Category: News

Netflix plays Soloman and cuts their baby in half. Wisdom? or Disaster?

Why is Netflix pulling open the wound they created by increasing their prices? The company announced that they will be splitting Netflix.com into two separate services that are completely independent of each other despite sharing a parent owner: Netflix.com will be for watching streaming media only and the new Qwikster.com will be for DVD’s by mail and will also include video games for the first time.

On the Youtube page for the video, user CtrlAltDan says:

“So let me get this straight. Now I have to manage two separate queues on two different websites, my DVD queue won’t tell me when something becomes available on instant, I get two different lines on my CC bill from two different companies, my ratings of a movie on my DVD queue won’t influence recommendations on my instant queue, have to update my CC information in two different places, and keep track of two different logins. On the plus side, I get to pay more!!”

The only part I like about this is the branding, because I have a thing about brand names reflecting their product and “Netflix” never quite fit a DVD by mail service, so I thought it was brilliant when they started the online streaming. It was as if that was the plan all along. hmmm…. But Qwikster? Wtf is that? Netflix = Internet Movies. Qwikster = fast…things. huh? Good thing no one besides me cares.

In an apology video, the founder and some-other-guy say sorry for “the way” they told everyone about the price increases. Super bizarre since no one complained about the delivery – it was the actual price hike that was the problem. This video says that if only they explained it better then it would have gone over better but they still don’t explain anything. They just use vague terms, pretty much saying “this will be a good thing because it’s good. don’t worry about it”. Not helpful.

TheOatmeal sums up the split pretty accurately, but it raises more questions than it answers. It seems obvious to me that there is more going on behind the scenes here, but I don’t know exactly what yet, though here is an interesting theory from Bill Gurley:

So here is what I think happened with Netflix’s recent price change (for the record, I have no inside data here, this is just an educated guess). Netflix has for the past several years been negotiating with Hollywood for the digital rights to stream movies and TV series as a single price subscription to users. Their first few deals were simply $X million dollars for one year of rights to stream this particular library of films. As the years passed, the deals became more elaborate, and the studios began to ask for a % of the revenues. This likely started with a “percentage-rake” type discussion, but then evolved into a simple $/user discussion (just like the cable business). Hollywood wanted a price/month/user.

This is the point where Netflix tried to argue that you should only count users that actually connect digitally and actually watch a film. While they originally offered digital streaming bundled with DVD rental, many of the rural customers likely never actually “connect” to the digital product. This argument may have worked for a while, but eventually Hollywood said, “No way. Here is how it is going to work. You will pay us a $/user/month for anyone that has the ‘right’ to connect to our content – regardless of whether they view it or not.” This was the term that changed Netflix pricing.

With this new term, Netflix could not afford to pay for digital content for someone who wasn’t watching it. This forced the separation, so that the digital business model would exist on it’s own free and clear. Could Netflix have simply paid the digital fee for all its customers (those that watched and not)? One has to believe they modeled this scenario, and it looked worse financially (implied severe gross margin erosion) than the model they chose. It is what it is.

It’s interesting…but if it’s true, why wouldn’t THIS be the content of that lame video above? Why wouldn’t Netflix explain that this is the case so everyone can get pissed off at Hollywood studios instead of porr Netflix trying to meet their demands while continue a great service? Something doesn’t add up here…

Is Blockbuster really the answer? I recieved this mailer yesterday and have been seeing similar ads to this online:


(details of price and services on the other side)

From PRNewswire:

Blockbuster L.L.C. today began rescuing upset Netflix® customers by launching a limited time, nationwide promotion for all Netflix customers who switch to Blockbuster Total Access™.

Blockbuster Total Access provides benefits Netflix doesn’t offer: availability of many new releases 28 days before Netflix; unlimited in-store exchanges; games for XBOX 360®, Playstation3™, and Nintendo Wii™, and no additional charge for Blu-ray™ movies.

As part of Blockbuster’s ongoing efforts to provide the ultimate in convenience, choice and value, Netflix customers who switch to one of Blockbuster’s two most popular Total Access plans will receive a 30-day free trial. After the free trial, customers will continue to receive Total Access for a new everyday price of only $9.99 per month for “1 Disc” at a time or $14.99 per month for “2 Discs” at a time.

“Blockbuster quickly responded to the cries of Netflix customers,” said Michael Kelly, president of Blockbuster. “Blockbuster Total Access is Netflix ‘without the wait.’ The combination of DVDs by mail and unlimited in-store exchanges provides more than 100 million people living near Blockbuster stores immediate convenience and unparalleled choice.”

Many Netflix customers have voiced their frustration about the Netflix price increase on Twitter by posting “Goodbye Netflix, Hello Blockbuster!”

“We find it shocking that anyone would raise rates as high as 60 percent,” Kelly added. “In contrast, Blockbuster has worked hard over the past few months to deliver value in entertainment to consumers in this economy and has even reduced in-store movie rentals to as low as 49 cents.”

This special offer for Netflix customers is available through Sept. 15, 2011, in participating stores and at Blockbuster’s website.

Tinkering with the Electoral College to…help Republicans?

Pennsylvania Republicans are working on a plan that’s as mischievous as it is completely legitimate: apportioning its electoral votes by congressional district instead of the current winner-take-all system. Under the new system, a presidential candidate would receive an electoral vote for each congressional district he or she (but let’s be honest — this year, it’s going to once again be a he) wins, plus two more if he wins the statewide vote count. For example, since John McCain won ten out of Pennsylvania’s 19 districts in 2008, he would receive 10 electoral votes, instead of the zero he took home under the state’s current system. Obama would have received 11 electoral votes — 9 for the congressional district he won, plus two for winning the state — instead of the 21 he was awarded.

Pennsylvania, like every other state, is free to dole out its electoral votes however it wants. Republicans control both chambers of the state legislature as well as the governorship, so if the GOP wants to switch over to a congressional-district apportionment system, all the Democrats can really do is whine.

Interesting push that I didn’t totally understand at first, and still don’t unless this is a conspiracy, which I will get to in a moment. The part that doesn’t make sense is that even though PA has been won by the Democrats in the past 5 elections, the Republicans have campaigned there every time with legitimate hopes to capture it. In theory it is a “swing state” because the margin of victory is thin enough to change over, it just never happens that way. So if the Republicans think they could actually swing the state to their direction, why would they want to change the winner-take-all rule RIGHT when it could benefit them? Further: the extra few electoral votes under this system wouldn’t have changed the outcome of any of the recent elections, so whats to be gained by Republicans by doing this?

That’s when the conspiracy comes in: What if other states that have gone Democrat in presidential elections for the past few rounds but are now controlled by Republican Governors and Republican state congresses did the same thing? Such states are Michigan and Wisconsin, which dont have many Republican voting districts but if the trend continues – who knows?

Below is the electoral map based on Congressional-district apportionment (Red = Republican. Blue = Democrat).

As for Democrats retaliating by doing the same in traditionally Republican voting states? Not so much…

The only states that John McCain won where Dems control both houses of the state legislature are Arkansas, Mississippi, and West Virginia. West Virginia is too small for splitting the electoral votes to have much effect, and Mississippi has a Republican governor. That leaves Arkansas, another small state — and one where McCain won every district handily in 2008.

No matter how you slice it, splitting up according to districts helps Republicans since Democrat districts are more solid-democrat than Republican districts are solid-republican. I know this from living and traveling across the country: there are far more areas where you can bet large amounts of money on picking a person at random at knowing for certain they will lean Democrat and hardly anywhere in the country where the same is true for Republicans. Even the most conservative areas of a fiery red state still has plenty of democrat influence. As Michael Barone of the conservative American Enterprise Institute wrote last year:

[I]n 2004 John Kerry won 80% or more of the vote in 19 congressional districts, while the number of congressional districts in which George W. Bush won 80% or more was zero. Similarly and even more starkly, in 2008 Barack Obama won 80% or more of the vote in 28 congressional districts, while the number of congressional districts in which John McCain won 80% or more was zero.

Normally I am not one for conspiracies but this one just might be hatching… Stay tuned…

Glenn Beck is both Huge and Tiny

Glenn Beck has taken his television show to the internetz and is showing early success and a shitload of expansion. Deadline New York warns with this headline saying “Analyst: Media Execs ‘Should Be Very Afraid’ of Glenn Beck’s Web TV Launch.”
Should they really? First, a pictorial:
In the media images for GBTV on Becks news site TheBlaze, they show his set is a mix of his 2 Fox News sets (he switched studios during the time his show was on the air there) combining the newsroom theme with the living room “fire side chat” theme.

The only thing is that that monitor is only obviously a monitor at first glance in the picture above. The rest of the images messed with my mind as they showed a giant Beck, Godzilla-stomping among regular sized people while in another he appears to be tiny, sitting on a table in front of normal humans in the background, since it’s not immediately clear that one is an image on a large screen.

I found the pictures to be metaphorical since it is true that in a celebrity and public influence and following sense, Beck is both huge and tiny.

Consider a comparison to Oprah, who also left her popular daily television broadcast to start her own network (titled OWN, as it were): On the one hand, Beck is no where near the celebrity that Oprah is – however… This Wall Street Journal article says that GBTV already has more paid subscribers than OWN has total viewers… whoah..

Because Mr. Beck owns the show and the network, he could make substantially more than the $2.5 million salary he got each year at Fox. GBTV is on track to take in more than $20 million in revenue in its debut year, according to a person close to the company.

The television industry will be watching closely to see whether the TV host can preserve his popularity while migrating to the Web, where efforts to get consumers to pay to watch online-only channels are just beginning.

When Mr. Beck announced GBTV in June, the network had 80,000 subscribers. In the months since, GBTV subscribers have swelled to more than 230,000, according to people close to the network, even though Mr. Beck‘s show hasn’t yet begun.

The audience is far less than the more than 2.2 million daily viewers his program on Fox drew, on average, over its 27-month run, which ended in June after clashes with the network’s management.

But it is more than the average 156,000 people who were watching the Oprah Winfrey Network in June.

The thing to consider however, as any Youtube personality like myself can confirm, is that the number of subscribers does not equal the number of viewers. How to compute the difference between the two, I don’t know, but if they’re paying it is kindov secondary to ask “are they actually watching?”. And boy are they paying…

Analyst Rich Greenfield of BTIG Research estimates that GBTV is already generating revenues of $27 million a year from subscription fees by monetizing a mere 1 percent of the total audience for his Fox show, his radio show, his websites (glennbeck.com and theblaze.com) and other outlets.

Mediate sums it up this way:

While Beck’s online venture is still relatively new, it’ll continue to be interesting to observe the different trajectories GBTV and OWN take as they forge their way. Here are two networks, albeit on different platforms, begun by two individuals who are themselves highly recognizable mega-brands. One is gradually building an audience as another is still hoping to find its place on television, and both depend highly on the trust viewers place on their respective founding personalities. Could you imagine what an episode devoted to Beck’s “favorite things” might pan out? Sales of chalk could go through the roof.

Glenn Beck… the tiniest giant in media?…

Fun with Racism: Facebook illegal Mexican edition

This guy went on a rant against illegal immigrants on one of my friends notes about illegal immigration and they mostly agreed except for my friend tamping down the intensity of this guys rhetoric. The tipping point was when my friend responded that immigration itself is good and that plenty of Mexicans have something fine to offer the country and should be welcomed in legally while those illegally crossing the border are cheating the system (the obvious position of every rational human ever). This dude didn’t like that so he announced that he was deleting and blocking my friend for daring to say that there was something redeemable about Mexican immigrants. I guess he was slow to the blocking part though since he checked back to see my followup comment labeling him a jerk and a bigot so he sent me this interesting message:

He blocked me instead of responding. lulz.

Zombies vs Vampires

Since the nations birthing when the undead Colonists won the war against bloody England, the fight has raged on domestically between the vampires and the zombies. In the beginning there was the Werewolf party but when they couldn’t cut it any more, zombie Lincoln entered the stage to fight against the vampire insurgency and win the battle to keep the union intact.

this bar graph shows the effect political parties in the US government have over which is more popular..

Study: College graduates driving increase in bankruptcy filings

“We’re told that if you do go and get advanced education, you’re going to be almost guaranteed this economic success,” said Leslie Linfield, the group’s executive director. But the recession proved that “higher education was no guarantee that you weren’t going to be at risk.”

Prediction: It will do no use showing this to my dad and the next time I display an inability to immediately access knowledge on anything from how to change a wagon wheel to how to fix the nations debt crisis, he will tell me I would know “If I went to college” just as consistently as ever. Still, however:

But Linfield said the recent increase in the number of bankruptcy filings is driven largely by wealthier, more-educated households. The percentage of debtors with bachelor’s degrees peaked in 2009 and then inched down in 2010. Those with graduate degrees jumped from 4.9 percent in 2006 to 6.7 percent last year. And the share earning more than $60,000 rose from 5.5 to 9.2 percent.

Linfield said she is also concerned about the age of debtors. Over the past five years, the number of consumers filing for bankruptcy between ages 18 and 34 has fallen 31 percent, her group’s study found. Meanwhile, the number of people 55 and older, who have less time to recover financially, has jumped 25 percent.