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Posted
Jun 11 2008, 09:50 AM
by
Kim Peterson
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Netflix said it sold all of its set-top boxes in the first three weeks, and it's trying to speed up production. The company, which expects its DVD-by-mail business to peak within five years, is branching into online video delivery with a $100 set-top system called the Roku Netflix Player by Roku. Netflix never told us how many boxes it had in the first place, so we have no idea how significant a sell-out is. Netflix shares dipped briefly this morning but have come back to $30.65 at last check. In the three weeks since the Roku player went on sale, Netflix stock has roller-coastered between $30 and $33.
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Posted
May 29 2008, 11:38 AM
by
Kim Peterson
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Netflix CEO Reed Hastings expects the DVD-by-mail business to peak in five years. That's the main reason the company is focusing on set-top boxes that stream video directly to the TV set. Investors tread carefully: Hastings' comments are more evidence that this is a company in the middle of a huge transition to a riskier, more competitive future. One growing threat to the company comes from Redbox, which offers $1 DVD rentals at kiosks in grocery stores and other locations and is a popular choice with this blog's commenters. Redbox is majority-owned by Coinstar and plans to file for an IPO soon. Netflix would be smart to partner with Redbox, offering customers another way to get movies between DVD mailings.
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Posted
May 28 2008, 09:53 AM
by
Kim Peterson
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Some headlines that caught my eye today: Who has the worst customer service? MSN Money went snooping, and Time Warner's AOL topped the list. I agree, having seen AOL's horrible service firsthand. Short version of a long story: A family member with Alzheimer's could no longer speak -- let alone remember his AOL password -- and AOL wouldn't let his wife discontinue the service because she wasn't the primary account holder. His wife had to pay for years, and threaten legal action, before AOL canceled the account. Thanks, AOL. Delaware has the best broadband. A new report says Delaware tops the country when it comes to the number of Internet connections using "high broadband" -- meaning speeds exceeding 5 Mbps. About 60% of Delaware's Internet connections fall into this category. Rhode Island and New York round out the top three. I was surprised to see Nevada and Oklahoma next on the list, given that vast rural areas aren't the best environment for fast broadband.
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Posted
May 20 2008, 10:43 AM
by
Kim Peterson
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 Today we're seeing the future of Netflix. The company announced its $100 set-top player, available now and getting all kinds of frothy reviews (Wired calls it "just shy of totally amazing"). Hook the box to your TV and your wired or wireless high-speed Internet connection, and you can stream videos from Netflix's library.
Before we drill into the details of this thing, note that Netflix shares rose nearly 4% today, but closed up 2% to $31.63. Netflix shares have enjoyed a good run over the last year as the company grew subscribers and beat out Blockbuster in the DVD-by-mail business. But mailing DVDs has always been a short-term play. Now, we're seeing what Netflix wants to be when it grows up.
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Posted
Apr 25 2008, 06:19 AM
by
Kim Peterson
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Netflix shares had run up 78% from mid-January -- a considerable accomplishment helped along greatly by Blockbuster's ongoing struggles. But the stock price tanked this week, with investors acting the way my cats do when the vacuum is turned on. Instead of enjoying the good news (a solid first quarter, a big subscriber increase and a virtual lock on the DVD-by-mail market), investors overreacted and dumped Netflix over the bad. Netflix lowered its full-year profit projections, partly because it's spending more to build out a service that streams movies over the Internet. The company will also start charging more to customers who want to rent high-definition Blu-ray discs. Gross margin dropped more than 4%
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Posted
Apr 14 2008, 12:19 PM
by
Kim Peterson
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Does one loser plus one loser equal a winner? Not in the case of Blockbuster, whose offer to buy Circuit City is being met today with near-universal derision and head-scratching. The video chain, which has been in a losing battle with Netflix, has offered as much as $1.3 billion for Circuit City. That's more than a 50% premium to Circuit City's closing stock price on Friday. Blockbuster wants to combine the companies into a chain that would sell portable devices, DVDs and other content. Circuit City investors are understandably thrilled by the potential marriage. Shares of the company soared 28% today to $4.98. The electronics chain has been exploring sale possibilities, and this kind of premium is attractive. Blockbuster investors, on the other hand, are not happy: shares dropped nearly 11% today to $2.79.
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Posted
Apr 10 2008, 12:36 PM
by
Kim Peterson
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Blockbuster is feeling the love again in its love-hate relationship with the Internet, and this time I think the company is serious. The Hollywood Reporter says Blockbuster is making a set-top box for streaming movies to TVs, and could announce the service this month. The device would be tied to Movielink, the online movie service for PCs that Blockbuster bought last year. It's an ambitious move for a company that has never figured out the Internet. Blockbuster has bumbled around while Netflix, Amazon, Microsoft, TiVo and others found ways to marry video and the Web. Blockbuster went guns blazing after Netflix two years ago, pouring money into its DVD-by-mail service before deciding to pull back and retrench. Now, Blockbuster is making some smarter moves. For one thing, it's actually doing something with Movielink. And by offering a streaming box, it avoids the messy license and DRM issues that come with a downloading service. But Blockbuster faces some real problems, which may be why its stock price only rose less than 2% on the news today.
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Posted
Jan 17 2008, 12:32 PM
by
Kim Peterson
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Talk about bad timing. Apple just announced it will offer downloaded movie rentals (including high-def) over the Internet. Netflix is working on a set-top box to do the same thing, and Microsoft has been ramping up its downloadable movie offerings over Xbox Live.
Now, one cable company is starting to push back at excessive bandwidth usage caused mainly by video downloading. After an internal memo was leaked, Time Warner Cable confirmed it's planning a trial in Beaumont, Tex., in which it will charge Internet subscribers based on usage. (Time Warner's shares closed down 22 cents to $22.35 Friday.)
It's a tricky situation for Time Warner and other cable companies. Customers generally pay a flat rate for Internet (about $50 a month in my case), but a small minority are basically torrenting HD movies like crazy and sucking up a bunch of bandwidth. According to the leaked memo, 5% of subscribers were using up half of the total bandwidth.
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Posted
Jan 14 2008, 03:24 AM
by
Kim Peterson
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Netflix does most of its business by mail, but the company is getting ready for the future by spending $40 million on a video streaming service for customers with high-speed Internet connections. Today, the company is lifting restrictions on that service so that customers can watch as many movies and television shows as they want from Netflix's library of 6,000 titles.
Netflix previously set time limits on how much customers could watch per month, presumably to save money on bandwidth and the fees it must pay Hollywood when a movie is streamed. Today's move could be costly, because the company isn't raising its monthly rates to compensate for the added expenses.
Why the sudden burst of generosity? We probably have Apple to thank. If the rumors are true, Apple is set to announce movie rentals over iTunes tomorrow at its Macworld Expo. Apple hasn't been much of a competitor to Netflix before, but with a movie rental service the company becomes a threat.
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Posted
Jan 08 2008, 12:19 PM
by
Kim Peterson
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The Blu-ray and HD-DVD folks can bicker all they want about whose next-generation format is going to win. Comcast and other companies are laying plans now that could make that battle irrelevant. Comcast today announced "Project Infinity," a grandiose name for a plan to make 1,000 high-def movies and TV shows available each month by the end of this year. By 2009, Comcast wants to offer 6,000 movies on demand -- half in HD. Comcast will also begin rolling out ultra-high-speed Internet that allegedly allows you to download a high-def copy of a movie like "Batman Begins" in four minutes. I say "allegedly" because downloads in real life never seem to happen as fast as promised.
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