Netflix Expects To Be Unprofitable In 2012

PolygamousRanchKid writes with an article in CNN Money about Netflix's prospects in 2012. From the article: "Netflix warned in its last earnings report that it expects to be unprofitable 'for a few quarters' starting at the beginning of 2012. The primary culprit is Netflix's pricey plan to expand its streaming video service into the United Kingdom and Ireland, but a wave of subscribers jumping ship hasn't helped. The filing also revealed that Netflix is in the process of raising $400 million from investors to help bulk up its cash stash. While that will give Netflix more money to invest in content, secondary offerings are sometimes considered ominous signs."

I'm sympathetic, but stop with the bonehead moves

[elrous0]

I understood when they had to raise prices. The studios have gotten crazy greedy on the whole streaming thing and their costs have gone through the roof. Netflix streaming is still BY FAR the best deal around. You can watch the entire runs of shows like Battlestar Galactica (original AND new, even 1980), The X-Files, Twin Peaks, Firefly, Family Guy, etc (many of them in HD, no less). Nothing else even comes close to the selection or quality of Netflix's streaming library.

But I'm a lot LESS sympathetic with some of their bonehead moves--like trying to separate their by-mail/streaming divisions with annoying separate websites and queues (a move destined to serve little purpose other than pissing off loyal customers like me) and paying $40 million for a bunch of shitty Dreamworks streaming rights (a move that's only going to encourage the greed of the other studios in the future).

Tivo Redux

[localman57]

Here we go again. Netflix (streaming) is going to follow the same path as Tivo. Innovate at the beginning, then get to a point where you have trouble growing your audience. Then bigger companies, such as the cable companies, come in with a comparable product, and eat your lunch, because they already have a relationship with the customer, and deeper pockets than you which will help them bid up content license prices. This makes the streaming side of NFLX negative growth in the middle term, as they have the same problem in other countries, despite their efforts to expand.

The disk mailing side of the company is already saturated from a customer base side. Increasing postal rates and the eventual end to saturday delivery will make the service less viable. Eventually the postal service will go to every-other-day delivery of first-class mail, in order to reduce the number of carriers and mail trucks by 30 to 40 percent. The disk mailing side of NFLX is therefore a revenue stock now (with that revenue being eatten by the streaming side), and negative growth in the future. Sell...

Netflix is great for active people

[pavon]

I know that Bob is a regular troll here, but I'm a sucker and will respond anyway.

As an active individual I have no desire to adjust my life around a television schedule, nor pay $50+ a month for a cable service that I rarely use. Cutting that expense to $8 a month makes much more sense for a casual TV/movie consumer. It allows me to not worry about getting "behind" in a series as I can watch it at my own pace, and leave the house at any time without concern about what I am missing. It allows me to have down time when I need it (and as you should very well know, having relaxing time is very important for physical and mental health).

A large part

[AdamJS]

A large part of their problems, ironically, can be blamed on iTunes. Or rather, what iTunes did.

Apple came into the market and swept a massive position of power and influence right out from under the music (or rather, content) industry's feet. Apple gained a novel and unrivaled position to dictate the terms of negotiation.
They're still stinging from that.

As a byproduct, they were far more 'prepared' for Netflix. Well, not prepared, as the industry is ancient, slow, bloated and generally can't see "the next big thing" until it's already slapped them across the face and taken their daughter out to dinner.
They were more Apprehensive, really.
They may not have known if Netflix would be a success (by-mail services could never be a threat, and when the streaming came about, similar "on demand" services were rather mediocre) but they knew well enough to keep the reigns on a potentially unwieldy beast.

So Netflix' (possibly unexpected to the Industry) fast growth and explosion in the public mindshare did not end up giving them anywhere near the same control and leverage for negotiations with content owners and producers. Netflix did not secure a completely dominant position, and were unable to supplant the general DVD purchase/rental and theater-going parts of the industry, or at least nowhere near as successfully as iTunes snowballed over CDs.

As such, they're entirely at the whim of industry conglomerates that view them now as something of an enemy, or an annoyance that is profitable enough not to deserve a swat yet.

If the industry wasn't so generally inept, there would have been an MPA-aligned style service already out and Netflix would be deprived of most of its content almost immediately.