Netflix To Go Back Into Price War Mode?
from the ad-supported-movie-rentals dept
Davis Freeberg writes in to tell us about Netflix’s CFO’s recent investor presentation where he talks about a few upcoming moves that the company is testing out. A year ago, we noted that the online DVD rental market was entering price war mode, with Blockbuster and Wal-Mart trying to attack Netflix and rumors of Amazon’s impending entrance swirling everywhere. Since then, a lot has changed. Blockbuster decided that the price war wasn’t working and raised prices, Amazon had second thoughts about entering the DVD rental business and Wal-Mart gave up and just outsourced DVD rental to Netflix. However, in the presentation, it sounds like Netflix is thinking about dropping prices again — with the CFO saying that he thinks the market is price elastic, and lower prices would put more pressure on Blockbuster. While this might not line up with previous stories that suggested Netflix and Blockbuster had different types of customers (Blockbuster more about theater releases, Netflix more about indie releases), he explains that away as well by saying that Netflix’s power is in convincing any customer that they may like other, lesser well known movies. Of course, he’s spinning things to make a strong case for Netflix — which is his job — so take it all with a large grain of salt. The other interesting part of the talk (though, not quite the “bombshell” the writer makes it out to be), is that Netflix may look to subsidize movie rentals by adding advertisements to the site itself. Considering the online advertising market these days, that’s not surprising at all, but to be expected.