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Posted
Dec 21 2007, 03:15 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
Blockbuster continues to struggle with balancing its online rental plans with its more profitable in-store business. The company said yesterday it's raising prices for its Total Access subscription plans, and Citigroup analyst Tony Wible said he thinks half of the subscriber base will ditch. In a nutshell, the premium plan increases by a shocking $10 to $35 a month. That plan allows you to rent three DVDs at a time online with unlimited in-store trades. If you rent one DVD at a time, the price increases by $2 to $12 a month. The most popular plan, which gets you three DVDs at a time, will cost $21 a month. These plans let you rent DVDs online or at stores. To ease the pain, Blockbuster is cutting the monthly price of some of its by-mail plans by $1.
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Posted
Dec 06 2007, 04:17 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Those red DVD mailers Netflix uses are a huge pain in the butt for postal workers. In a report out this week, the Postal Service says it has to manually process 70% of Netflix's DVD envelopes because they jam up the mail machines.
And here's government bureaucracy at its finest. Normally the Postal Service would charge Netflix for having a "nonmachineable" mailpiece. But this kind of envelope isn't discussed in the official "Mail Manual," so the Postal Service can't classify it as nonmachineable. So the Postal Service has had to suck it up and hand-process Netflix envelopes. That's added $41.9 million in labor costs over the past two years and will add $61.5 million over the next two, the service estimates. No more. The Postal Service's Inspector General wants Netflix to make its envelopes easier to process or pay a 17-cent surcharge for each one. Netflix says it will redesign its mailer to avoid the fee. A spokesman spins the issue to note that the company actually saves the post office money by going to the post office to get returned discs. Netflix is entitled to have the discs delivered because it pays for first-class postage.
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Posted
Jan 17 2008, 12:32 PM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
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
Rating:
Money Blog: Top Stocks Blog - MSN Money
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
Mar 03 2009, 11:16 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Nothing like a bankruptcy rumor to demolish a share price. Blockbuster (BBI) has hired lawyers to look into a possible bankruptcy filing, Bloomberg reports. Shares plunged 77% Tuesday to 22 cents before trading was halted.
Late Tuesday, Blockbuster said it was exploring a corporate restructuring, and not a bankruptcy.
The movie-rental chain has been hit hard by Netflix (NFLX), which has been firing on all cylinders for years while Blockbuster struggled to find a strategy for the future. On some days, it went after Netflix with guns blazing, but other times it pursued other ideas, such as its bizarre attempt to buy Circuit City last year. Blockbuster has 7,500 stores worldwide, and hasn't wanted to cannibalize its retail sales with a by-mail DVD effort (It has a by-mail offering, but has wavered on how heavily to promote it). But the video-rental industry is hurting, despite Blockbuster's many attempts to try to lure people back to stores with in-store kiosks and other offerings.
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Posted
Aug 14 2008, 09:40 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
Couch potatoes like me might have to, ulp, find something else to do this weekend. Netflix is suffering from a "severe technology issue" that has cut its DVD shipments this week. The company didn't mail any DVDs on Tuesday, and only got about half of its distribution centers online yesterday, according to Bloomberg.
The company hasn't shipped any today, and said it's "working feverishly" to resolve the shipping delays. About a third of Netflix's 8.4 million customers are affected, and presumably those are the ones who got an e-mail about it. I haven't seen anything in my inbox yet. Netflix investors don't seem too flustered; shares are up more than 1% today to $31.57.
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Posted
Nov 02 2007, 04:11 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
This is how I picture board meetings at Blockbuster world headquarters. CEO Jim Keyes stands up and slams his hands on the table. "This Internet thing is killing us!" he shouts. "Come on, people, we need ideas!"
Silence. Crickets chirping.
If any company could pack the Internet up in a box and shove it on the garage shelf, it would be Blockbuster. Oh, for the days when it could zap you with late fees if you didn't have the movie back by 4 p.m. Or when it could charge you an arm and a leg for new releases. The company hasn't been able to handle the rise of online distribution or the Web-slash-mail delivery system that Netflix has pioneered.
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Posted
May 20 2008, 10:43 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 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
Oct 23 2007, 09:46 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
I love rooting for Netflix. One reason is that in five years of being a customer, I've never had a bad experience. But the bigger reason is that Netflix has doggedly pursued its business model to become a worthy rival to BOB, also known as Big Old Blockbuster. After losing ground to BOB this year, Netflix has regained its momentum.
The company surprised analysts last night with stronger-than-expected quarterly results and a 24% increase in subscribers, to 7 million. Its shares are up more than 9% today to above $25 as investors applaud the news.
Netflix's outlook seemed bleak three months ago, when the company missed revenue targets and had its first drop in subscriber numbers. BOB, meanwhile, said its online subscribers rose by 600,000 to 3.6 million. Netflix's share price dropped below the $16 mark in July in response.
Netflix has cut some subscription plans by $1 and reduced marketing costs to save money. A bit of a risky strategy, but one that seems to be paying off. Still, Netflix's position has always been volatile, and in the future the company faces increased competition from Amazon and others.
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Posted
Nov 14 2007, 03:11 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 DVDs used to be the profit makers for movie studios, but a new report says DVD sales are tanking this year -- and suggests Hollywood is headed into the red.
DVD sales have fallen for the last three years after soaring by 75% between 1999 and 2004, according to the report, by Global Media Intelligence. In the first half of this year, DVD sales in the U.S. dropped by 12.5%.
I haven't seen enough solid clues about why DVD sales are down. I don't think the next-generation formats, Blu-Ray and HD-DVD, are mainstream enough yet to eat into the DVD market. Maybe more cable and satellite options, such as on-demand programming, are factoring in. DVD player sales are down 15% over the past year, after dropping 24% the year before.
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