Will Hollywood Kill The Golden Goose By Squeezing Netflix Dry?

from the watch-those-numbers... dept

Back in December, we did a little back-of-the-envelope calculating to show how much more expensive it is for Netflix to license movies for streaming, as compared to just buying DVDs and shipping them out. The differences are staggering. And apparently it's only getting more expensive. The Hollywood Reporter has an in-depth article highlighting the love-hate affair that Hollywood has with Netflix, including details on the sorts of prices that the various players are demanding (and often getting) from Netflix. What's not surprising is that they keep asking for more and more (and some are still complaining that Netflix doesn't pay enough). But the numbers being thrown about are simply staggering. And at the rate they're going up, it will make it increasingly difficult for Netflix to actually afford all of those deals. Once again, it seems like a situation where the content providers are overvaluing their content, and undervaluing the services that make that content more valuable. That is, they look at how Netflix is succeeding (especially as they're failing to adapt themselves online), and they start to get jealous, and assume that Netflix really should be paying them more money. Basically, they don't think Netflix deserves to profit at all, since it's really all "their content." What they ignore, of course, is that (despite multiple weak attempts) they were the ones who failed to provide a compelling streaming service themselves. Either way, if Hollywood keeps pushing those numbers up, they may discover that they end up killing the golden goose.

Filed Under: content, licensing, movies, streaming, value
Companies: netflix

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  1. icon
    m3mnoch (profile), 20 Jan 2011 @ 9:22am

    Re: I will mourn the loss of Netflix

    i have sweet faith that someday content industries will figure it out. it's either nothing or market price. there is no in-between anymore. there are no middlemen. there is no more secret collusion. you can't artificially push the market price needle higher because you can no longer hide from nor block out your competition.

    'cause, like it or not, you have to compete with free from now on.

    games have (mostly) figured this out and profits are raging upward. give people what they want and you'll make money hand-over-fist. and what do people want? what will they pay for when it comes to content?

    convenient access to a quality experience. end of story. period.

    it is a truism. from the resurrection cakes in ddo to any song ever created at your fingertips in itunes. meet their need right then. don't make them wait. don't overprice it. find a solution in your industry to one of these two pain points (there are only these two points on the triangle you can control now -- convenience and quality) and you'll be rich.

    fighting costs money. fulfilling makes money.

    you mr. content provider, for pete's sake -- be a profit center and stop being a goddamn cost center.


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