Netflix has ditched plans to enter the hardware market in favor of partnering with LG Electronics — and every other set-top box manufacturer on the planet. So far, Netflix's streaming subscription will support LG's combo Blu-ray and HD-DVD player and a standalone box, but it plans to market the service to makers of DVRs and game consoles. [Reuters]
DVD rent-by-mail operation Netflix may be kicking rival Blockbuster where it hurts, but all is not well with the company. According to the U.S. Postal Service, the ubiquitous red return envelopes used by Netflix, hailed for saving the company millions of dollars, are prone to jamming mail sorting machines. The USPS estimates the cost at $21 million per year. To recoup that amount, the postmen propose a 17-cent surcharge per mailer. Such a charge would cost Netflix two-thirds of its operating income and lower its monthly profit per subscriber from $1.05 to $0.35. Netflix is likely to redesign its return mailer, yet again, to mitigate the burden. A company so vulnerable to the price of postage must be thinking that video downloads are looking better and better.
Through-the-mail movie rental outfit Netflix has been very aggressive in fighting Blockbuster's competitive advances — and winning. Analytics firm Compete has a rundown of Netflix vs. Blockbuster and lists Netflix.com as having four times the visitors Blockbuster.com does. Also, Netflix's download strategy seems to be having some success with 450,000 "Watch Instantly" users in November. Blockbuster is still attempting to roll out a download service it gained from its purchase of movie download site Movielink. Good luck to both of them. Apple is rumored to be introducting movie rentals to iTunes. Will they be battle-tested veterans by the time Steve Jobs shows up — or so bloodied from fighting each other they'll fall victim to his shiny white-plastic machine?
NBC Universal, in its ongoing effort to throw Steve Jobs into a jealous rage, is wooing every other feller with a video service in sight. In its man-harem: Jeff Bezos, with Amazon Unbox, and Jason Kilar, CEO of its joint venture with News Corp. Hulu. Add to the list Netflix CEO Reed Hastings. NBC has wooed Hastings into a syndication deal. As Apple used to do on iTunes, Netflix will offer new episodes of Heroes the day after they air, alongside a library of prior 30 Rock, Friday Night Lights, and The Office shows. Looks like someone can finally stop whining about the gaping hole left by the iTunes pullout.
Apple fanatics have uncovered some code in an iTunes software update hinting at a video rental service. Now every blogger on the planet is running around like decapitated chickens. Why the fuss? We all know iTunes video sales aren't rocking. This is an inevitable move on Apple's part as rivals move in. Rental is the business model of choice for Vudu, Microsoft's Xbox 360, and most likely Sony's PlayStation 3. For some reason, content producers feel it's more piracy-proof than direct sales. Don't cancel your Netflix memebership just yet, though. Building the code into iTunes is one thing. Striking agreements with balky Hollywood studios is quite another.
Already all burnt out on your Christoga DVD? Newly Netflixable today is "Yoga For Indie Rockers," featuring an instructor named "Chaos" and "songs from Kevin Devine, Paulson, Jet Lag Gemini, Roses Are Red, the Bruises, Two Lone Swordsmen, House of Fools, Dillinger Escape Plan, Crash Romeo and many others." [Netflix via Lindsayism]
Vudu, the set-top box rumored to single-handedly topple both Netflix and digital video recorders, has, in reality, failed to impress. Katie Boehret, the Wall Street Journal's Walt-Mossberg-in-training, reviews the movie-downloading box which aspires to win over those too lazy to traipse over to the video store. The only problem is that Vudu has its own set of not-inconsiderable inconveniences. One needs a hard-wired Ethernet connection — no built-in Wi-Fi — to make it work. The service charges above market rate for movies. And the selection, tragically, is poor. Except for its on-screen ease of use, little separates it from Microsoft's Xbox 360 downloads or Sony's planned Playstation 3 store. Until Netflix puts its own box on the TV console, stick to mail-order DVDs, we say.
Not every great idea should be copied. But thanks to NetFlix, which proved that DVDs could, indeed, be rented profitably by mail, people are now trying to rent anything and everything through the mail, with orders placed over the Internet. Purses, videogames, and now ... textbooks? Bookrenter.com is one such venue, claiming that it wants to "shift purchasing power back to students." It recently pitched Valleywag — always a dangerous sign, in and of itself — claiming to be the first textbook rental service on the Web. First, well, no. Secondly, any student who hasn't learned to scour eBay, Half.com, and a slew of online used-textbook sites deserves to be gouged by campus bookstores. Heck, most campus libraries have multiple copies of textbooks in their collections.
Sony's recent announcement that its PlayStation 3 console will soon act as a digital video recorder in Europe is little surprise to anyone following the industry. It's long been believed that the PS3 and Microsoft's Xbox 360 could act as DVRs. The real question is how this move will affect a soon-to-be crowded DVR marketplace. TiVo, the best-known DVR brand, has struggled financially as cable and satellite distributors released their own recorders. Although its future may be a bit brighter thanks to a recent licensing deal with Comcast and the potential of a renewed DirecTV contract, there's more competition for TiVo than ever — and from the unlikeliest of places.
DVD rental site Netflix is in the news for hiring human customer-service reps in a move away from automated support. But that's surely the least significant of Netflix's recruiting plans. A tipster whispers that Netflix is trying to hire away Apple engineers to work on a set-top box for movie downloads. Not surprising, after Netflix's alliance with TiVo fell apart, and the DVR maker turned to Amazon.com instead as a partner for movie downloads. And Netflix's hiring of ReplayTV founder Anthony Wood, who's thought by many to be the original creator of the digital video recorder, kept Netflix set-top box rumors alive this spring. But if Wood is now staffing up his team by poaching Apple engineers, that tells us Netflix is getting serious. Heard more? Drop us a line.
Here's what no one's saying about Blockbuster's acquisition of Movielink, the Hollywood-backed movie-download site: It's a desperate move to shore up Blockbuster's online failures. Blockbuster, remember, has been promising video downloads for most of this decade. First came a deal with Enron's broadband division, and, well, we all know what happened there. Since then, Blockbuster has said that video downloads would be coming soon for years. But Hollywood studios, burned by past negotiations with Blockbuster for sharing video rental fees, are understandably loath to cut favorable online deals with the video-rental chain. And it's hard for Blockbuster to compete technologically with the likes of Apple, Amazon.com, and Netflix. Buying Movielink gets Blockbuster deals with studios and ready-made tech — all of which gives it merely a place at the online-video table, not the ability to eat everyone else's lunch.
Netflix, already losing customers thanks to a fierce rivalry with Blockbuster, is now offering customers another reason to ditch. Its site has been down since 9 a.m., with no promises of when it will be back online. A company spokesman blames the outage on an "unanticipated problem." Update: The site's back up, after what spokesman Steve Swasey says was "a database problem," unrelated to today's massive outage in San Francisco.
Industrious data-miner and Jane-blogger Lindsay Robertson imports a maneuver from the Los Angeles Times, checking out what the neighbors are renting from Netflix via their "local favorites" listings. Cruelly, Netflix doesn't do New York by ZIP code, denying us the chance to compare the Lower East Side's preference for slash porn to the Upper West's inclination for complete seasons of PBS programming. Nevertheless, we do get results by borough, giving us the following top-ten for Manhattan:
