Reflections

Netflix Beat Blockbuster But Now Faces Stiffer Competition

Posted by on Sep 27, 2010 | 5 Comments

Last week’s news about Blockbuster filing bankruptcy came as no surprise, since the once popular rental business has been in financial distress for quite some time. Between Netflix and Redbox, Blockbuster no longer could compete nor match the efficiency that the competition was offering. People were tired of not having rentals available, but more important, having to race back to the store to drop off the rented disk. The latest competition is going to be from Apple, Google, Amazon and others who are going to compete with Netflix in the lucrative streaming movies over the Internet.

In a recent article it states that:

Netflix has raced to become ubiquitous. In addition to PCs, more than 100 types of devices can stream Netflix movies to a TV, including game consoles and Internet TV set-top boxes like Roku and AppleTV. The company says 61 percent of its 15 million subscribers streamed movies in the second quarter.

The weakness of the streaming service is movie selection. Netflix’s catalog of 20,000 streaming movies does not include many recent Hollywood hits because Netflix has been unable to negotiate rights from all the studios. Netflix has about five times as many titles in its DVD catalog.

Many of the company’s studio deals require it to delay making titles available — either on DVD or online — until they have been on store shelves for 28 days. For example, “Robin Hood,” starring Russell Crowe, is available to stream on Amazon but will not be available on Netflix until Oct. 19. Hulu Plus has the current season of “The Office,” while the most recent episodes on Netflix are from last season.

The industry is still very young, they said, and many companies are experimenting with business models and expanding their video libraries. Streaming requires less infrastructure and therefore has lower barriers to entry than a system built on sorting machines and distribution or even brick-and-mortar stores.

Though competition will keep pricing down for those consumers who choose to stream, it currently will make it difficult to select which service to use. As I have mentioned I have selected a Roku device to stream movies from Netflix, but I do not know how long Netflix will remain the leader in streaming. As with any new industry, it is going to be a few years before we know who the winner will be.

Competition against Netflix is going to be severe since the competition has a huge war chest of funds to fight with. Netflix appears to be the underdog.

Comments welcome.

Source – NY Times

  • Cliffystones

    I personally don’t mind waiting longer to see a “new release” movie, and would prefer not paying a premium price. We seldom go to the theater anymore, not just because of the prices, but do to the fact that the best part of many movies are the previews.

    I also have a Roku with Netflix, and I hope they keep it just the way it is. Instead of new material I hope Netflix can get the rights to stream more “vintage” movies and TV shows. You know, the stuff “TV Land” was supposed to be about.

    My 14 year old son and I are just about finished with season 9 of the X-Files that’s streaming on Nexflix right now. A couple of years ago I introduced him to the original Mission Impossible TV series, and he loves it. I have those on DVD and we’re still working on them.

    There are just so many really great old movies and TV shows out there. And even the Tech Savvy younger crowd can enjoy these “Blasts from the Past”

    • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

      Hello Cliffystones,
      There is another advantage of watching vintage movies and TV programs. None of them contain the ‘F’ word
      that seems to be so popular in the current generation of movies. Our TV programs now are slowing introducing
      more profanity, since they are unable to get their point across without swearing.

      My congratulations for introducing your son into a world where sex, violence, and profanity was not the norm.

  • http://www.justenrobertson.com Justen Robertson

    Probably the wost move Blockbuster made was to bring back late fees after spending a couple years without. They might as well have chased out customers with pointy sticks as brought back that draconian, medieval practice in the face of keep-it-as-long-as-you-want services like Netflix or Redbox with its reasonable dollar-a-day model. You’d have to be retarded to pay seven bucks to rent a movie, then get charged seven more if you missed the noon deadline 3 days later. About the only thing Blockbuster had going for it was that you could get Blu-Ray there on demand (since most Redbox don’t carry blu-ray yet), and even then most blockbuster stores have a weak selection.

    Anyway, like you said, no surprise there.

    • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

      Hi Justen,
      I had a horrible experience with our local Blockbuster about 6 years ago. They charged my credit card
      for $80 saying I never returned a movie, which I personally dropped in their drop box. What a hassle.
      It took a month to finally get them to admit they made a mistake. They gave me several coupons for free
      movies and popcorn which I immediately dropped in the trash. I canceled my account and have never
      entered a Blockbuster since. I was thrilled to see them fail. :-)

  • Tim Arnold

    Re: Netflix “New Releases” selection is stale. I currently have two dvds in my queue. Netflix keeps saying that I should have at least 6 title in my queue. Trouble is, they don’t seem to get that these 2 movies are the only new releases in over 5 months that I had the slightest interest in seeing. Their “Watch Instantly” isn’t much better. Maybe I’m too selective, but I watch maybe 2 instantly a month and maybe 5 “New Releases” a year. 29 movies total a year shakes out to like $4.13 a movie. Hardly a bargain.