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Netflix is now a streaming company that mails DVDs  (Source: Nintendo)
Reed Hastings says Netflix is now a streaming company

Netflix is one of the main reasons that so much pressure was put on traditional video retail, ultimately leading to the bankruptcy filing of Blockbuster. Netflix has been changing its business model to keep up with consumer trends that are migrating from DVDs to streaming content.

Netflix offered up its financial data for Q3 2010 this week and the company is doing very well. During Q3 2010, Netflix added 1.9 million new subscribers bringing the total number of subscribers to the service up to 16.9 million. The 16.9 million figure is a gain of 52% from the same quarter of 2009. Netflix also stated in the earnings release that 2/3 of the customers of the service now stream content, up from 41% last year and 61% in Q2 2010.

Netflix grew its revenue significantly from $431 million in Q3 2009 to $553.2 million in Q3 2010 for a growth rate of 30% compared to last year. Interestingly, the number of DVDs that Netflix sent to users by mail declined in areas like San Francisco and grew overall by only 10% despite the significant amount of new users that signed up and the growth in revenue. That is a clear indication that more and more users are streaming content only. Netflix did note that it still spends more than $500 million to ship discs.

Netflix CEO Reed Hastings said, "We are very proud to announce that by every measure we are now a streaming company, which also offers DVD-by-mail. In Q4, we’ll spend more on streaming content than DVD content, and we’ll deliver many more hours of entertainment via streaming than on DVD. More impressively, a majority of our subs will watch more content streamed from Netflix than delivered by us on DVD. DVD-by-mail shipments are still growing, but streaming for us is much larger and growing much faster."

Hastings notes that the company is able to retain more customers thanks to word of mouth marketing by customers and high customer satisfaction. The cost to acquire a new subscriber dropped to $19.81 for Q3 2010 compared to $26.86 for Q3 2009. The huge growth in streaming use also lead to Hastings stating that streaming only subscriptions could be introduced this year. Netflix also plans to expand its service to more countries.

Netflix launched its streaming service in Canada in September marking its first venture outside America. AllThingsD reports that the earnings for the quarter were very close to Wall Street expectations with non-GAAP earnings of $0.70 on expectations of $0.71, missing the mark by a penny. However, Wall Street expected revenue of $551 million, which Netflix beat with $553 million.

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Dear Netflix...
By Schrag4 on 10/21/2010 1:46:43 PM , Rating: 5
...yes, you do stream, but you don't stream everything. I watch plenty of shows and movies through streaming, but it seems anytime I want to watch something GOOD, it's only available via DVD. Please refer to yourself as a DVD company until you no longer require me to use DVDs for some of your content!!!

RE: Dear Netflix...
By deltadeltadelta on 10/21/2010 5:04:58 PM , Rating: 1
Yes...No more discs...just streaming everything!

something doesnt add up
By invidious on 10/21/2010 5:20:48 PM , Rating: 2
Netflix did note that it still spends more than $500 million to ship discs.

In Q4, we’ll spend more on streaming content than DVD content

These two claims don't match up, I am guessing the $500 million figure is total distribution costs not just shipping dvds.

RE: something doesnt add up
By roadhog1974 on 10/22/2010 5:22:12 AM , Rating: 2
perhaps that is about purchasing/replacing content
as opposed to shipping.

don't forget ps3 extra features
By truss64130 on 10/21/2010 11:52:53 AM , Rating: 3
On monday, the PS3 got the built-in netflix app rather than using a disc to access content. Along with that comes even higher res HD content, and 5.1 surround. As soon as 5.1 is supported on every player and more content, it will 1-up any TV network's website content. The HD quality stuff on the network's websites is better than the HD stuff on Netflix, but not by much. I recommend the service.

By Wolfpup on 10/22/2010 2:47:02 PM , Rating: 2
Worse video quality (even if I paid a ton extra for a faster level of service), worse selection, and I'm tied to only using it at home...oh, and no extras, no subtitles, etc. = I virtually never use it...though I suppose since maybe I see one thing a year on it I get counted in the 66% :-D

By th3pwn3r on 10/23/2010 12:48:19 AM , Rating: 2
I'll just keep using my "free" sites to watch streaming and with decent connections.

By Motoman on 10/21/10, Rating: -1
RE: Blah
By Copaseticbob on 10/21/2010 10:30:44 AM , Rating: 2
The video quality depends on the internet connection as well.
I have gotten HD streams when watching mythbusters on my computer. Looked awesome.

RE: Blah
By Motoman on 10/21/10, Rating: -1
RE: Blah
By Micronite on 10/21/2010 11:19:02 AM , Rating: 5
You do realize that before the movie plays, the Netflix player determines the amount of bandwidth available to it and adjusts quality to compensate, don't you?

If you've got 4 people playing WoW when the movie starts, it's going to reduce the quality of the movie so it doesn't have to stop and buffer all the time. They try to make the experience seamless so you don't get frustrated.

But hey, I'm fine with you not watching streaming Netflix. The less you tie up the Akamai servers, the better for others.

RE: Blah
By Motoman on 10/21/10, Rating: -1
RE: Blah
By ArenaNinja on 10/21/2010 11:48:06 AM , Rating: 5
No... your statement was really poorly written. I thought the same as he did, then saw this post and re-read your original statement. It really is unclear.

RE: Blah
By Motoman on 10/21/10, Rating: -1
RE: Blah
By 2uantuM on 10/21/2010 12:09:18 PM , Rating: 4
No, not really. It's ambiguous.

RE: Blah
By rburnham on 10/21/2010 4:58:41 PM , Rating: 3
No, not really. You should have rephrased it.

RE: Blah
By roadhog1974 on 10/22/2010 4:24:29 AM , Rating: 2
He could have phrased it better but I got it ok.

neener neener.

RE: Blah
By Da W on 10/21/2010 11:24:12 AM , Rating: 2
I watch movies from my WII with a wireless G connection and the quality is suprisingly ok. Sure it's not top notch, but it's only 7,99 a month, and you don't even lift your ass from the couch. Just watching back an old Cheech & Chong was worth this month's fee.

RE: Blah
By bissimo on 10/21/2010 10:31:14 AM , Rating: 2
It depends on the movie/show. Some stuff is streamed as 720p h.264 at 7mbps (far beyond DVD quality, not quite Blu-ray quality)

RE: Blah
By quiksilvr on 10/21/2010 1:17:06 PM , Rating: 2
Some are even at 1080p, but really, it all depends on bitrate.

RE: Blah
By kattanna on 10/21/2010 10:34:21 AM , Rating: 1
quality really depends on bandwidth.

on my 56" TV if i am getting the full 4 bars, it looks pretty good. if i dont get the full 4 bars, then yeah, not so much.

but i am also using either my xbox 360 via hdmi or the ROKU box via composite to stream directly.

but in general we still get far more content from netflix via DVD's as their streaming library, while growing rapidly from when it started, is still limited and because occasionally we will run into dumbshit stuff like out of a season of a TV show 1 or 2 episodes will be not be streamable, but DISK ONLY. which really is annoying.

overall though i can completely understand the good word of mouth netflix gets. its an awesome service.

RE: Blah
By Copaseticbob on 10/21/2010 10:41:57 AM , Rating: 2
agreed. They have a pretty impressive library for streaming. It can be tough sometimes to see whats out there because they try so hard to point out things they *think* you'll like.

Ive only ever received a DVD from them once, I stream everything.

RE: Blah
By kattanna on 10/21/2010 10:59:54 AM , Rating: 2
Ive only ever received a DVD from them once, I stream everything.

wow, really? interesting. we are on the 5 disk at a time plan and get most of what we watch via DVD's. since we dont have the pay for cable channels like HBO and such, we wait for the show to hit DVD then watch it. which we like better cause then we can blow through a season and really get into the show without having to wait week to week.

RE: Blah
By Copaseticbob on 10/21/2010 11:09:30 AM , Rating: 2
I do the same, but with whats available streaming.
The entire series of 30 rock is available streaming, the office, Archer. I havent run out of streaming content yet to justify waiting for a dvd.
Saves money too, just an internet connection, dont have to 'bundle' anything. I like that part lol.

RE: Blah
By xSauronx on 10/21/2010 11:21:07 AM , Rating: 3
I dont get DVDs anywher near as often as I used to. Im on the one at a time plan, and stream most of what I watch. Usually I reserve my discs for blu-rays that I care about seeing in high-def

RE: Blah
By kleshodnic on 10/22/2010 10:52:21 AM , Rating: 2
If you are finding it tough to find content you would like via Netflix streaming then try the netflix gems thread @

It's where I have been going to find movies that I would other wise never have seen.

RE: Blah
By therealnickdanger on 10/21/2010 10:52:29 AM , Rating: 5
You can't judge the whole service based upon one experience. Well, it's a free country, so you can if you want to, but you probably shouldn't.

First, you have to have a good transfer of a film to video (studio). Then the video has to have a good encoding, balancing compression artifacts without sacrificing picture quality (studio/distributor). Then the encoded video has to be properly compressed for streaming, again trying to mask further image compromises (usually the studio/distributor). Then your internet connection quality will determine one of many levels of compression on top of the copy's compression for the final stream (Netflix).

I have seen *some* garbage on Netflix - standard definition streams of older content, but many of the factors I listed above are outside their control. You can't polish a turd. Most content I watch on Netflix is HD and trumps DVD easily, but rarely as good as broadcast HD (varies by channel), and certainly never better than Blu-ray.

In the end, I don't pay Netflix $12/mo for the best quality picture and audio in streaming. That's what I have Blu-ray for. Oh wait, they send Blu-ray to me via mail too! I pay Netflix for the vast, vast stockpile of movies and TV that I like to watch, most of it in HD, but wouldn't spend the money to buy on disc.

RE: Blah
By Motoman on 10/21/10, Rating: -1
RE: Blah
By WLee40 on 10/21/2010 11:30:35 AM , Rating: 5
you are an idiot

RE: Blah
By theapparition on 10/21/10, Rating: -1
RE: Blah
By Hexus on 10/21/2010 5:15:36 PM , Rating: 2
Read the whole thing, the opinion is being based on the whole of the thread, not just that comment.

And it's more his insisting that Netflix is somehow flawed because his experience wasn't as good as someone else, and their opinions of his further decline when he immediately becomes pompous and hostile.

RE: Blah
By Suntan on 10/21/2010 11:31:42 PM , Rating: 2
Not an idiot so much as just awfully ignorant on the topic.

As discussed, computer playback of Netfix is quite poor compared to other sources and other hardware players (which is unacceptable to a lot of people.)

That said, what Netflix is doing lately on the PS3 (with more recent content available in HD) is down right impressive.

Personally, I think the better quality encodes in HD are quite appropriate, especially if a person is just watching them on a TV of that size.


RE: Blah
By tlbj6142 on 10/21/2010 11:30:39 AM , Rating: 2
As mentioned above there are 3-4 things that affects the image quality...

1. Source. When I select a movie on my BR only about 20% are listed as "HD" quality. On my Wii there is no HD label as I assume it knows I can't display HD, so there is no reason to transmit that "version" of the film.
2. Bandwidth. If you don't pass the "HD" test you don't get to see it in HD.
3. In-movie adjustments, a co-worker with a Xbox? Ps3? claims the image quality adjusts throughout the movie. I don't see that on my BR or Wii. But it might be an issue via PC viewing.

Examples while streaming movies using my Samsung BR player's netflix "app" displayed on my new 58" Samsung Plasma.

* Season1-3 X-Files look "OK", but they are not labeled as "HD". As I assume they were not shot in HD. They do look slightly better than when streamed via the Wii which I'd expect.
* Star Trek IV -- This is labeled as "HD". It looks like a DVD. But I assume it was shot/processed with older equipment.
* Spartacus: Blood and Sand (a Starz Original series from 2009??) is labeled as "HD" and I'd say it looks nearly as good as the two or three BR movies I own.

NOTE: I've never watched anything on my PC, so I have no idea how he streaming compares to what I see with my Wii-->42"LCD or my BR-->58"Plasma.

RE: Blah
By tlbj6142 on 10/21/2010 11:32:23 AM , Rating: 2
One more thing....

I rarely, if ever use the DVD on Netflix. But, I do, stream probably 10+ hours per week (a mix of BR and Wii viewing).

RE: Blah
By therealnickdanger on 10/22/2010 11:38:59 AM , Rating: 2
Sadly, most "pre-HD" TV shows suffer from a similar problem. While many shows were shot on film, allowing for pristine transfers from original negatives, it's the effects that hold it back. TV shows back then did all their digital effects work in SD (480i video) in post-processing, separate from the original film elements. So in order to bring pre-HD effects shots into the HD realm, the original source film must be transfered, then the effects shots must be COMPLETELY redone in HD. This is a monumental undertaking, but it can be done.

Star Trek, The Original Series, was resurrected onto HD-DVD and Blu-ray with this mastery. While it didn't contain digital effects, the original effect elements were rotoscoped onto lower resolution tape for broadcast. Paramount/CBS took the time and spent the money to give every old episode the proper treatment: HD transfer from original negatives, recreate all old effects using new technology. Many people balked at the "upgraded" effects, but they did it with extreme care and respect to the original work.

Other shows that require this treatment: Star Trek: TNG, DS9, Voyager, Babylon 5, X-Files (most seasons)... pick just about any TV show before Lost that did effects work in video post... The problem is that it's such an expensive endeavor that it's risky.

Star Trek IV was unfortunately the recipient of over-zealous applications of digital noise reduction, scratch removal software, and edge enhancement. Essentially, the studio decided to take the cheap/easy route and in the process of applying the above algorithms, destroyed most of the fine detail inherent to the original film elements. The ST:IV Blu-ray is better than the DVD, but when compressed down for streaming, the destruction of the source detail ruins it. Wrath of Kahn, while older, was given special treatment and looks much, much better.

RE: Blah
By Riven98 on 10/21/2010 12:33:25 PM , Rating: 4
You can't polish a turd.

Actually, you can. They proved it on MythBusters. I saw it streamed from Netflix.

RE: Blah
By Copaseticbob on 10/21/2010 2:29:13 PM , Rating: 3
Its in HD too.

RE: Blah
By therealnickdanger on 10/22/2010 11:16:02 AM , Rating: 2
LOL that's fantastic! :)

RE: Blah
By gjk392 on 10/21/2010 5:38:22 PM , Rating: 2
"You can't polish a turd."

Actually you can and there is a Mythbusters episode where they did just that.

RE: Blah
By Denigrate on 10/21/2010 10:59:25 AM , Rating: 2
So get a better internet connection. It is not the Netflix service, which looks about good as Cable "HD" (if you don't know, Cable drastically downscales your signal) most of the time on my 40" LCD TV. In fact, I dumped Cable because nearly everything I want to watch is now streamed in some fashion on the internet. Put an antenna in the attic for local news and weather. So my "cable" bill is now about $50/month which includes my Netflix subscription and my internet service.

RE: Blah
By Motoman on 10/21/10, Rating: -1
RE: Blah
By Denigrate on 10/21/2010 11:43:35 AM , Rating: 2
Because you are alone in your experience, or you are a troll and lying about your experience. Do you even have Netflix?

RE: Blah
By Motoman on 10/21/10, Rating: 0
RE: Blah
By micksh on 10/21/2010 12:06:44 PM , Rating: 2
He is not alone. It is a known fact that Netflix streaming quality on PC is usually worse than quality on other devices on the same bandwidth.

It could be that Netflix does not use Silverlight efficiently when streaming to PC, or something else. There are threads about that on

If you want better Netflix quality stream to XBox, Roku or Blu-ray player with Netflix support.

RE: Blah
By Denigrate on 10/21/2010 12:41:53 PM , Rating: 2
That's horse crap as well. I stream via a PS3 and with a couple PCs and laptops, and have no issues. Works fine with low end integrated graphics and works fine with a middle of the road gaming PC with twin 24" LCD's.

RE: Blah
By Motoman on 10/21/10, Rating: 0
RE: Blah
By Copaseticbob on 10/21/2010 2:32:37 PM , Rating: 2
by physical size, they dont.
But that 67" is 1080p? So is my 23" LCD computer monitor. And most likely his/her 24" screens.
Is that 67" plasma? Thats a big tv lol.

RE: Blah
By Motoman on 10/21/2010 3:41:38 PM , Rating: 1
Yes, it's 1080p. So with the same number of pixels spread out over 67" vs. 24", any degradation in the video is going to be that much more obvious.

No, it's not's an LED DLP...which is a fabulous display. Watching DVD/Blu-Rays on it, or playing WoW, is pretty freaking amazing.

RE: Blah
By sprockkets on 10/22/2010 5:23:34 PM , Rating: 2
You don't sit less than 2 ft away from your 67" screen like you do with a 24" monitor, duh.

Just to prove you wrong, I also tried streaming. Initial start of episode of the office looked bad, then cleared up in 10 seconds once it started to see how fast it can stream.

XP suffers also from video tearing cause it sucks, Vista and 7 don't. Hope you don't still use XP.

RE: Blah
By SSDMaster on 10/21/2010 3:22:11 PM , Rating: 2
No its not horse crap... Streaming to the PC is capped at 2200Kb/s.

RE: Blah
By Spivonious on 10/22/2010 11:07:35 AM , Rating: 2
Source? This might explain the infamous stuttering issue.

RE: Blah
By Flunk on 10/21/2010 11:01:05 AM , Rating: 2
What sort of internet access were you using? Your computer specs are mostly irrelevant in this case.

RE: Blah
By WLee40 on 10/21/2010 11:26:56 AM , Rating: 2
As already stated, the quality depends on the internet/wireless connection. I have an xbox360 on my 56in and it has a good connection (4 of 4 bars) and the content is comprable to cable (std and HD). In the bedroom my other netflix device gets only 2-3 bars of signal on my wireless. And the image quality varies from fair to good (not as good as cable). It is on a 32in LCD though. Make sure you have a good internet connection before you judge...Maybe upgrade that wireless router?!

RE: Blah
By Xarthos on 10/21/2010 11:30:28 AM , Rating: 2
First: If you are streaming from a laptop hooked throuh HDMI the experience is going to be completely different than a Samsung Blu-ray player that supports netflix. We have a dedicated Blu-ray player that we watch netflix on and the HD content is amazing. I watched shark week off netflix and it was AMAZING...
Star Trek VI in HD recently.. It was awesome too.
Most of the new tv content is HD and some of the movies are HD as well. Even the non HD stuff looks great. If it looks like crap you are doing it wrong...
I stream over a wireless N network and the speed of the network and quality of the connection all play a role in the performance and quality.

RE: Blah
By Motoman on 10/21/2010 12:08:40 PM , Rating: 1
...does this sound like a laptop to you?

HTPC (triple-core Phenom, 8Gb RAM, Radeon 4870)...

I watch streaming video from other online sites, and they look a lot better.

If Netflix is thinking that they're "tailoring" the quality to my internet connection, as others have implied, then they're doing it wrong...because they make their service look inferior to what I can get for free elsewhere.

RE: Blah
By Hiawa23 on 10/21/2010 12:17:10 PM , Rating: 2
I have been a member of Netflix since day 1 & love it. I got the two out plan, plus Blu-ray, which is fantastic, & I use streamin on my PS3 & Xbox 360. Fantastic value, as the movies get to me the next day, & as soon as I put them in the box at the post office the next one ships, so between the shipped rental plus streamin I always have something to watch. The pic quality looks fine on my 1080p HDTV which is what my Xbox PS3 is connected to via HDMI. Good to see em doing well. Hopefully, one day they will eliminate the shipping alltogether & just make everything stream accessible for instant new releases. I watch on a 26" TV looks fine to me.

RE: Blah
By callmeroy on 10/21/2010 12:30:51 PM , Rating: 2
It definitely varies I'll give you that much.

I have a habit of skipping any movie that doesn't have the "HD" (obviously indicativing its the HD version) logo next to it.

I streamed Point of No Return and Full Metal Jacket -- both HD and both looked fantastic.

My home wireless was recently upgraded to "n" with a better router than I had before. My TV and my blu-ray player both support n wireless networking.

I also have QoS configured to give priorty to video content.

You can notice a definite drop in game performance if you are trying to play an online game and watch a streamed movie...but thankfully the QoS is working as the game seems to suffer and not the video.

My bigger problem with Netflix is that their streaming library is actually rather bad.

They need to greatly expand the selection -- particularly with new release movies.

RE: Blah
By SSDMaster on 10/21/2010 3:20:00 PM , Rating: 1
Netflix caps its streams to PC. Playing from a "Netflix Ready" device will more than double the video quality... They change it kind of often but last time I checked the Roku box got the highest quality streams. Also, Netflix will only rate your bandwidth at 50% of its actual bandwidth.

There's a reason for this, but all it really does is pause the player when you don't want it to and downgrade the streaming quality.

The PC gets something like: 2Mb/s max
PS3: 4Mb/s max
Roku box: 5Mb/s max

If someone has the actual numbers please post them!
I know that thread is outdated, and Netflix streams higher quality now..

RE: Blah
By rburnham on 10/21/2010 4:56:39 PM , Rating: 1
On my DSL connection the Netflix streaming got pretty bad at times. After moving to cable, I have seen a noticeable increase in quality.

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