Posted on 12/14/2010 6:26:14 AM PST by Gondring
For the past year, executives at big media companies have watched Netflix with growing resentment — for its success in delivering movies and television shows via the Internet, for its stock price nearly quadrupling, for its chief executive being named businessperson of the year by Fortune magazine.
Now many of the companies that make the shows and movies that Netflix delivers to mailboxes, computer screens and televisions — companies whose stocks have not enjoyed the same frothy rise, and whose chief executives have not won the same accolades — are pushing back, arguing that the company is overhyped, and vowing to charge much more to license their content.
“It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey L. Bewkes, the chief executive of Time Warner, in an interview last week. “I don’t think so.”
[...]
If Netflix is to renew the Starz pact — and thus keep a steady flow of Hollywood movies — it will probably pay many times the current $25 million a year. Richard Greenfield, an analyst at BTIG research, estimated a new deal could cost Netflix more than $250 million a year. Mr. Bewkes suggested a new deal may not be reached, because Netflix’s subscription streaming service, which costs about $8 a month, isn’t high enough for the company to pay top dollar for movies.
[...]
(Excerpt) Read more at nytimes.com ...
Because they are really not paying their “fair share” of the distribution costs of transmitting the video stream over network. At some point cable companies are going to start increasing prices for connectivity to cover the costs.
Not the same thing. You are charged by your ISP/Cable Co for an expected usage of the network. If users start overloading it then the prices will have to increase in order for them to provide you with the same 5 mbs that you contracted with them to offer you. There is no law that says you get to have broadband for $39.95 all you can eat.
Disagree all you want but the facts remain. They are not paying the true cost of their distribution costs and that model cannot be sustained since level 3 or comcast, VZ or anyone else in the connection business isn’t going to tolerate having to carry larger amounts of traffic without getting paid. How they collect it will likely be a degraded service or higher fees across the subscriber base.
In fact, none of what this thread is about would be a problem.
As it is, I have as much choice in broadband as I do in electricity, tap water, or garbage pickup.
Any company that wants to have a monopoly in access to my home should expect to be regulated like a monopoly.
You ignore the connection and transmission costs part of the equation. Sure, you WANT something but it has to be paid for. The service provider has to install infrastructure then price the connectivity so they realize a revenue stream that allows them to meet some acceptable rate of return/risk in their capital. If they have to haul additional traffic while providing a high standard of quality then someone has to pay for it.......
Exactly: advertising.
Cable companies could drive prices higher for Netflix and... lose their advertisers to Netflix LOL!
You have choices
Direct TV or Dish
Cable
Telephone or other Alt carrier supplying connections
this is a huge infrastructure cost business with operations expenses that are substantial. There isn’t room for many.
The problem is not payment for value received, it's the conflict of interest.
It's as if a phone company also owned Pizza Hut, and then wanted to charge Papa John's extra for connecting their stores with customers.
If the broadband company is just a dumb pipe and is not trying to protect other pieces of its business by selective pricing, then I do not have a problem with them.
And yet Americans have some of the highest cost, lowest bandwidth so-called "broadband" in the developed world. I am getting to the point where I want to call BS on your argument.
Netflix doesn't drive demand, the consumer does. Why should Netflix pay for the delivery service at all? Even if they're mailing disks to me, they cover the cost of shipping within the subscription.
If I buy something from a brick and mortar store, the cost of shipping is included in the price. If I buy on-line, the cost of shipping is quoted and I pay it (in the case of "free shipping" the price of the goods has been adjusted to cover the cost). So, I pay Netflix for the content, then pay my provider for the cost of getting it to me. I'll only pay so much, so either I'll switch providers or drop Netflix, either way, the market will sort it out.
I think that as broadband speed continues to increase, the netflix model of mailing the disks will fade.
The studios will go directly to their cable partners and close out the netflix channel.
Years ago Congress was screaming about the vertical integration of the telecom business.
Here you go....
(How long before some idiot in Congress starts with, “....there oughta be a law....”)
They are pricing based on traffic flow to provide QoS. When you start pushing traffic in excess over the network the service degrades. At some point someone has to pay for it.
Because they are really not paying their “fair share” of the distribution costs of transmitting the video stream over network. At some point cable companies are going to start increasing prices for connectivity to cover the costs.
My local cable company advertises that the advantages of their high speed internet service incluced “streaming of music, movies, and more!” If that is what they are using as an reason I should buy their service, why should they be upset when I use that service for exactly that.
Netflix is piggybacking off the MY internet service, not the cable companies. I pay a monthly fee (including an extra fee for increased download speeds) for my high speed internet service.
How is the cable company getting ripped off when they advertise a service, I pay for it, and I use it for the purpose they advertise?
Interesting point.
(Personally, I don't really care either way, except as an intellectual exercise, as I really don't care for the content they carry. I guess I'm one of the few oddball Americans not addicted to Hollywood.)
I live rural, in an area where there are many retired folks with very limited resources.
The Netflix system of getting & sending back the movies by mail is a Godsend to such people. Many can no longer drive & are not interested in the usual daytime fare on TV. Their mobility is limited, as is their eyesight & hearing. Living alone, they can crank up the sound as much as they please!!
The cost is minimal and usually within range of their Social Security.
Hear, hear! (no pun intended)
Time Warner better watch the frick out, because it’s not just the movie rights. If people can get the entertainment they want from Netflix, and news from an the internet, there is no reason for cable tv, sayonara Warner Cable.
I bet the AOL people aren’t real thrilled at Facebook these days either.
YEah, but these advances are created by failure. Why do kids like to text so much nowadays? Because we’ve accepted CRAP call quality from the cell providers. Why have young people eschewed cable tv? Because the promise of 256 channels is CRAP if there isn’t anything good on. Why are the legacy newspapers and TV news going away? BEcause they deliver CRAP that even a teenager can see through. Oh, and the ink gets all over your fingers.
"Fading star," heck. Netflix is the wave of the future. TV and movie companies, like record companies, are going to have to come to grips with the fact that their product is grossly overpriced and their delivery systems are woefully outdated.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.