Kiosk.net

Thanks to an inside scoop from a former Amazon employee, hackingnetflix.com was able to direct us towards some early screenshots from the movie downloading service soon to be available from Amazon.

From the looks of these screenshots (available here), it appears that Amazon will be offering TV downloads for around 2 dollars and movies for as low as 10. The site looks close to done, and only time will tell how successful the movie downloading model will become. The key, of course, is for major players like Amazon to get involved. A report from videobusiness.com suggests that the slower growth of the downloading model is ultimately rooted in problems with securing the rights to music in older films, as many major movie studios are already on board. In older contractual agreements, these movie studios only own the rights to the image content, but not the music, of the films.

Thanks to a deal with Netflix, Delta SkyMiles members will instantly receive a one-time bonus of 1,500 SkyMiles by becoming a Netflix member. Click here to access this special offer through shopmyway.com.

The Netflix Rolling Roadshow promotional tour hits Iowa tonight for what many consider to be the highlight of the tour. A free public screening of “Field of Dreams” will take place in the Dyersville corn/baseball field where the film was shot. Kevin Costner is expected to appear and perform with his band at the screening.

While Kiosk.net’s own megamark thinks that the whole promotion is a bit strange (I’m on the fence on this one), you can see what a Des Moines Register writer thinks about the Iowa screening here.

Bear Stearns analyst Glen Reid recently told investors that Movie Gallery’s recent 53% second quarter loss spells big time trouble for the video rental firm. Reid called MovieGallery’s debt burden “unsustainable” and warned that a complete “restructuring will ultimately be necessary.”

The company itself just announced that it is talking to restructuring firm Alvarez & Marsal to help determine its options. Apparently, the company’s acquisition of the Hollywood Video brand has hurt it badly, as Hollywood Video branded stores posted a 7.3% drop in sales last year while Movie Gallery branded stores posted a 1.6% gain.

See the full story here.

The constant rumors that companies like Apple and Amazon, and even Netflix, are toying with the idea of getting into the movie-download-and-burn business suggest that the model is the proverbial “future” of home movie-watcing.

Smaller companies like CinemaNow and MovieLink already offer this service, for which they have received mixed reviews. While these sites have already been criticized for offering a tiny number of titles, a recent article in Slate magazine also questions the visual quality of the DVDs that have been burned from their downloads. The conclusion of the article is that a viable download-and-burn model is still a ways off.

For now, at least, this comes as good news for Netflix, and even brick-and-mortar rental stores.

A recent Alex Mindlin article (registration required) in the New York Times is reporting that video-on-demand subscribers are renting fewer DVDs, but are purchasing just as many. According to a study conducted by Forrester Research, video-on-demand users rent an average of 11% fewer DVDs a year but only buy an average of 1% fewer DVDs a year.

The latter statistic should come as no surprise since buying and renting are two different things. The former number isn’t really surprising either, but it doesn’t really tell us how video-on-demand is affecting rental subscription services like Netflix. In other words, no matter how much slower your Netflix turnover is (i.e. no matter how many fewer movies you “rent”), you still pay the same monthly fee. In order to really trace the impact that cable video-on-demand service has on Netflix, we would need reports tallying the number of flat-out subscription cancellations and/or subscription downgrades. I would imagine that there is negative effect, but the question, as always, is one of degree. Does anyone have this info?

Thanks to Hacking Netflix for the scoop.

July was not a good month for new-media stocks, writes Paul Bond at The Hollywood Reporter. The bunch of them declined 3.7%, and among the losers were everbody’s favorite online movie rental company, Netflix:

In many cases, the falling share prices encouraged more bullishness among Wall Street analysts. Netflix, for example, reported revenue that fell short of Jefferies & Co. analyst Youssef Squali’s predictions, and the stock quickly shed about 20%, “a level we find attractive,” the analyst wrote.

In a case of bad timing, just before Netflix’s earnings release and stock plunge, Lehman Bros. analysts upgraded shares to “overweight,” arguing that lower-priced subscription plans were leading to subscriber growth, as were store closures at bricks-and-mortar rivals.

But the day after Lehman slapped its $32 target on Netflix shares, they dropped from $23.76 to $18.78. They finished the month at $20.69.

Two oddly similar articles published one week apart in South Florida Sun-Sentinel (”The Flick is in the mail“) and New York Times (”Getting Movies From a Store or a Mailbox (or Just a Box)“) on the joy of being a Netflix customer.

In my last post, I brought your attention to a WSJ Online article, which reported that Netflix’s business is overwhelmingly based upon renting out ‘hits’ (i.e. popular, big studio new releases). The larger point of the article itself was to combat the Long Tail Theory of economics that has come into vogue as of late, but for Netflix fans, the real issue centers on the counterintuitiveness of this finding.

Many of us were attracted to Netflix in the first place because of its large selection of older, limited release, foreign, special interest, or independent films. It is for this reason that Netflix has cultivated an identity as a bastion of the independent film industry. Via a report from Hacking Netflix, I was directed to a Hollywood Reporter article that justifies this reputation.

In the article, IFC President Jonathan Sehring hails Netflix’s recommondation model in particular as heavily responsible for turning people on to films outside the mainstream. The main problem that indie films face is that they can’t to keep up the heavy advertising expenses of big studio films. The Netflix recommendation system allows users to bypass (a bit) the influence of these ads and reduce the extent to which their choices are dicated to them by the media.

In keeping with this plan to help out the little guys, and thereby advance the artistic development of the medium (while calling into question any WSJ-article-based conclusions about Netflix’s philosophy), Netflix recently signed a deal with the IFC to help nationally distribute the independent film (and Sundance hit) “Sherrybaby,” which otherwise would not be able to reach a national mainstream audience.

A story in the Wall Street Journal Online reports that ‘hits’ are still a driving force the entertainment industry, accounting for large percentages of annual profits.

According to the article, Netflix is no exception, as 50 (the ‘hits’) of its 60,000 titles typically generate 30% of all rentals. The main motivation behind the article is to respond to Chris Anderson’s “Long Tail Theory,” which predicts that, due to internet retail, the sum of “misses” purchased by consumers will come to equal that of “hits.” While I am not knowledgeable enough about this theory to debate its merits (see Anderson’s own response to the article here) I do find the Netflix stats to be rather interesting.

The main reason why I like Netflix is that it offers such a wide selection of films. But I never have kept and never will keep track of how many of my queued movies are “new” and how many are “old” or how many are “popular” and how many are “indie.” Focusing on this sort of thing is what fuels snobbiness and the closedmindedness that those who only take in popular culture are often criticized for in the first place. In any case, I am a bit surprised by the Netflix stats simply because I am a bit surprised that not everyone is like me.

But then again, 3 out 10 isn’t really that much, considering that the the 50 films that make up this 3 are the ones that Netflix just so happens to be pimping the hardest. Considering the barrage of advertising for newer movies that we are faced with, it really isn’t that shocking that they make up a big chunk of rentals. People are simply more interested in what is new and in what others like themselves have seen. Culturally, not much more can be said about these stats beyond this. “New” doest not mean “bad,” just as “old” does not mean “good.” There are plenty of good new movies. Until someone is able to figure out whether or not this 30% is mainly crappy movies (not just new movies), I refuse to draw any conclusions from it.

Watch the debate unfold at Hacking Netflix.

UPDATE: A recent article in the New York Times by Lorne Manly offers an interesting gloss of the Long Tail Theory and some of the cultural trends that it, if true, may be suggesting.