Just As Record Labels Resented Apple For Dragging Them Into The Internet Age, Movie Studios Resenting Netflix

from the amazing dept

It’s been about five years since we posted a story about how the record labels were pissed off at Steve Jobs and Apple for building such a successful online music store in iTunes. The whole thing sounded counterintuitive. Prior to iTunes, the record labels had tried a series of dreadfully awful online music stores with horrible selection, crippling limitations, and ridiculous prices. While iTunes still isn’t the savior that some in the industry think, it did drag the industry forward. And… for that, the labels resented Apple. It was basically because Apple had become the gatekeeper — the position they were used to holding.

These days, it sounds like the movie studios are going through the same sort of experience with Netflix. A recent story highlighted how the heads of major studios are getting upset about how successful Netflix has been with its online streaming offering. They literally are complaining that Netflix has been too good at getting customers to use online streaming:

“The problem is that Netflix is not the company we thought it was when we started doing these deals a few years ago. It has changed,” said a studio executive who requested anonymity because the studio’s discussions were confidential.

Of course, as was the case with the labels and Apple, what’s really going on is that the studios want a bigger cut. It’s a case of overvaluing the content, and undervaluing the service. What the studio bosses refuse to admit is that it’s the service that is working. There have been many attempts at offering streaming or download movies, and none of them did well, because they all sucked. They had the same content (or, in some cases better content), but since the services were so bad, no one used them. That seems like pretty clear evidence that it’s the service that made this a success — but they can’t bring themselves to admit that. So, instead, they rag on Netflix and talk about how “unfair” it is that Netflix isn’t paying them enough. And these are the same execs who complain about customers having an “entitlement mentality”?

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Companies: netflix

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Comments on “Just As Record Labels Resented Apple For Dragging Them Into The Internet Age, Movie Studios Resenting Netflix”

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Anonymous Coward says:

Re: Re: Re:2 Re:

Even better:


The Services Trade Council workers at Walt Disney World are still negotiating for a fair contract and a living wage. They’ve released a longer version of the “MouseTrapped” video they put out earlier this week. It details more the living conditions for long-time Walt Disney World castmembers, some of whom are forced to supplement their groceries with donations from church food-banks.“

Eugene (profile) says:

Re: Content is King

That’s true, but Netflix isn’t exactly struggling here. Quite the opposite, it’s wildly successful. And honestly, the movie studios suck at content distribution. They always have. So, what? They pull away from Netflix causing it to fail, and then try it on their own and also fail. That’s a lose-lose situation if ever I’ve heard one.

They can grumble and whine all they want, but at the end of the day, Netflix is getting them tons of money that they don’t have the means to get themselves.

PaulT (profile) says:

Re: Content is King

“they have survived numerous advances in tech which they deemed threatening to their business”

…by first fighting them tooth and nail, and then trying to enforce artificial restrictions such as windowing until they finally realised what their customers really wanted.

Their record might be a little better than the RIAA’s, but their past has hardly been enlightened.

anothermike says:

Re: Re:

News, books, music, movies… all publishing really. Overhead costs are plummeting to marginal while supply is approaching infinity. And they have no idea how to deal with that because their industry’s history was defined by high start-up costs and capital expenses and limited supply. Now that it’s reversed- high supply and limited expenses- they’re lost.

Anonymous Coward says:

The new studios:

Google Pictures
Microsoft Pictures
NetFlix Pictures

This whole Netflix thing will force tech giants to produce their own content, Microsoft is quietly doing just that, they bought a lot of small successes recently and are bankrolling others, they are entering the production pipeline because they know they will not get any deals out of the legacy players without any leverage, and if Netflix don’t want to end up like blockbuster they too should start financing the production side of things, they are the new gatekeepers because they are the ones that understand how to make money on the internet(well maybe not Microsoft yet).

It may take some time, but the old school studios and record labels are going under unless they drastically reinvent themselves which seems unlikely.

Other players are ISP’s that will try desperately to acquire content providers, but they probably will sink their newly bought “assets” trying to make them look like ISP’s offers and not internet companies.

Anonymous Coward says:

So the 28 day delay wasn’t good enough now they have to bitch about streaming too? I was happy to see Netflix lower my rate because I never got DVDs from them anyways. Now it’s only $7.99 a month for the streaming only plan and you get all the movies currently showing on Starz which costs more than $8 a month on either satellite or cable. The ability to turn on my Xbox and stream tons of movies and TV shows instantly is well worth $8 a month.

Alexthedogman (profile) says:

Netflix+Comast=the same thing

Don’t shed too many tears for Netflix. They are all about making a profit and NOT profit-sharing. At the moment they are the only game in town, but as online distribution/delivery evolves, hopefully other more progressive companies will emerge to offer competition and fair returns to those who create content (and aren’t named Sony, Warner, etc.)

AW says:

Re: Netflix+Comast=the same thing

Are you SERIOUS? No you can’t be…because that would mean you’re a moron. Netflix provides a far better service, that keeps even difficult customers like me happy. I’ve never once thought man I wish they would do X(aside from Linux streaming which they can’t offer). They have always been ahead of every gripe I’ve had. They offer a good product at a fair price, Comcast gives you less for almost 3 times the cost…where is the comparison?
If you’re looking for more money for content providers, there are plenty of other options out there, not the least of which is doing it yourself, don’t blame Netflix because they are a business, the deal would be far worse for you going through Comcast.

BigKeithO (profile) says:

Re: Re: Re: Netflix+Comast=the same thing

Would simply pirating movies and TV shows be preferable to Netflix for everyone? Netflix gives people the option of going from a “pirate” to a paying customer. It is an on-demand solution for a reasonable price, exactly what the customers are looking for these days.

The only thing I can see Netflix sucking at is the streaming selection and that isn’t their fault. Why do you agree that Netflix sucks?

anothermike says:

Re: Hulu

I love Hulu! They got their advertising right (could use a bit more variety). As opposed to the way NBC Universal, Syfy, et al work or rather don’t. NBCU’s providers are all on the AdBlockPlus blacklist. No I won’t turn it off and I won’t troubleshoot their site. Even the few Hulu ads that get an ABP block, Hulu fails around it and still delivers the content. Ads on Syfy? The whole stream fails, content and all.
Long live Hulu.

Christopher Gizzi (profile) says:

Netflix Gets It

I always thought Netflix really new how to build and grow a business. Having watched them from their early days (and as a customer myself), it seemed as if they knew they were the underdogs and worked hard to organically acquire customers. I got impatient with the lack of streaming knowing full well it probably wasn’t their fault with the licensing issues and all. Fast forward a few years to today where I can get Netflix on my iPhone, iPad, & PS3.

But what impresses me now is how Netflix still operates with the customer in mind. From their algorithm contests to the multi-platform streaming options, they make sure they’re the best at what they do. And just this morning, I read that Netflix spends a lot of time and money on interface design and custom programming to ensure a great product. They experiment and try new things.

The article is here: http://mashable.com/2010/12/03/netflix-html5/

The reason they succeed is because they try new things and have the user in mind.

The reason the labels fail is because they don’t care about the user as much as they care about more ways to control.

Anonymous Coward says:

It’s the price. iTunes or Netflix didn’t do it any better, they did it cheaper. They sell at a price that people feel they can afford. Make Netflix $14.99 and watch the subs desert ship. TV advertisers are starting to get it. Anything $10.00 or under is a much easier sell. Most people have 10 bucks for an impulse purchase.

Christopher Gizzi (profile) says:

Re: Re:

I disagree. It’s the service. Subscriptions are simple and easy. One price, one product. You choose your plan and that’s it. Simplicity is part of the service.

Second, their customer service is fantastic. If they nickel and dimed their customers, they wouldn’t be so successful.

Third, they designed their interface to be as simple and user friendly as possible. Their APIs let 3rd party developers create their own interface – which adds value to the service.

Fourth, the convenience; it’s also a part of the service. Streaming is on demand – a service people love which adds value. But the queue is a fantastic way to “set and forget.” Add movies as you can and they’re sent in that order. There’s little thinking involved. If a title is rented out, the next movie in line shows up. No fuss, no lines, no travel time, no store clerks to deal with, no stress. Easy. Valuable.

Netflix loves the subscription method because its constant money. Blockbuster has to kick, scream, and fight for someone to walk into their (expensive to maintain) stores. Target, Best Buy, and others – including Amazon – have to do the same to get buyers. They don’t get a constant revenue stream from customers and its easy to see why Netflix has had an easier time of it. The whole business model is setup for success.

And as long as their service is the best, people will pay reasonable fees to them. And I would venture there are plenty of users who willingly pay more than $15 a month. BTW, does anyone know if Netflix discloses their average subscription dollar amount in their 10k filings? I’m sure it could be calculated if it isn’t.

anothermike says:

Re: Re:

It can’t be just about price. All of Netflix’ competitors undercut them at some point and yet Netflix is the market leader in ‘videos by mail’ and now ‘streaming movies’ too.
Blockbuster should have squashed Netflix. Videos would come through the mail from your queue or you could pick up and drop off at any Blockbuster store for that extra convenience. And all at a lower price than Netflix. Their mistake was not seamlessly integrating the stores into the offering; there were too many glitches. Now Blockbuster is an also-ran in the entire video rental market.
Remember that Netflix had to build out their own distribution network. Sure they piggy-backed on the Post Office for branch and last mile but Netflix had to build out their own warehousing and routing structure. Wal-Mart entered their 900 pound gorilla in the ring with one of the largest and most efficient distribution networks in the world. What happened? No idea; probably a mix of too little and too late. Wal-Mart eventually ended up contracting out their rentals to Netflix before handing everything over and leaving the video rental market entirely.

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