie viewing service (which includes store rentals, purchases, internet downloads, subscription services and more). This seems like a random bogus lawsuit targeted at a company with deep, deep pockets (Wal-Mart), rather than anything serious.

Filed Under: antitrust, dvd, monopoly, online rental
Companies: blockbuster, netflix, wal-mart

Hollywood Removing Hit Movies From Apple, Netflix

from the stupidity-knows-no-bounds dept

Some days you just wonder if entertainment execs wake up in the morning planning to shoot themselves in their collective foot. The latest display of entertainment exec short-sightedness is that the Hollywood Studios have apparently forced both the Apple iTunes store and Netflix's download store to remove certain movies just as they're getting close to being available for TV. As you probably already know, Hollywood makes a lot of money through a "windowing" system, where they release movies in different formats at different times: theaters, special locations (airplanes, hotels), DVD, cable and finally network TV. Of course, they're working on adding some more tiers to this as well, but apparently they convinced these online download stores that they need to kill certain movies as the timing reaches where the movies can appear on TV.

The studios' myopic reasoning is that TV broadcasters pay a lot of money for those rights, and they don't want to piss them off: "It wouldn't make any business sense to do it any other way," claiming that allowing the videos to be downloaded via these online stores would kill some of its biggest money makers. Of course, this makes no sense. The movies are already released on DVD and the studios don't prevent Blockbuster or Netflix from offering the physical DVD for rent, so why do that with the download version? If people really want to download these movies, they're more likely to just go get them from an unauthorized site, rather than bother to watch the network broadcast version (which, given recent MPAA statements, they'll probably try to prevent you from recording via your DVR anyway). If TV networks have been willing to pay good money for the broadcasting rights all these years while DVDs and unauthorized downloads have been available, are they really suddenly going to stop paying because legal downloads are available? Unlikely.

So what are we left with instead? A bunch of consumers really pissed off at the movie studios yet again. One of these days movie studio execs will discover that business models are much harder to implement when a large percentage of your customers hate you.

Filed Under: competition, downloads, movies, release windows
Companies: apple, netflix

Now Blockbuster Wants To Sell You A Proprietary Box So It Can Sell You Streamed Movies

from the broken-record dept

Stop us if you've heard this before: a company wants to sell people a box so they can pay to download movies. Sound familiar? That's because plenty of companies have tried it before -- all with little success. Consumers haven't shown much interest in buying service-specific hardware so they can buy movie downloads from a single provider for a number of reasons: poor selection of movies, the cost of downloads, the cost of the hardware, download times, and lack of portability to name a few. What's amazing is that so many companies keep lining up with their own efforts, without ever really fixing any of the problems, as if time will solve them. Now, it's Blockbuster's turn, as it's announced a $99 box that can access $2 movie downloads. Blockbuster says its service is different than all the failed ones before it because it has "more recent" movies. Netflix's streaming service has 12,000 films and TV shows -- less than 10 percent of its collection, thanks to Hollywood licensing schemes. Blockbuster has a whopping 2,000. But they're newer, they swear. So not only has Blockbuster failed to solve one of the problems of these services (narrow selection), they've exacerbated it and are calling it a feature. Now that sounds like the path to success.

Filed Under: movies, settop box, streaming, videos
Companies: blockbuster, netflix

The Napoleon Dynamite Problem Stymies Netflix Prize Competitors

from the love-it-or-hate-it dept

We've been covering the ongoing race to claim the $1 million Netflix Prize for a while now, highlighting some surprising and unique methods for attacking the problem. Every time we write about it, it appears that the lead teams have inched just slightly closer to that 10% improvement hurdle, but progress has certainly been slow. Clive Thompson's latest NY Times piece looks at the latest standings, noting that the issue now is "The Napoleon Dynamite problem."

Apparently, the algorithms cooked up by various teams seems to work great for your typical mainstream movies, but where it runs into trouble is when it hits on quirky films, like Napoleon Dynamite or Lost in Translation or I Heart Huckabees, where people tend to have a rather strong and immediate love or hate reaction to those films, with very little in-between. No one seems quite sure what leads to such a strong polar reaction, and no algorithm can yet figure out how people will react to such films, which is where all of the various algorithms seem to run into a dead end.

Some folks believe that's just the nature of taste. It really can't just be programmed like an algorithm, but takes into account a variety of other factors: including what your friends think of something, or even if you happened to go see that movie with certain friends. Basically, there are external factors that could play into taste, that isn't necessarily indicated in the fact that you may have liked some other set of quirky movies, and therefore you must love Napoleon Dynamite. In some ways, it makes you wonder if we're all putting too much emphasis on an algorithmic approach to the issue, and if other recommendation systems, including what specific friends think of a movie might be more effective. Of course, Netflix is hedging its bets. It's been pushing social networking "friend recommendation" features for a while as well.

Filed Under: movies, napoleon dynamite, netflix prize, ranking, recommendation engine
Companies: netflix

And You Thought The Next Generation Video Standards Battle Was Over?

from the we've-got-a-new-one-coming-on dept

If you thought the questions about what technology standard we'd be using to watch movies was settled when Blu-ray won the next generation DVD standards battle, then you're in for a bit of a surprise. In taking nearly half a decade to decide which standard would make it, the DVD camps left open plenty of opportunity for online competitors to start making their moves. The technology for delivering movies online has been rapidly improving. But, of course, what we didn't count on was that it would just create a huge new mess.

Earlier this week, there was all sorts of talk about Netflix streaming movies to the Xbox as part of Netflix's effort to get consumer electronics companies to build in support for Netflix streaming. As we warned when that announcement was made, it's a bad idea for Netflix to focus on a proprietary streaming solution, as it's only going to set up another standards battle. And, indeed, Blockbuster is working on its own such solution. Then, of course, everyone knows that Apple's in the market with the AppleTV. And don't forget Sony, which is selling a special (extra expensive) TV for downloading movies. And, of course, there are countless startups in the market as well.

Oh, and how could we forget Amazon? The company is now announcing its own proprietary online store for streaming movies and TV. This one piggybacks a bit on Sony's awful plan (meaning if you buy that super expensive internet-connected TV, you'll also be able to stream movies from Amazon).

But the end result is a total mess for the entire market, and that doesn't help anyone. All of the players should take a look at how badly the multi-year DVD standards battle hurt the industry. It makes people unwilling to buy certain hardware, as they don't want to be stuck with the "loser" a year from now. What's wrong with coming up with a single standard for streaming movies from any particular service to various TV-connected devices and computers? Then let the different providers compete on actual services provided? That would increase adoption, and let these companies do what they do best, rather than fighting a can't-win battle against too many other competitors.

Filed Under: movies, next generation, online video, standards, streaming, television, video
Companies: amazon, apple, blockbuster, microsoft, netflix, sony

Netflix Changes Its Mind, Will Keep Profiles

from the listening-to-customers-is-good dept

A few weeks back, we were one of many who questioned Netflix's decision to take away its "profiles" feature, that allows a single account holder to have separate queues for different people in his or her household. For the folks who used this feature, it was quite popular, and our main complaint was the bogus language that Netflix used, claiming that removing this feature was somehow a benefit to users. Obviously, most folks who used that feature regularly thought it was somewhat obnoxious to take away a favorite feature and to tell them it was for their own good -- despite not having any plans for a replacement.

However, Netflix surprised a lot of folks by actually listening to the complaints from many users and agreeing to keep the feature, though it won't promise to do any more enhancements to it. It's so rare to hear of companies actually listening to their users, that it's nice to see Netflix actually do so. Of course, Netflix could potentially make even more fans of the company by somehow opening up the profiles platform so that others could develop for it -- now that Netflix doesn't want to do so. That may not be possible depending on how things are set up, but that could really turn what was a negative into a strong positive for the company.

Filed Under: customer service, netflix profiles
Companies: netflix

How Does Taking Away A Popular Feature 'Improve Netflix'?

from the please-explain dept

I am not currently a Netflix customer, but one of the features of the service that I thought was quite useful (and I know plenty of people who use it actively) was the "profiles" feature that let a single family/household set up separate queues of movies they wanted. So, for example, a husband, wife and kids could each get their own list of movies with separate logins, rather than having to manage a single queue. This made the service a lot more useful for a household. And yet... Netflix is eliminating the feature, and doing so with the bizarre Orwellian explanation:

Why? While it may be disappointing to see this feature go away, this change will help us to continue to improve the Netflix website for all our customers.

Can someone explain how eliminating a feature that many people use improves the Netflix website? You see, Netflix, if you're going to remove a feature and say that the website is better because of it, it would actually help if you explained how or why it's better (i.e., you're replacing that feature with something better). To simply say that removing a well-liked feature makes the website better without any further explanation, you're basically calling your customers stupid because you think they'll believe what's clearly bogus.

Filed Under: benefits, features, households, profiles, queues
Companies: netflix