Variety: Netflix poised to kill
A remarkably informative article from Variety, reporting plenty of new information along with the old. I’ve been talking for a while about the imminent death of Blockbuster and blah blah blah, I’m sure your sick of hearing about it, but now Netflix bigwigs are calling the video rental stores out publicly. A major price cut may loom n the horizon. Its goal: Not to gain new subscribers, not to reward loyal customers, but to put physical video stores like Blockbuster out of business. They want those stores to close, they want that company bankrupt, and they’re not just hoping, they’re doing:
Rather than taking the opportunity to raise prices and focus on profits, Netflix is looking to use its position to put the permanent kibosh on remaining challengers. CEO Reed Hastings said company will test further price cuts over the next six months to see if it can accelerate growth further without sacrificing margins.
“If there is enough elasticity to make additional price points work, this would increase the economic pressure on video stores and additional store closures would further increase Netflix growth for many years ahead,” he told analysts in a conference call.
I’d say “them’s fightin’ words,” but it doesn’t look like Hastings is looking for a fight at all. He’s looking for BB to just roll right over and die like a varmint.
Later in the article, we get an update on the much-anticpated Netflix On Demand offering… the update: On hold indefinitely. Again, not because the demand isn’t there, not because the technology won’t work or the business model is infeasible, but because the studios just said no.
Plans to garner growth from Internet downloads are now on indefinite hold, however, Hastings said, as a lack of available content have caused him cancel a launch planned for the end of this year.
“We face the same obstacles Movielink and Comcast and Apple have faced licensing movies,” he said. “Our shared opponents are TV channels that pay large sums to get multiyear exclusive access to studio films.”
Well, so much for that. Another great technology killed in the name of the mighty $. As they say, we live in a material world and Netflix is a material girl. Just think of the big studios as a sort of macro-economic sugar daddy, and you’re half way to understanding how the whole thing works.
There’s some stuff in the Variety article about the format wars, Blockbuster’s financial woes, and some other stuff, too. If I were you, I’d just read the whole thing.