The Netflix Streaming Quandry

Streaming on Netflix is great, isn’t it? You can watch all you want for a low flat fee, no worries about waiting for discs, and all it takes is a push of a button. But it’s not Netflix’s content that you’re watching.

Many people don’t seem to care about the lackluster streaming selection Netflix offers, or they wouldn’t be adding new customers almost every quarter. There’s a reason they don’t have that new release content though, and it’s the studios. Netflix has promised to aggressively pursue Warner Brothers content when that contract comes up, but what if Warner says no?

Look at the situation from Warner’s side: Netflix pays a one time fee, or maybe a yearly contract of some sort, to license specific Warner films/TV shows. Warner gets paid sure, but all of sudden Blu-ray and DVD revenue drops because people are happy with just hitting a button from their couch. In place already is The Warner Archive, a selection of exclusive classic films unavailable anywhere else but that website. You can pay to download the movies for $15 or have them printed onto a DVD-R for an added fee ($20). The studio is already making a bid to stream their own content, and per movie, not unlimited. Which is more profitable when the only choice is through the actual studio and not a third-party?

See, unlike physical media where they ship discs out to retailers, let them run promotions, and deal with the bulk of customer issues, streaming doesn’t work like that. You don’t need replication, you don’t need third parties, and Warner sure as hell doesn’t need Netflix. What is the benefit to Warner by signing on with the world’s largest streaming company? Exposure? Who doesn’t know about Inception? What if, instead of waiting for the 28-day delay the studio has imposed on rentals, you could stream it from Warner immediately? What if the Xbox 360 offered Warner content for streaming? Sony’s PlayStation 3 already groups digital movies by studio. It only requires a heftier back-end, the costs of which would be paid for by streaming content individually.

The Netflix advantage is that it is everywhere, and soon there will be a Netflix button included on remote controls. But Netflix is shooting themselves in the foot by transitioning an eager public into streaming, ruining their business model for short term gain. Streaming is bad enough for the consumer in the long run, losing their unlimited options only to be forced into a la carte programming (do you think Fox wants you using bandwidth to stream Avatar 10 times?), they lose what limited rights to the content they already have, all for the sake of convenience. Netflix may be able to ditch the employees who package discs, cutting costs, but they still have to find content to offer.

Netflix is suddenly backed into a corner when Warner leaves and sets up their own shop… then Fox… then Universal… and so on. Suddenly, the Xbox 360 (or next-generation hardware) doesn’t have a Netflix section, but individual ones for the studios, all with the press of a button (and 1200 Microsoft Points). The exodus will not be smooth, and it’s all short-sightedness on the part of country’s largest supplier of digital movie content who don’t seem to have any idea what the future holds.

Matt Paprocki has been a movie and video game critic for 12 years. His work has been featured on a variety of websites, and he currently edits DoBlu.com and Multiplayergames.com.

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  • Nate

    The studios need to accept that there’s not as much money in the post-theater business as there used to be. If they all abandon Netflix and start their own individual services and charge their usual prices, people will just torrent more. I’m against torrenting, but this is the world we live in. Desperately clinging to the old ways has more or less killed the music industry. If the studios can’t make Netflix work for them, hopefully they can create something as convenient and ubiquitous.

  • This pay per watch will never work for me, I want to pay a flat fee and then I can watch what I want no matter how many times. Netflix works for me, and ever since I joined Netflix I have not pirated a movie. Now if Warner wants to start their own streaming service for a monthly fee of $5, then sure I’ll be on board, but I think only morons pay $4.99 to watch a movie once.

  • I agree with Nate. If studios go this direction, and charge the prices they want to continue charging, torrents go up substantially and it’s the music battle played out all over again. And where did the music labels end up after that? With Apple dominating online distribution. That’s probably not what the labels had in mind when they went to war against their customers. Let there be no doubt, the labels were ultimately waging war on their customers in the form of high prices, hard to acquire product, and constant reminders that these law abiding citizens were only a click away from being put in prison.

  • rjdelight

    the real quandry is the bandwidth issue.

  • Don’t underestimate Netflix, as the issues you’re discussing probably aren’t news to them, and they’re probably thinking further ahead than you give them credit for. If it wasn’t FOR Netlflix, the studios probably wouldn’t have taken the steps they’re taking already, so as long as Netflix can anticipate the competition’s next move and stay at least a step ahead, they should be fine.

  • Jackson

    The other problem with Netflix is how much I payed in extra gigs of usage. I wasn’t impressed with Netflix to say the least but I kept it for a few months to go through anything decent that I hadn’t seen. I canceled it when I realized I was actually paying about $50 bucks a month for it when I went over my gig usage about week into my billing period. It was not worth it to pay that much for a site that had almost no decent movies on it.

  • @Jackson, that seems like an ISP problem and not a Netflix problem.

  • Niklas

    It is an ISP problem but its also a Netflix problem because it keeps customers like myself from subscribing to their service.

  • Matt

    @Niklas How is it a Netflix problem? They’re not in charge of how much GB you use.

  • It may not be a problem that Netflix created but it’s one that’s potentially going to kill their business here in Canada. The CRTC just passed a law here that basically prevents any third party ISPs from offering unlimited internet, and our main providers here typically cap usage at 60 GB per month.

  • What frustrates me is far too many people I know are just plain idiots. I love Netflix and whenever I mention it to someone either at work or a family member or friend, their response seems to ALWAYS be the exact same:

    “I tried that. I hated it. It never had anything I looked for.”
    Me: “What did you look for?”

    And their reply is ALWAYS either a movie that only JUST came out within a week or two, or is STILL IN THE THEATER. Of fucking COURSE Netflix isn’t going to have that. Stop having your expectations so god damn high.

    As for me, I don’t use Netflix for Searching. I use it for Browsing.

  • I love Netflix. Here in the states I have comcast internet and don’t have any problem with bandwidth usage. I like being able to just jump on and load up a movie to watch. My instant cue is filled with stuff to watch. So to me it’s worth the $10 a month.

  • Dom Cobb

    I just tried a one month trial of Netflix streaming through my PS3 and besides being able to watch the new season of Spartacus, I think it sucks balls. The selection is pitiful and not even worth $8 a month unless you don’t watch TV or movies otherwise. I feel like I’ve already seen everything Netflix streaming has to offer and besides getting the occasional movie I want to watch like Dogtooth or Enter the Void, it’s a huge disappointment in my opinion. I really don’t see what all the fuss is about unless your not an avid movie/television fan.

  • Kurt

    Someone should listen to this website: http://www.dontmakemesteal.com/

  • ShabbyX

    Canadians should be lobbying their representatives about their internet bandwidth laws. I have unlimited 3G on my Android phone. Your (or depending on how much responsibility you want to take, your government’s) bad. Not Netflix’. My comments below are much based on my experience and ability to get lower cost bandwidth here in the US than what is apparently available up north.

    The author of this article is really confused as to who/what he’s mad at. “Netflix is wrong to offer streaming!” “Consumers are wrong to embrace streaming!”
    “Netflix doesn’t know what’s going to happen in the future!”

    Streaming is here. Done. Pandora’s box opened, cat has exited bag.

    I live in the US, and subscribe to streaming and a one-disc plan. There is tons of content. Yes, selection is limited. I don’t find I need the newest hits. I can’t yet watch genius stuff like Prince of Persia right when it gets released to home video. (Don’t worry about me though, those deals are coming)

    I have 347 shows in my Instant Queue alone. Even if half those are things I will never get around to watching, I’ve got at least half a years worth of programming for the average person.

    I am starting to HATE getting DVDs from Netflix… especially if you are a movie lover who wants to see older selections or cult classics. These discs are scratched to shit or ‘very long wait’ – or Netflix hasn’t even bothered to purchase the title.

    I’m bored with the panicky chorus of naysayers who say streaming is a horrible idea and that true cinephiles should keep spending all their $ on products that will be worthless in ten years. And that’s probably a generous time frame. I’m absolutely sure that the studios will continue to offer some ‘purchase it’ product for you folks.

    I suspect a good portion of why some people are so pissed about streaming is that their dvd collections are something they really feel ‘are’ them.

    That and the convenience / control factor. Yet consider: Instead of people counting their dvds /blu-rays, they should count how many times they’ve watched each of them in the last year.’oh, I have that. I haven’t watched it yet, got it two months ago.’ Instead of paying $20 for some plastic that will eventually end up in a landfill or have to be re-processed (causing more environmental damage), I’d prefer that you actually have to re-express your interest and commitment to the movie by paying a small sum each time you want to, you know, actually WATCH it.

    What about a non-DRM download? Oh, but that can’t sit pretty on a shelf.

    The marketplace is about give and take and balance. If studios price their content in a way that the majority people find out of line with the value of it, they will not pay for it. (See the number of responders who have already said they will just go torrent it).

    The author asks “Why should Warner Brothers make a deal with Netflix?” Because they have the streaming infrastructure in place and a boatload of customers on their system who are happy and don’t want to have seperate access apps for each provider.

    Again, I can see how streaming is not viable for Canadians yet, due to the bandwidth/cost issue alone. That sucks.

  • “I’m bored with the panicky chorus of naysayers who say streaming is a horrible idea and that true cinephiles should keep spending all their $ on products that will be worthless in ten years”

    Whatever the final physical media is, they won’t be worthless. There will probably a collector’s market to appreciate the medium and its benefits… you know, owning something. If I download a movie tomorrow and it authenticates on a server, I won’t have that movie in a couple of years when the plug is pulled. It’s a disaster for consumers. They can’t trade. they can’t resell. They can’t let friends borrow. The studios have full control over when you watch and when you watch it. The convenience isn’t worth it.

    It’s not that streaming is bad, although I personally don’t like it. It’s great for some stuff like TV shows where shipping discs is time consuming, and I doubt many people watch TV series often because of how much time that takes. A 90-minute movie? That’s something I’ll watch often, and I actually want my own copy, not something that sits on a finite server.

    “Instead of paying $20 for some plastic that will eventually end up in a landfill or have to be re-processed (causing more environmental damage), I’d prefer that you actually have to re-express your interest and commitment to the movie by paying a small sum each time you want to, you know, actually WATCH it.”

    Who throws out their movies? There’s a huge resale market, trading, borrowing, etc. It’s hardly an environmental issue. Plus, if you’ve got kids, it’s far cheaper to buy a movie no matter how cheap it is to stream each time. Hell, I’ve watched Ghostbusters more times than I care to admit. I’m not going to pay each time I want to watch it.

    “The author asks “Why should Warner Brothers make a deal with Netflix?” Because they have the streaming infrastructure in place and a boatload of customers on their system who are happy and don’t want to have seperate access apps for each provider.”

    But when they don’t have a choice, what are consumers going to do? Warner has the streaming capabilities RIGHT NOW. It is a huge infrastructure like Netflix? No, of course not… yet. It’s not so much the service that matters, it’s the device. When you buy a streaming device, you get Hulu, Netflix, Crackle… etc. Replace those with individual studios, and the convenience factor is still there.

  • Kurt

    I used to buy hundreds of DVDs per year. Now I’m luck if I buy one every 3 months. Even the limilted selection of Netflix Canada is pretty damn awesome. Only issue is capping out my Bandwidth (60Gb max) every month. Yea, things have to change in Canada…the Gov’t is pretty aware of what is going on with our Mono/Oligopoly TelCo/Cable/Internet monoliths. All three political parties, PCs, Liberals and NDP are against this per-use billing. Our gov’t parties never agree on anything, so I’m expecting some big changes in the next year or so on the issue.

  • I used to buy tons of DVDs too, but then, as someone above mentioned, I really started to think about how much I watch something (I have very, very few movies that I watch over and over and over and over), how long something sits there before I DO watch it (I’ve often bought something new and then still hadn’t watched it before the price dropped 3 months later), and how many I haven’t watched at all (well, I KIND OF like the movie when it was in theaters 6 months ago, and I’d like to someday get around to watching the extras. Someday…). As a result, I’ve really slowed down on my DVD buying and have E-Bayed off a large part of my collection, most of which I hadn’t watched in years and will not miss at all. Contrary to what some believe, there really isn’t much of a secondary market. Some of my Criterion stuff went for higher than I expected, and TV stuff can sell really well if you have full runs, but for the most part, you probably aren’t going to get much, at least nowhere close to what you initially spent on it, as even prices on newer DVDs seem to drop quickly.

    Netflix has saved me a hell of a lot of money and has expanded my tastes quite a bit, mostly because of it’s convenience. There’s a lot of stuff I was able to check out instantly because I heard of it on this very site, and most of those films aren’t readily available where I am. The selection of documentary and foreign films is pretty tremendous, and even the best of those are films that you’ll have trouble finding at the local FYE or Blockbuster. I’m willing to wait the day or 2 for something in the mail, but there is more than enough in my instant queue to keep me occupied in the meantime (I WILL get around to watching the “Red Riding” and the “Girl With/Who Played With/Who Kicked” trilogies someday. Someday…).

    A question for the people that say there’s nothing there to watch: Do you use the website at all, or are you just using whatever device you have hooked up to your TV? My roommate used to use Netflix on her X-Box 360, and I run it on my Wii, and if you just rely on that, it’s a hell of a mess to get through. I don’t know if the onscreen interface changes at all from device to device, but I know that the 360 and Wii are similarly awful in their organization (or lack thereof). If you search on the site itself and add to your queue from there, it makes things MUCH much easier.

    Of course, I DO still buy DVDs (and will soon be upgrading to Blu-Ray, which is another reason why my DVD spending has slowed), but I’m either a) much more selective and buy stuff I know I’ll watch repeatedly, or b) I’m a total bargain hunter and pick up movies at their dirt cheapest that I just held off on buying when they were newer. I think I spent a total of 20 bucks on the 2-disc versions of Knocked Up, SuperBad, Funny People, Forgetting Sarah Marshall, and Pineapple Express when I picked them up on Black Friday.

    Also, borrowing from and loaning to friends isn’t an issue when THEY have Netflix too.

  • Ovenball

    I can’t believe this business about metered bandwidth in Canada. If I were in that situation, yeah, Netflix streaming probably wouldn’t be worth it. As it is now though, I pay about 50 bucks a month for internet and I don’t get any type of cable or TV package. I get movie and television content from either Netflix (via disc or streaming), Zune marketplace, the local video store, and the cineplex. I’d be hardpressed to give up my netflix streaming.

    There are thousands of available titles and my instant view queue is well stocked. Yeah, the Stars Play content looks like garbage, but with a good connection, a lot of other content plays fine in HD. I’ve only encountered rare issues with audio/video problems, and they are dedinately not as common as damaged/scratched discs when using netflix snail mail.

  • Mason

    To tell you the truth I almost never buy DVDs anymore. I obtain them to own mostly through gifts. Netflix is my source for seeing movies that I’m seeing for the first time or don’t need to own. (I don’t re-watch movies much anyway since there is so much out there to see for the first time!)

    I’m in the USA, so bandwidth is not an issue. To me, Netflix’s selection is awesome- my family’s queue is over 150 movies and TV series long. And if something is not available, we still have a DVD/Blu-ray by mail queue. I think people’s biggest complaint about instant watch selection is the low amount of newer releases. I don’t even notice, since I’m just as content to watch older movies that are “new to me”. One thing that there is an abundance of on Netflix USA is documentaries- even very recent ones. They become available at the same time as DVD release and sometimes before.