8 ms·

A little secret is that the content rights holders negotiated draconian streaming contracts that are outright prohibitive to Netflix. Netflix is trying to do e

by lr1970 3y ago

A little secret is that the content rights holders negotiated draconian streaming contracts that are outright prohibitive to Netflix. Netflix is trying to do everything possible to hide the fact that their streaming library is small and shrinking. In the old hey-day of Netflix mail-in red envelopes with DVDs you were hard pressed to find a movie they did not have. These days your search returns mostly crap.

Wowfunhappy 3y ago
This is why I'm still surprised they separated out (and eventually killed) their disc-by-mail service. I understand the visceral feeling that discs are an antiquated relic—but you just can't beat that catalog. Combining discs and streaming in one subscription provides customers with the best of both worlds. Need something to watch right now? No problem, we have an excellent streaming catalog and you're going to love Stranger Things! Want a specific movie or show, maybe Friends or The Lion King? We've got that too, it'll be in your mailbox in a couple days. And if some customers choose to forgo either the digital or physical side of the package, it doesn't cost Netflix anything.
- munificent 3y ago
  I'm sure they just ran the numbers and realized that being both a data streaming software company and a physical package logistics company just didn't add up. Every dollar they spent on the latter would have net them more profit if they instead invested it in the former.
  - Wowfunhappy 3y ago
    Maybe--I of course don't have their numbers--but remember that Netflix kept offering discs up until last year, just under a separate subscription. So they were still investing some money. I think Netflix got cocky. When Netflix separated the plans, streaming rights were cheap and Netflix's streaming catalog was growing quickly. They didn't foresee the market becoming so competitive. Continuing to offer discs would have allowed Netflix to hedge their bets and avoid relying on rights-holders. The original content push did that too, but at a much higher cost. If keeping DVDs meant Netflix could produce a few less original shows per year, that seems worth the trade.
    - PaulHoule 3y ago
      The transition from not needing a license (mailing discs) to renting content to owning it was intrinsic in their business plan all along. They saw that streaming was the future but that mailing discs would let them build a big brand early on, but they took the disc market very seriously and optimized it. Once you're streaming the cost structure is like this: Fox or Disney or someone like that will charge them $X /month/sub but it costs $Y to create a piece of content, independent of how many subscribers you have. There is a crossover point where you have enough subscribers that it makes sense to own.
- closewith 3y ago
  I'd say the majority of their customers wouldn't have a way to play the discs if sent.
  - Pxtl 3y ago
    Right? I have a half-dozen old devices around my house that could play a DVD, but I've never owned anything that can play bluRay, much less 4K disks (I've never even seen one of those IRL). And DVDs are no longer worth bothering with mostly because of the aspect ratio hassle if nothing else.
    - piperswe 3y ago
      Many people own an Xbox One S/X, Xbox Series X, or PS5, which can all play 4K Blu-ray. Many more people own a PS3, PS4, or regular Xbox One, which can all play regular Blu-ray.
      - LoganDark 3y ago
        Xbox One S/X doesn't have a disc drive, Xbox Series X doesn't have a disc drive, PS5 needs the disc drive bought separately and paired over the internet. Only the original Xbox One had a disc drive integrated.
        endisneigh 3y ago
        > Xbox One S/X doesn't have a disc drive, Xbox Series X doesn't have a disc drive, PS5 needs the disc drive bought separately and paired over the internet. Only the original Xbox One had a disc drive integrated. It’s always fascinating that people say things that are verifiably untrue. Like, really?
        afavour 3y ago
        OP may have meant Xbox Series S and X? Honestly a partly blame MS, their console naming has always baffled me.
- Kluggy 3y ago
  I'm more surprised they didn't sell it off so it could keep running, as the claims were that it was still profitable. I was a die hard subscriber to the end. I would have happily paid more money per month to get access to 4k disks as well
- tomnipotent 3y ago
  The DVD business was ~1% of total revenues by the time they shuttered it. At that point, it was no longer really cost effective for them to retain such a large physical infrastructure for so little ROI.
munificent 3y ago
> A little secret is that the content rights holders negotiated draconian streaming contracts that are outright prohibitive to Netflix. Netflix is trying to do everything possible to hide the fact that their streaming library is small and shrinking. I think that's fairly well-known at this point, though I agree it should be more widely known. I think the real secret is that Netflix discovered that their users aren't trying to watch the best movies, they're just trying to kill time. Apparently you can substitute good films for generic junk and people will keep their subscriptions. Really, the business model for Netflix has some weird perverse incentives. They make money from monthly subscriptions. They lose money when actually streaming content to users. So the ideal user from their standpoint is one who keeps paying but never watches anything. Thus, the company is incentivized to put out just enough good stuff that you can't miss that you don't cancel, but otherwise produce garbage you don't want.
- PaulDavisThe1st 3y ago
  I pay $16.55 per month for Netflix. I generally watch movies with my spouse. That cost is less than the cost for both of us to go to a movie theater. If Netflix has one item per month of roughly movie length or longer that we want to watch, the price seems worth it just for that. In recent years, this has still not been a sure bet month to month, but over a year, 12 scores are pretty much guaranteed.
  - hetspookjee 3y ago
    I rent any movie I’d like for like 3-4eu instead of a monthly subscription with a tiny offering.
    - PaulDavisThe1st 3y ago
      From where?
      - lagadu 3y ago
        Not the OP but I know I can rent both from Google and from my ISP, I imagine there are more services available.
LegitShady 3y ago
My favorite part about this is that a lot of the rights holders are losing their shirts on their alternative streaming services, because it turns out making content is different than running a profitable streaming service. Peacock and Disney+ are losing huge money, Amazon is introducing commercials or an upcharge to their service because they've been spending on their own content with abandon (I can't imagine why WoT costs per episode what I read it costs), and I don't know how appletv+ is doing in 2023 but in 2022 and 2021 they were also losing huge sums of money. Is netflix the only major streaming service that makes money at this point? Everyone decided "I can cut out the middleman and keep the money in my pocket" and they all lost hugely on that strategy.
- vrosas 3y ago
  Funny to think back on all those HN/Reddit stock threads parroting “anyone can put a video on a CDN Netflix is doomed lmao” as if being responsible for a double digit percentage of the entire internet’s bandwidth was some intern project.
  - LegitShady 3y ago
    The real hard part was always customer acquisition and retention. I got free apple tv+ with an ipad I bought and I couldn't find a reason to keep it after the free trial ran out. I roam different video services, switching every month or two. I don't have time to need all the services at once anyways.
- imbnwa 3y ago
  Of all the platforms I don’t think Apple is actually interested in replacing Netflix
  - LegitShady 3y ago
    apple has been in the content licensing and user distribution business for a long time with books, music, etc. Its a logical extension of their business. But they have more money than god and if their studio spending far outweighs its income they can absorb that with prophets from other divisions. Also, apple has the problem where they have more money than they know what do with - if they can figure out a profitable movie and tv studio then it would be an honest to god diversification.
deleted 3y ago
[deleted]
paxys 3y ago
Funny enough it has been so long that we have come full circle on this. Studios that were pulling their content from Netflix to launch competing streaming services are now willing to license it again because their services are failing, leaving them bleeding for cash. You can even find the newest Disney and Warner Bros movies and shows on Netflix now.
- varispeed 3y ago
  Is it region locked? In the UK it's basically cobwebs. 99% of new stuff is just unwatchable filler. Template stories with dialogues probably written by ChatGPT.
  - andybak 3y ago
    You're overstating considerably.
    - GreymanTheGrey 3y ago
      I live in Australia and have noted the same phenomenon on Netflix. There is an absolute dearth of new, quality content coming through. I've seen no indication that formerly exclusive content from other platforms is making its way to Netflix in my country. I don't believe the person you're replying to is overstating at all, and certainly not 'considerably'.
PaulHoule 3y ago
The real "Netflix Optimization Problem" is them figuring out how to minimize the cost of licensing or creating content while staying just good enough that you renew your subscription.
- throwaway2037 3y ago
  Real question: Why doesn't HBO suffer from the same?
tracerbulletx 3y ago
The general consensus in the media industry is that Netflix basically won the streaming wars this year. Every other service is contracting, has a fraction of the viewership, is running at a loss. Netflix is running in the black, has by far the highest viewership (like an order of magnitude over many of them), dominates over seas. The other studios have started to license content again to get every last bit of cash flow they can.
- danpalmer 3y ago
  I can't help but feel that being in the black (or the degree to which they are) is a short term effect of the password sharing crackdown and the price increases. Both of those are likely to have a drop-off in impact over the long run, especially as the cost of living crisis develops. It makes sense to me that the first thing to go is the other streaming services, as Netflix has such a strong mindshare, but their lack of content is more noticeable all the time, and I think there will be a swing back to cheaper services with at least different content, if not better.
  - imbnwa 3y ago
    For me Netflix has the best foreign content selection hands down, look at the impact of RRR (India), Dark (Germany), or Squid Game (Korea). They’ve become _the _ platform for South Korean content when South Korea is ascendant on the global pop culture stage. Somebody on Netflix has been using the ol noggin
  - lotsofpulp 3y ago
    > I can't help but feel that being in the black (or the degree to which they are) is a short term effect of the password sharing crackdown and the price increases. The numbers disagree. Net income and profit margin was doing great even before password sharing crackdown. https://www.macrotrends.net/stocks/charts/NFLX/netflix/net-income https://www.macrotrends.net/stocks/charts/NFLX/netflix/net-i... https://www.macrotrends.net/stocks/charts/NFLX/netflix/profit-margins https://www.macrotrends.net/stocks/charts/NFLX/netflix/profi...
- awongh 3y ago
bagels 3y ago
I like some of the original content, but I quit when 5/5 times I wanted to watch an old movie, it was not available.
- willi59549879 3y ago
  That is annoying as a user. I guess they remove content because of the contracts they have. Wouldn't it be nicer to have all content on all platforms, and then when content is watched the creators receive a money payment? Not sure if that is feasible though, storing content also has a cost. To make it simpler they could switch from subscription fees to a fee based on views.
deleted 3y ago
[deleted]
patmcc 3y ago
I'm still surprised Netflix hasn't bought a bunch of media companies with big back catalogs. I feel like it'd help with people complaining about lack of content and give them better negotiating power.
Tommstein 3y ago
> Netflix is trying to do everything possible to hide the fact that their streaming library is small and shrinking. And it appears to be working. I was telling this girl the other day about why I canceled Netflix years ago, because they frequently didn't have whatever I searched for. She insisted that "no, Netflix has everything!" So we proceeded to search for various things with her account, including the final straw that made me cancel. Netflix proceeded to not have a single thing we searched for.
pyuser583 3y ago
There are a couple movies/TV shows that were unobtainable via Netflix DVDs, and which seem unstreamable. Some very old DVDs float around at high prices. Examples are: Exit to Eden, The Others, and Baccano! How does this happen? Why do rights holders want movies killed?
solardev 3y ago
Is that a secret? I thought that's the whole reason they moved to making a bunch of originals instead (many of which are great).

by lr1970 3y ago

Wowfunhappy 3y ago

This is why I'm still surprised they separated out (and eventually killed) their disc-by-mail service. I understand the visceral feeling that discs are an antiquated relic—but you just can't beat that catalog. Combining discs and streaming in one subscription provides customers with the best of both worlds. Need something to watch right now? No problem, we have an excellent streaming catalog and you're going to love Stranger Things! Want a specific movie or show, maybe Friends or The Lion King? We've got that too, it'll be in your mailbox in a couple days. And if some customers choose to forgo either the digital or physical side of the package, it doesn't cost Netflix anything.

munificent 3y ago
I'm sure they just ran the numbers and realized that being both a data streaming software company and a physical package logistics company just didn't add up. Every dollar they spent on the latter would have net them more profit if they instead invested it in the former.
- Wowfunhappy 3y ago
  Maybe--I of course don't have their numbers--but remember that Netflix kept offering discs up until last year, just under a separate subscription. So they were still investing some money. I think Netflix got cocky. When Netflix separated the plans, streaming rights were cheap and Netflix's streaming catalog was growing quickly. They didn't foresee the market becoming so competitive. Continuing to offer discs would have allowed Netflix to hedge their bets and avoid relying on rights-holders. The original content push did that too, but at a much higher cost. If keeping DVDs meant Netflix could produce a few less original shows per year, that seems worth the trade.
  - PaulHoule 3y ago
    The transition from not needing a license (mailing discs) to renting content to owning it was intrinsic in their business plan all along. They saw that streaming was the future but that mailing discs would let them build a big brand early on, but they took the disc market very seriously and optimized it. Once you're streaming the cost structure is like this: Fox or Disney or someone like that will charge them $X /month/sub but it costs $Y to create a piece of content, independent of how many subscribers you have. There is a crossover point where you have enough subscribers that it makes sense to own.
closewith 3y ago
I'd say the majority of their customers wouldn't have a way to play the discs if sent.
- Pxtl 3y ago
  Right? I have a half-dozen old devices around my house that could play a DVD, but I've never owned anything that can play bluRay, much less 4K disks (I've never even seen one of those IRL). And DVDs are no longer worth bothering with mostly because of the aspect ratio hassle if nothing else.
  - piperswe 3y ago
    Many people own an Xbox One S/X, Xbox Series X, or PS5, which can all play 4K Blu-ray. Many more people own a PS3, PS4, or regular Xbox One, which can all play regular Blu-ray.
    - LoganDark 3y ago
      Xbox One S/X doesn't have a disc drive, Xbox Series X doesn't have a disc drive, PS5 needs the disc drive bought separately and paired over the internet. Only the original Xbox One had a disc drive integrated.
      - endisneigh 3y ago
        > Xbox One S/X doesn't have a disc drive, Xbox Series X doesn't have a disc drive, PS5 needs the disc drive bought separately and paired over the internet. Only the original Xbox One had a disc drive integrated. It’s always fascinating that people say things that are verifiably untrue. Like, really?
        afavour 3y ago
        OP may have meant Xbox Series S and X? Honestly a partly blame MS, their console naming has always baffled me.
Kluggy 3y ago
I'm more surprised they didn't sell it off so it could keep running, as the claims were that it was still profitable. I was a die hard subscriber to the end. I would have happily paid more money per month to get access to 4k disks as well
tomnipotent 3y ago
The DVD business was ~1% of total revenues by the time they shuttered it. At that point, it was no longer really cost effective for them to retain such a large physical infrastructure for so little ROI.

munificent 3y ago

> A little secret is that the content rights holders negotiated draconian streaming contracts that are outright prohibitive to Netflix. Netflix is trying to do everything possible to hide the fact that their streaming library is small and shrinking. I think that's fairly well-known at this point, though I agree it should be more widely known. I think the real secret is that Netflix discovered that their users aren't trying to watch the best movies, they're just trying to kill time. Apparently you can substitute good films for generic junk and people will keep their subscriptions. Really, the business model for Netflix has some weird perverse incentives. They make money from monthly subscriptions. They lose money when actually streaming content to users. So the ideal user from their standpoint is one who keeps paying but never watches anything. Thus, the company is incentivized to put out just enough good stuff that you can't miss that you don't cancel, but otherwise produce garbage you don't want.

PaulDavisThe1st 3y ago
I pay $16.55 per month for Netflix. I generally watch movies with my spouse. That cost is less than the cost for both of us to go to a movie theater. If Netflix has one item per month of roughly movie length or longer that we want to watch, the price seems worth it just for that. In recent years, this has still not been a sure bet month to month, but over a year, 12 scores are pretty much guaranteed.
- hetspookjee 3y ago
  I rent any movie I’d like for like 3-4eu instead of a monthly subscription with a tiny offering.
  - PaulDavisThe1st 3y ago
    From where?
    - lagadu 3y ago
      Not the OP but I know I can rent both from Google and from my ISP, I imagine there are more services available.

LegitShady 3y ago

My favorite part about this is that a lot of the rights holders are losing their shirts on their alternative streaming services, because it turns out making content is different than running a profitable streaming service. Peacock and Disney+ are losing huge money, Amazon is introducing commercials or an upcharge to their service because they've been spending on their own content with abandon (I can't imagine why WoT costs per episode what I read it costs), and I don't know how appletv+ is doing in 2023 but in 2022 and 2021 they were also losing huge sums of money. Is netflix the only major streaming service that makes money at this point? Everyone decided "I can cut out the middleman and keep the money in my pocket" and they all lost hugely on that strategy.

vrosas 3y ago
Funny to think back on all those HN/Reddit stock threads parroting “anyone can put a video on a CDN Netflix is doomed lmao” as if being responsible for a double digit percentage of the entire internet’s bandwidth was some intern project.
- LegitShady 3y ago
  The real hard part was always customer acquisition and retention. I got free apple tv+ with an ipad I bought and I couldn't find a reason to keep it after the free trial ran out. I roam different video services, switching every month or two. I don't have time to need all the services at once anyways.
imbnwa 3y ago
Of all the platforms I don’t think Apple is actually interested in replacing Netflix
- LegitShady 3y ago
  apple has been in the content licensing and user distribution business for a long time with books, music, etc. Its a logical extension of their business. But they have more money than god and if their studio spending far outweighs its income they can absorb that with prophets from other divisions. Also, apple has the problem where they have more money than they know what do with - if they can figure out a profitable movie and tv studio then it would be an honest to god diversification.

deleted 3y ago

[deleted]

paxys 3y ago

Funny enough it has been so long that we have come full circle on this. Studios that were pulling their content from Netflix to launch competing streaming services are now willing to license it again because their services are failing, leaving them bleeding for cash. You can even find the newest Disney and Warner Bros movies and shows on Netflix now.

varispeed 3y ago
Is it region locked? In the UK it's basically cobwebs. 99% of new stuff is just unwatchable filler. Template stories with dialogues probably written by ChatGPT.
- andybak 3y ago
  You're overstating considerably.
  - GreymanTheGrey 3y ago
    I live in Australia and have noted the same phenomenon on Netflix. There is an absolute dearth of new, quality content coming through. I've seen no indication that formerly exclusive content from other platforms is making its way to Netflix in my country. I don't believe the person you're replying to is overstating at all, and certainly not 'considerably'.

PaulHoule 3y ago

The real "Netflix Optimization Problem" is them figuring out how to minimize the cost of licensing or creating content while staying just good enough that you renew your subscription.

throwaway2037 3y ago
Real question: Why doesn't HBO suffer from the same?

tracerbulletx 3y ago

The general consensus in the media industry is that Netflix basically won the streaming wars this year. Every other service is contracting, has a fraction of the viewership, is running at a loss. Netflix is running in the black, has by far the highest viewership (like an order of magnitude over many of them), dominates over seas. The other studios have started to license content again to get every last bit of cash flow they can.

danpalmer 3y ago
I can't help but feel that being in the black (or the degree to which they are) is a short term effect of the password sharing crackdown and the price increases. Both of those are likely to have a drop-off in impact over the long run, especially as the cost of living crisis develops. It makes sense to me that the first thing to go is the other streaming services, as Netflix has such a strong mindshare, but their lack of content is more noticeable all the time, and I think there will be a swing back to cheaper services with at least different content, if not better.
- imbnwa 3y ago
  For me Netflix has the best foreign content selection hands down, look at the impact of RRR (India), Dark (Germany), or Squid Game (Korea). They’ve become _the _ platform for South Korean content when South Korea is ascendant on the global pop culture stage. Somebody on Netflix has been using the ol noggin
- lotsofpulp 3y ago
  > I can't help but feel that being in the black (or the degree to which they are) is a short term effect of the password sharing crackdown and the price increases. The numbers disagree. Net income and profit margin was doing great even before password sharing crackdown. https://www.macrotrends.net/stocks/charts/NFLX/netflix/net-income https://www.macrotrends.net/stocks/charts/NFLX/netflix/net-i... https://www.macrotrends.net/stocks/charts/NFLX/netflix/profit-margins https://www.macrotrends.net/stocks/charts/NFLX/netflix/profi...
awongh 3y ago

bagels 3y ago

I like some of the original content, but I quit when 5/5 times I wanted to watch an old movie, it was not available.

willi59549879 3y ago
That is annoying as a user. I guess they remove content because of the contracts they have. Wouldn't it be nicer to have all content on all platforms, and then when content is watched the creators receive a money payment? Not sure if that is feasible though, storing content also has a cost. To make it simpler they could switch from subscription fees to a fee based on views.

deleted 3y ago

[deleted]

patmcc 3y ago

I'm still surprised Netflix hasn't bought a bunch of media companies with big back catalogs. I feel like it'd help with people complaining about lack of content and give them better negotiating power.

Tommstein 3y ago

> Netflix is trying to do everything possible to hide the fact that their streaming library is small and shrinking. And it appears to be working. I was telling this girl the other day about why I canceled Netflix years ago, because they frequently didn't have whatever I searched for. She insisted that "no, Netflix has everything!" So we proceeded to search for various things with her account, including the final straw that made me cancel. Netflix proceeded to not have a single thing we searched for.

pyuser583 3y ago

There are a couple movies/TV shows that were unobtainable via Netflix DVDs, and which seem unstreamable. Some very old DVDs float around at high prices. Examples are: Exit to Eden, The Others, and Baccano! How does this happen? Why do rights holders want movies killed?

solardev 3y ago

Is that a secret? I thought that's the whole reason they moved to making a bunch of originals instead (many of which are great).