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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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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.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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