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Hollywood film executives fear Netflix may conquer traditional broadcast services the way it did Blockbuster if someone doesn't keep them in check  (Source:
Film execs think the video-rental company is becoming too big too fast

As Netflix continues to grow in both audience and content, Hollywood film executives are feeling more and more threatened. 

In the past, studio executives have questioned whether Netflix could acquire a large audience without hit films or television shows, which is content they didn't think the video-rental service could afford. But now, Netflix has more than 20 million subscribers and has "sought-after" content available more than 200 internet-based platforms and devices like Xbox 360 and iPad. In the past year alone, the number of subscribers to Netflix has increased 66 percent. The video-rental company has even pushed competitors like Blockbuster and Movie Gallery to file for bankruptcy protection.

Netflix's ability to obtain such popularity so quickly has Hollywood executives scared, mainly because of how it influences the studio's businesses. For instance, Netflix draws sales from other areas such as airlines that offer in-flight internet access. If a person aboard the plane has Netflix, this takes a sale away from the carrier who is trying to sell movies on the plane as well.  

Film executives believe Netflix is having other impacts on the movie industry as well. For instance, movies on Netflix lose value more quickly than those that don't because "Netflix takes scarcity out of the equation" by offering movies to users anytime they want. In addition, film execs say Netflix discourages users from buying new releases. Disc sales are decreasing annually, and 30 to 50 percent of DVD's are still in their original shrink-wrap. While new releases won't appear on Netflix for years, users are okay with waiting until they do. 

According to Eric Garland, CEO of Big Champagne, which is a company that follows digital-media consumption, consumers quit collecting DVD's because it is no longer the new technology of the times.  

"The medium was creating this false impression that we had a real need to curate libraries of films," said Garland. "People built film libraries because they had never been able to own movies before. Even then, most of the movies only got watched once." 

Nevertheless, the film industry made a large profit for years off of movie sales, especially the DVD.  

"If we find out that people won't collect feature films anymore, than the business as we know it is broken beyond repair," said Garland. 

In response to Netflix's overwhelming popularity and its negative impact on the film industry, Hollywood film execs have decided to avoid Netflix completely. They will not "throw in" with the company and jeopardize conventional broadcast services. They feel it is their job to keep Netflix in check before it grows too large to handle. 

This doesn't mean that film execs are at war with Netflix or refuse to distribute films or television shows over the internet. The film industry plans to continue offering this content over the internet for attractive prices, but not through Netflix. 

Studio managers see Netflix as a company that offers the least-valuable material, and that the service will become a swap meet at best that users will become bored with eventually. 

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8 years of netflix
By Shadowmaster625 on 3/9/2011 11:34:09 AM , Rating: 2
I've been a Netflix user for 8 years. A pioneer I guess you could say. Their time is coming, but not quite yet. Their competition simply charges too much, any way you look at it. Redbox is the only reasonably priced competition. Netflix does have a few large flaws though.

For one thing, they go out of their way to hide the best new releases. You have to really know what you are looking for, since their site is worthless for finding movies. Why netflix hasn't bought Rotten Tomatoes and Flixster is beyond me. I think it was part of a deal they made a long time ago. They may have had to hide the top box office movies deep in the bowels of their website in order to get the content so cheaply. I cannot confirm that though. Based on the way they really do literally go out of their way to keep you from ever seeing the top box office hits, it can only be the case that they are indeed hiding them as a matter of policy. However, they can always be found.

Also, their streaming and compression is nothing special. It could use a lot of improvement.

Their instant viewing selection is very poor and probably always will be.

There are three big reasons netflix is doing better than a simple analysis would suggest.

#1- Sure it is true that Netflix has mostly just garbage available for instant viewing. But analysts overestimate how much people really give a damn about what they watch. Truth is they'd watch anything. People plug in to the tube in order to unplug, they dont even really care what they watch. Isnt this obvious based on the crap that is popular these days? Netflix's business model was built to capitalize on that sad flaw of humanity.

#2- There is and has always been an unspoken added value to having the actual dvd in your hand. Online streaming services cannot compete with that, obviously. Not to mention streaming still just barely works, even in 2011. But of course Blockbuster and other B&Ms couldn't compete either, because their overhead was just too large. (And they never had your movie in stock when you wanted it anyway.) In addition to all this, there is yet another advantage netflix dvds offer, but like I said it is unspoken. lol. If you have been a netflix subscriber for any length of time, or if you have any kind of brain in your head, then you should be able to figure out what I mean.

#3- With netflix you are simply accepting the fact that you cannot get what you want right now, but you CAN get it when you want it as long as you want it later. lol. You just have to plan a little tiny bit. Your reward for doing that tiny little bit of planning is vastly reduced costs. Netflix is introducing a level of efficiency into an Extremely large market that has never really tried to be efficient. The B&Ms made most of their money off new releases, and those were always rented out all at once. Then a month later all those copies just sat there. I was 7 years old when I first said that was kinda stupid.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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