6 ms·

Time Warner Views Netflix as a Fading Star

47 points by donohoe 16y ago

taylorwc 16y ago
I think the right word for TWC's view is 'delusional.'
erreon 16y ago
Blockbuster didn't think they were gonna be a challenge either.
chc 16y ago
Several times in this article, they make it sound like Netflix is competing with cable. But in reality, Netflix only streams TV shows that are already out on DVD. iTunes is the service competing with cable, both on the PC and Apple TV.
- brucehart 16y ago
  Netflix isn't competing with cable in terms of getting eyeballs for the same content, but it is competing with cable in terms of time spent on entertainment. I know several people who have canceled their cable subscription because they found they had plenty of things to watch with a $10/month Netflix subscription and no longer found a $50-100/month cable subscription to be a good value.
  - Qz 16y ago
    I skip Cable based on Hulu alone. Still paying my share of 50$ for cable internet though.
  - adamc 16y ago
    I'm such a person. If you can live without sports (or only the sports available locally via over-the-air) and you don't need to see the latest/greatest shows, cable TV isn't a great value proposition. I don't mind waiting a year or two to watch something; there are plenty of alternatives in the meantime. That's the essential problem that the industry has to deal with: there is way more content than most of us have time for.
  - chime 16y ago
    I'm another person who cancelled cable and started watching things I normally wouldn't on Netflix. I'm rewatching the Doctor Who new series now and loving every minute of it. Wife and I watched Dead Like Me, Arrested Development, Pushing Daises, and lots of documentaries and movies.
- jdludlow 16y ago
  It's currently rare, but Netflix does offer some shows prior to DVD release. For example, Party Down Season 2 episodes were available on Netflix the same week that they were originally broadcast. They've since been removed, and I assume will be back once the DVDs are out. On a tiny scale they're experimenting with a hybrid model of "instantly available" and "waiting for DVD."
DiabloD3 16y ago
I find TWC's concept of reality rather ironic. TWC's stock is at an all time new low, and they have been given permission by the FCC to break the rules on the maximum bill for service packages. I have TWC here and can't get Sat, and am paying $75 a month for 40 analog stations; soon as I figure out how to switch to, say, Google TV + Netflix without loosing too much, I'm switching.
Cushman 16y ago
Netflix responds, "Who?"
protomyth 16y ago
It isn't so far fetched. Time Warner is a producer of content and has a large library. It doesn't seem unreasonable for content producers to cut out the middle man and have a streaming service of their own. Disney in particular could very well build a Netflix clone of their content. Aggregated services like Netflix allow for more content and smaller library owner participation, but one wonders at what size of library could $5 a month be justified? How about $10?
- adamc 16y ago
  Speaking as a netflix subscriber, the problems I see with this are: 1) many of these libraries, on their own, wouldn't even be worth $5 a month to me 2) I don't want to have to buy a bunch of different services and somehow integrate them. Maybe if they all showed up as Roku channels... but netflix is available across many different devices. Few other services are so ubiquitous. Honestly, if netflix failed and nothing took its place, I expect we'd just buy/rent dvds for a few years and wait it out. But I don't think they are going to fail. The sad truth is that there is so much content out there that it's pretty easy to live without the latest.
- DanielN 16y ago
  Isn't that what Hulu is to some extent. I guess it's different forms of media (tv vs. movies) so one could convince themselves that they don't compete, but this seems in the same vain to me.
- ericd 16y ago
  The thing is that 1 service with 5x content >> 5 services with x content each. Being able to find everything in one place is a very large benefit from a consumer perspective.
  - protomyth 16y ago
    The thing is they don't all have same size libraries. If Disney took all content off Netflix and created its own service, then it probably could do it itself. Time Warner might be close to that size. Other need to be part of an aggregation.
p_nathan 16y ago
Cable is on its way out. Maybe not today, maybe not next year, maybe not in five years. But it is surpassed and supplanted by the Internet. Movies, news and TV shows will continue, and online pricing will, in the course of time, adjust to reflect a profit margin that doesn't involve existing cable TV. That doesn't mean Netflix is going to rule - it's much more reasonable in my opinion to assume a cabal of motion picture industry will form and cut out the middle-men. My 0.02c.
- cobralibre 16y ago
  That doesn't mean Netflix is going to rule - it's much more reasonable in my opinion to assume a cabal of motion picture industry will form and cut out the middle-men. And it's a pity that you're almost certainly right, since Netflix actually does what it does well.
rdtsc 16y ago
Am I the only one who actually thinks they are scared and worried if they find the need to downplay Netflix and condescendingly compare it to the Albanian army taking over the world? If it isn't a threat, why bother even talking about it... Do the corporate PR types and CxOs really think they are being smart and sly when they all of the sudden, out of the blue start telling everyone "we are doing very well, we are not afraid of anyone, everything is fine" and not arouse suspicion? Last time this kind of excessive chest pounding and excessive boasting happened in a company I worked for, a week later we read from CNN financial news that we have been sold to some no-name equity holding company... and it wasn't because we were great, it was because things were going South. Now what I am interested in, does the management actually brainwash themselves to believe their own lies or do they know things are bad and just try to lie and talk their way out of the problem with pure "leadership" and "decisive" chest pounding...
- dasil003 16y ago
  I tend to think the smartest among them realize that the world is changing and big budget entertainment will increasingly have to compete with more and more free and low-cost entertainment options on the internet, but what are they supposed to do about that? The only rational thing is to extract as much value from their content as they can while they can. Freezing out NetFlix may well help profits in the short-term, which is the best they can hope for with the way the market is going. Eventually they will have to take less for streaming deals, but we are still a ways from that point.
  - sielskr 16y ago
    "big budget entertainment will increasingly have to compete with more and more free and low-cost entertainment options on the internet" By "free and low-cost entertainment options" do you mean pirated content? I do not see non-pirated content competing effectively with big-budget movies and television the way that non-pirated textual content (blogs, sites like HN) competes effectively with newspapers and magazines.
    - dasil003 16y ago
mayukh 16y ago
I had the same thought as some have expressed here, Time Warner taking a shot at Netflix,,really? Time Warner ?? But the article makes some valid points. When Netflix started it wasn't viewed as a direct threat to the content owners. Nflix served as the physical distribution arm (and a very very efficient one at that) for media houses. But now with streaming the game is changing. Each of the players can now setup their own web based distribution base, why would they need Netflix anymore? Plus there's more competition now. When Netflix launched it was the only one that did what it did (true bb tried, but they were poorly run). With streaming in addition to each Media conglomerates own websites there's also Hulu and lets not forget big dog Google (Youtube and Google TV). In short content owners have options now, that didn't before. I trust Netflix will come out of this strong, they're a great company with some really smart people, but its not going to be easy
bennesvig 16y ago
Maybe fade slightly, but cable companies are ready to supernova.
aresant 16y ago
Netflix's greatest coup to date has been integration with so many hardware manufacturers - the bulk of net-connected TVs & consoles have Netflix on there as a gimmie. But Amazon is catching up - found them on my most recent Sony TV purchase, they're on ROKU (originally a Netflix device), etc. With that option I find myself using Netflix less and less because the streaming content just ain't that great and Amazon's streaming on-demand service, while more expensive today, gives better content. The recent rumor of Amazon considering bundling a FREE streaming service with Amazon Prime is very compelling and, unlike Blockbuster & the studios, they can compete in online commerce and have the pockets to play with the studios. ref - http://technolog.msnbc.msn.com/_news/2010/12/07/5605985-amazon-primed-for-subscription-streaming-video http://technolog.msnbc.msn.com/_news/2010/12/07/5605985-amaz...
j2d2j2d2 16y ago
I do too, unfortunately. I got bored of their streamable selection a little while back. If they updated it or got more of the main library in there, I'd be all about it again though.
aracena 16y ago
"Who in the hell wants to hear actors talk?" Harry Warner
- OpieCunningham 16y ago
  Yeah, that guys company sure didn't last very long.
jey 16y ago
“It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey L. Bewkes, the chief executive of Time Warner, in an interview last week. “I don’t think so.” Someone please throw a dozen copies of The Innovator's Dilemma[1] at this guy. Maybe the TW board will wake up and fire him before he runs their company into the ground. 1. http://en.wikipedia.org/wiki/Disruptive_technology http://en.wikipedia.org/wiki/Disruptive_technology
- Thuraash 16y ago
  I don't think you're giving Bewkes due credit. It seems like the point wasn't lost on him at all; the industry seems to have realized that the wave is going by, and they got caught flat-footed. See: "Time Warner’s HBO is in the process of introducing a new online service, HBO GO, which will be available to authenticated HBO subscribers. Mr. Bewkes has also led an industry initiative he has called TV Everywhere, whose idea is to offer cable network programming online for anyone who is a verified cable subscriber. " They're trying to take advantage of the economies and at least some of the capabilities of the digital distribution platform without losing a huge chunk of profits (subscribers). It makes sense to try and diminish their digital-distribution competition (including Netflix) for business reasons. Netflix jumped the gun on them by hopping on the digital platform first, and at very subsidized prices, so the conglomerates have to play catch-up. Don't forget, though, that this kitty got claws: big media can still price Netflix out of the game, or at least out of this ridiculous growth phase, since they do own/create the content that Netflix thrives on, and can raise prices.
  - jey 16y ago
    Nah, that seems like a classic textbook late response of a company caught empty-handed by a disruption. The very pressures you cite to preserve their existing business will ultimately kill them without some IBM-style creative thinking. Yes, it's theoretically possible that the TV industry is inefficient enough that the oligopoly can keep out new entrants, but Netflix already has way too much market share for that to work out in the cartel's favor.
    - 16y ago
chime 16y ago
> Time Warner’s HBO is in the process of introducing a new online service, HBO GO, which will be available to authenticated HBO subscribers. Mr. Bewkes has also led an industry initiative he has called TV Everywhere, whose idea is to offer cable network programming online for anyone who is a verified cable subscriber. And that's what you're doing wrong Mr. Bewkes. As I don't have cable anymore, I'll never be able to access HBO GO or TV Everywhere. I will not re-signup for cable at $75/month now that I have Netflix for $8/month, even if you add tons of tertiary services to your cable offerings. With these tactics, the most you can do is slow down customer defection to Netflix. And even then, you will never get back a single customer you already lost to Netflix. They get their users better than you get your viewers. Get your content on Netflix and/or make your content available to any Roku/XBox/Wii/PS3/iPad/iPhone/PC/Mac like Netflix for a fair price and I'll sign up. I am no fan of DRM but I will use Silverlight if I must.
invertedlambda 16y ago
I would have paid attention to this article but I'm too busy streaming "Robin Hood: Men in Tights".
acangiano 16y ago
Speaking of fading stars: http://grab.by/grabs/47f61f006c2121a23c90dd80cb633255.png http://grab.by/grabs/47f61f006c2121a23c90dd80cb633255.png
gphil 16y ago
On a related note, Netflix will be joining the S&P 500 next year when they re-index.
iwwr 16y ago
Killing Netflix is not going to push customers back in the fold of cable TV. It will push them toward piracy.

47 points by donohoe 16y ago

taylorwc 16y ago

I think the right word for TWC's view is 'delusional.'

erreon 16y ago

Blockbuster didn't think they were gonna be a challenge either.

chc 16y ago

Several times in this article, they make it sound like Netflix is competing with cable. But in reality, Netflix only streams TV shows that are already out on DVD. iTunes is the service competing with cable, both on the PC and Apple TV.

brucehart 16y ago
Netflix isn't competing with cable in terms of getting eyeballs for the same content, but it is competing with cable in terms of time spent on entertainment. I know several people who have canceled their cable subscription because they found they had plenty of things to watch with a $10/month Netflix subscription and no longer found a $50-100/month cable subscription to be a good value.
- Qz 16y ago
  I skip Cable based on Hulu alone. Still paying my share of 50$ for cable internet though.
- adamc 16y ago
  I'm such a person. If you can live without sports (or only the sports available locally via over-the-air) and you don't need to see the latest/greatest shows, cable TV isn't a great value proposition. I don't mind waiting a year or two to watch something; there are plenty of alternatives in the meantime. That's the essential problem that the industry has to deal with: there is way more content than most of us have time for.
- chime 16y ago
  I'm another person who cancelled cable and started watching things I normally wouldn't on Netflix. I'm rewatching the Doctor Who new series now and loving every minute of it. Wife and I watched Dead Like Me, Arrested Development, Pushing Daises, and lots of documentaries and movies.
jdludlow 16y ago
It's currently rare, but Netflix does offer some shows prior to DVD release. For example, Party Down Season 2 episodes were available on Netflix the same week that they were originally broadcast. They've since been removed, and I assume will be back once the DVDs are out. On a tiny scale they're experimenting with a hybrid model of "instantly available" and "waiting for DVD."

DiabloD3 16y ago

I find TWC's concept of reality rather ironic. TWC's stock is at an all time new low, and they have been given permission by the FCC to break the rules on the maximum bill for service packages. I have TWC here and can't get Sat, and am paying $75 a month for 40 analog stations; soon as I figure out how to switch to, say, Google TV + Netflix without loosing too much, I'm switching.

Cushman 16y ago

Netflix responds, "Who?"

protomyth 16y ago

It isn't so far fetched. Time Warner is a producer of content and has a large library. It doesn't seem unreasonable for content producers to cut out the middle man and have a streaming service of their own. Disney in particular could very well build a Netflix clone of their content. Aggregated services like Netflix allow for more content and smaller library owner participation, but one wonders at what size of library could $5 a month be justified? How about $10?

adamc 16y ago
Speaking as a netflix subscriber, the problems I see with this are: 1) many of these libraries, on their own, wouldn't even be worth $5 a month to me 2) I don't want to have to buy a bunch of different services and somehow integrate them. Maybe if they all showed up as Roku channels... but netflix is available across many different devices. Few other services are so ubiquitous. Honestly, if netflix failed and nothing took its place, I expect we'd just buy/rent dvds for a few years and wait it out. But I don't think they are going to fail. The sad truth is that there is so much content out there that it's pretty easy to live without the latest.
DanielN 16y ago
Isn't that what Hulu is to some extent. I guess it's different forms of media (tv vs. movies) so one could convince themselves that they don't compete, but this seems in the same vain to me.
ericd 16y ago
The thing is that 1 service with 5x content >> 5 services with x content each. Being able to find everything in one place is a very large benefit from a consumer perspective.
- protomyth 16y ago
  The thing is they don't all have same size libraries. If Disney took all content off Netflix and created its own service, then it probably could do it itself. Time Warner might be close to that size. Other need to be part of an aggregation.

p_nathan 16y ago

Cable is on its way out. Maybe not today, maybe not next year, maybe not in five years. But it is surpassed and supplanted by the Internet. Movies, news and TV shows will continue, and online pricing will, in the course of time, adjust to reflect a profit margin that doesn't involve existing cable TV. That doesn't mean Netflix is going to rule - it's much more reasonable in my opinion to assume a cabal of motion picture industry will form and cut out the middle-men. My 0.02c.

cobralibre 16y ago
That doesn't mean Netflix is going to rule - it's much more reasonable in my opinion to assume a cabal of motion picture industry will form and cut out the middle-men. And it's a pity that you're almost certainly right, since Netflix actually does what it does well.

rdtsc 16y ago

Am I the only one who actually thinks they are scared and worried if they find the need to downplay Netflix and condescendingly compare it to the Albanian army taking over the world? If it isn't a threat, why bother even talking about it... Do the corporate PR types and CxOs really think they are being smart and sly when they all of the sudden, out of the blue start telling everyone "we are doing very well, we are not afraid of anyone, everything is fine" and not arouse suspicion? Last time this kind of excessive chest pounding and excessive boasting happened in a company I worked for, a week later we read from CNN financial news that we have been sold to some no-name equity holding company... and it wasn't because we were great, it was because things were going South. Now what I am interested in, does the management actually brainwash themselves to believe their own lies or do they know things are bad and just try to lie and talk their way out of the problem with pure "leadership" and "decisive" chest pounding...

dasil003 16y ago
I tend to think the smartest among them realize that the world is changing and big budget entertainment will increasingly have to compete with more and more free and low-cost entertainment options on the internet, but what are they supposed to do about that? The only rational thing is to extract as much value from their content as they can while they can. Freezing out NetFlix may well help profits in the short-term, which is the best they can hope for with the way the market is going. Eventually they will have to take less for streaming deals, but we are still a ways from that point.
- sielskr 16y ago
  "big budget entertainment will increasingly have to compete with more and more free and low-cost entertainment options on the internet" By "free and low-cost entertainment options" do you mean pirated content? I do not see non-pirated content competing effectively with big-budget movies and television the way that non-pirated textual content (blogs, sites like HN) competes effectively with newspapers and magazines.
  - dasil003 16y ago

mayukh 16y ago

I had the same thought as some have expressed here, Time Warner taking a shot at Netflix,,really? Time Warner ?? But the article makes some valid points. When Netflix started it wasn't viewed as a direct threat to the content owners. Nflix served as the physical distribution arm (and a very very efficient one at that) for media houses. But now with streaming the game is changing. Each of the players can now setup their own web based distribution base, why would they need Netflix anymore? Plus there's more competition now. When Netflix launched it was the only one that did what it did (true bb tried, but they were poorly run). With streaming in addition to each Media conglomerates own websites there's also Hulu and lets not forget big dog Google (Youtube and Google TV). In short content owners have options now, that didn't before. I trust Netflix will come out of this strong, they're a great company with some really smart people, but its not going to be easy

bennesvig 16y ago

Maybe fade slightly, but cable companies are ready to supernova.

aresant 16y ago

Netflix's greatest coup to date has been integration with so many hardware manufacturers - the bulk of net-connected TVs & consoles have Netflix on there as a gimmie. But Amazon is catching up - found them on my most recent Sony TV purchase, they're on ROKU (originally a Netflix device), etc. With that option I find myself using Netflix less and less because the streaming content just ain't that great and Amazon's streaming on-demand service, while more expensive today, gives better content. The recent rumor of Amazon considering bundling a FREE streaming service with Amazon Prime is very compelling and, unlike Blockbuster & the studios, they can compete in online commerce and have the pockets to play with the studios. ref - http://technolog.msnbc.msn.com/_news/2010/12/07/5605985-amazon-primed-for-subscription-streaming-video http://technolog.msnbc.msn.com/_news/2010/12/07/5605985-amaz...

j2d2j2d2 16y ago

I do too, unfortunately. I got bored of their streamable selection a little while back. If they updated it or got more of the main library in there, I'd be all about it again though.

aracena 16y ago

"Who in the hell wants to hear actors talk?" Harry Warner

OpieCunningham 16y ago
Yeah, that guys company sure didn't last very long.

jey 16y ago

“It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey L. Bewkes, the chief executive of Time Warner, in an interview last week. “I don’t think so.” Someone please throw a dozen copies of The Innovator's Dilemma[1] at this guy. Maybe the TW board will wake up and fire him before he runs their company into the ground. 1. http://en.wikipedia.org/wiki/Disruptive_technology http://en.wikipedia.org/wiki/Disruptive_technology

Thuraash 16y ago
I don't think you're giving Bewkes due credit. It seems like the point wasn't lost on him at all; the industry seems to have realized that the wave is going by, and they got caught flat-footed. See: "Time Warner’s HBO is in the process of introducing a new online service, HBO GO, which will be available to authenticated HBO subscribers. Mr. Bewkes has also led an industry initiative he has called TV Everywhere, whose idea is to offer cable network programming online for anyone who is a verified cable subscriber. " They're trying to take advantage of the economies and at least some of the capabilities of the digital distribution platform without losing a huge chunk of profits (subscribers). It makes sense to try and diminish their digital-distribution competition (including Netflix) for business reasons. Netflix jumped the gun on them by hopping on the digital platform first, and at very subsidized prices, so the conglomerates have to play catch-up. Don't forget, though, that this kitty got claws: big media can still price Netflix out of the game, or at least out of this ridiculous growth phase, since they do own/create the content that Netflix thrives on, and can raise prices.
- jey 16y ago
  Nah, that seems like a classic textbook late response of a company caught empty-handed by a disruption. The very pressures you cite to preserve their existing business will ultimately kill them without some IBM-style creative thinking. Yes, it's theoretically possible that the TV industry is inefficient enough that the oligopoly can keep out new entrants, but Netflix already has way too much market share for that to work out in the cartel's favor.
  - 16y ago

chime 16y ago

> Time Warner’s HBO is in the process of introducing a new online service, HBO GO, which will be available to authenticated HBO subscribers. Mr. Bewkes has also led an industry initiative he has called TV Everywhere, whose idea is to offer cable network programming online for anyone who is a verified cable subscriber. And that's what you're doing wrong Mr. Bewkes. As I don't have cable anymore, I'll never be able to access HBO GO or TV Everywhere. I will not re-signup for cable at $75/month now that I have Netflix for $8/month, even if you add tons of tertiary services to your cable offerings. With these tactics, the most you can do is slow down customer defection to Netflix. And even then, you will never get back a single customer you already lost to Netflix. They get their users better than you get your viewers. Get your content on Netflix and/or make your content available to any Roku/XBox/Wii/PS3/iPad/iPhone/PC/Mac like Netflix for a fair price and I'll sign up. I am no fan of DRM but I will use Silverlight if I must.

invertedlambda 16y ago

I would have paid attention to this article but I'm too busy streaming "Robin Hood: Men in Tights".

acangiano 16y ago

Speaking of fading stars: http://grab.by/grabs/47f61f006c2121a23c90dd80cb633255.png http://grab.by/grabs/47f61f006c2121a23c90dd80cb633255.png

gphil 16y ago

On a related note, Netflix will be joining the S&P 500 next year when they re-index.

iwwr 16y ago

Killing Netflix is not going to push customers back in the fold of cable TV. It will push them toward piracy.