Netflix, Hold The “Flix”

I’ve long had a love affair with Netflix. But perhaps more so than any other service, the relationship has changed over time. Not in a bad way, necessarily — it’s just different. And it’s different, because Netflix is different. It’s a service that keeps re-inventing itself.

That should be obvious to anyone paying attention. But it took this post by Felix Salmon to point out the obvious to me: in its transition to full-on streaming, Netflix is no longer about movies.

Said another way: Netflix has ramped up the “net” and wound down the “flix”.

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Despite the huge swings in our stock price since our 2002 IPO ($8 to $3 to $39 to $8 to $300 to $55 to $330), we’ve continued to grow our membership every year fairly steadily. We do our best to ignore the volatility in our stock. The progress we’ve made over the last 10 years is stunning. We want to make the next 10 years even more remarkable.

Reed Hastings, after Netflix beat quarterly estimates once again, sending the stock soaring to new all-time highs.

You could certainly argue that Netflix is an even more volatile stock than Apple — because it clearly is. And Hastings is smart to try to calm the furor in a time of exuberance. You’re never neither as good nor as bad as they say you are — but you can only really say that when they’re saying you’re good.

Joan E. Solsman:

Netflix will be streaming art-house heavyweight films alongside Disney superhero blockbusters before any other pay-TV services in a few years. The company unveiled a deal Tuesday to be the exclusive U.S. subscription TV provider to stream first-run movies from the Weinstein Co. starting in 2016. Last year, Netflix notched its first agreement with one of the top six film studios, Disney, to be the only U.S. subscription TV service offering relatively newer movies from Pixar, Marvel, Walt Disney Animation, and Disneynature. The Weinstein agreement Tuesday brings Netflix an independent-film studio powerhouse to complement the Disney content.

Massive deal for Netflix.

David Carr:

The Emmys were the most prominent marker of change, but hardly the only one, in a week full of headlines about what TV is becoming. It’s not their first foray, but if Apple and Google move further into the television space, they are sure to collide with not only traditional players, but Netflix, Amazon, Sony and Intel. And Aereo, which so far is a small but persistent player backed by Barry Diller, won another court victory for its plan to totally upend broadcast networks, by streaming their content without compensating them.

Meanwhile, what were the traditional television players up to? Squabbling yet again over retransmission fees, with a standoff between CBS and Time Warner Cable that could set off a blackout, driving audiences to other ways of viewing. The only constant was steady price hikes on cable bills.

Said another way: the incumbents aren’t just fiddling while Rome burns, they’re playing with matches…

Also, a nice tidbit from David Bianculli, a professor at Rowan University:

“It took HBO 25 years to get its first Emmy nomination; it took Netflix six months,” he said. In that sense, Netflix is more like Pixar than Hulu, showing that a Silicon Valley company could produce creative, successful programming.

Liz Shannon Miller on Netflix’s new show Orange Is the New Black:

Here’s the highest compliment I can pay: Other Netflix series have left me excited for more Kevin Spacey political scheming or Bluth family antics. But Orange is the first time that I’ve finished watching a show and been excited about what Netflix might release next.

The original content strategy appears to be working quite well…

Great profile of Reed Hastings by Ashlee Vance for Bloomberg Businessweek. Three standouts:

The master copies of all the shows and movies available to Netflix take up 3.14 petabytes of storage space. (In comparison, Facebook uses about 1.5 petabytes to store about 10 billion photos.) Hollywood studios used to send individual films and shows to Netflix on a disc or thumb drive; now they use a Netflix system called Backlot to send encrypted files via the Internet. Netflix then compresses the files and creates more than 100 different versions, each tuned for the varying bandwidth, device, and language needs of its customers. (An hour of video for the iPhone would be about 150 megabytes.) This compressed catalog comes to about 2.75 petabytes.

Wow — also, Pi.


Netflix began to experiment with cloud services from Amazon and Microsoft, where Hastings served as a board member. In 2009 he bet his company’s future on Amazon. Up to that point, nothing the size of Netflix had placed so much of its crucial technology on Amazon’s systems. Hastings sent an e-mail to Amazon CEO Jeff Bezos, announcing his plans. “I asked him if he was comfortable with that idea,” Hastings says. “If not, there was no point going forward.” Bezos gave the go-ahead.

That seems like a pretty large diss of a company where he’s a board member — especially when you consider that Amazon is now a very direct rival.

And finally, the best for last:

Qwikster was a fiasco, but far less threatening than a debacle that preceded it. In August 2008, Netflix’s technology infrastructure melted down. This was when the company was still known for DVDs-by-mail, and for three days it could not send discs because a crucial Oracle database kept malfunctioning. Reporters and customers took notice. Netflix traced the problem to an expensive, third-party storage system that went haywire after a software update. The incident still annoys Hastings. When the subject comes up in the watchtower, Chief Product Officer Neil Hunt, who’s also gathered at the table, suggests they not mention the storage-system vendor by name. Hastings responds, “Let IBM have it, baby.” (An IBM spokesman declined to comment.)

Said another way.