DVD rental company boosts 3Q profit forecast amid lower costs as customers rented fewer movies.
10/05/04 08:34 AM, EDT
Online DVD rental company Netflix Inc. said Monday its third-quarter net profit will far surpass its previous forecast because subscribers who pay a set fee every month had rented fewer movies than expected, leading to lower costs.
Full Story Here: http://money.cnn.com/2004/10/05/technology/netflix.reut/index.htm
This might be a supporting bit of info for those that claim netflix deliberately slow down turnaroun rates.
Here: https://www.videohelp.com/forum/viewtopic.php?t=232965&highlight=netflix+suck
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drink up....the world's about to end
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I experienced the same thing. Originally (couple years ago) I was very pleased as I worked my way through a lot of their older movies. Most of the newer ones I was buying anyway so I never rented many of those. When I did order the newer ones they appeared on my queue list as "long wait, very long wait, etc.). Sometimes I was waiting 3 - 4 weeks. Hard to tell whether it was just a new release thing or my frequent ordering habits (I would sometimes get 12+ movies a month). My tendency is to believe they just don't stock the new releases to the extent people are ordering them.
While I'm at it, Blockbuster is no real bargain either. I have three in my neigborhood and I can never get a new release on the Tuesday it comes out. Sure, they have 30 empty boxes on the shelf giving you the impression that they stock a lot, but they just happen to be all checked out (right, 30 people came in Tuesday morning "just before I did". -
Originally Posted by Jayhawk
I've had that problem for sure. i waited 5 days for Kill bill 2.
I start working at a blockbuster next week, I'll see what goes on from the insidedrink up....the world's about to end -
I start working at a blockbuster next week, I'll see what goes on from the inside
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i worked at blockbustera year ago and they usually have twice as many of a new release as there are boxes on the shelf. i dont know why yours run out so fast but they definatly will have as many as there are boxes, it makes no sense that they would buy empty boxes just to fool you, or make some movies garenteed so u can get it for free if they are out. when i went last tue they had like 100 of walking tall and prolly 60 boxes out. if u think im wrong just go right when they open on a tue morning and see. or look at the ID number on the box, i think the last two digits are the copy number for that store and they start at 01, try to find the highest one and thats how many they have. blockbuster is a good company, i have the movie pass and rented 2 a day for the past 3 months.
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Back when I had netflix the service got so bad I started searching around for other online companies. I ran across many sites discussing netflix and on at lest a few, people actually gotten several acounts (or them and family members did) and tracked the results. If you rent more movies, you get less priority with popular titles. Netflix has both denied and admited (at diffrent times) that they do this. they give some crappy excuse about people renting a lot geting to see what they want but people that rent occationally only occationaly get the chance to see what they want so they get more priority (or some crap like that). In addition, peole that rent more seem more likly to get damaged or badlly scratched disks (I'm not sure what is behind that one).
I am using blockbuster now, not that I like blockbuster or anything. They charged over a hundred dollars to my credit card for missing movies and video games from two stores(which I had reversed of course). After a month of arguing with them, it turned out that they had the video tapes all along. They droped the issue with the games (not sure if they found them). As it was at two stores at the same time, I'm thinking computer network problems but acording to them, their computers are never wrong. Also, have you ever noticed that when you are standing in line to exchange movies, every other person has late charges? I actually started writing down everything I rented with checkout and return date and times. I finally caught them applying bogus late charges. They said that they could check the security video tapes (the same thing they said when the movies disapeared) and of course they never were able to produce any security video tapes, either time. They did produce plenty of excuses though. So after three years of boycoting blockbuster, I caved and got a movie pass. I must admit, it is nice to be able to just run down the street and exchange whenever I want. Waiting a week for a new release is beter than waiting a few months with netflix (if you watch them right away and send them right back). The selection sucks though. I really miss the selection from netflix. All the blockbusters around here seem to have quite a few crapy b grade movies (and some good ones of course).
Anybody know of a good online alternative to netflix? I hear blockbuster is suposed to be doing it online soon? -
I used to use Greencine. They had a very good selection (even had adult titles and and great selection of Anime)
The only problem with them was that they were a bit slower turnaround wise.
Maybe they have added some more distribution centers around the country in the last 3-4 months though.
www.greencine.com
Check it out. -
Some of these Netflix conspiracy theories would take more time and money to perform than they would make by doing it. So it does not make sense.
Want my help? Ask here! (not via PM!)
FAQs: Best Blank Discs • Best TBCs • Best VCRs for capture • Restore VHS -
I have to agree. The only problems I've had are chipped dvds. It would be nice if NetFlix put them in something more protective, but hey, a disc replacement is probably cheaper than millions of protective slips for the cds.
It would also help if my mailman would be a little easy on those, too. -
Originally Posted by ripit
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Greetings,
I have always at least 50 dvds in my queue and I always receive the dvd the day after it was shipped. Netflix always receive the dvd the day after I posted it.
I noticed for new releases, there is some delay (wait to long wait), but I am ok with it because I get other selections. Frankly, I can't say I got any delays for dvd deliveries with Netflix and I am very happy with their services.
Thank you -
Originally Posted by rogue203Originally Posted by lordsmurf
But, in all respect, I seriously disagree that even the most minute collection of data and control of inventory and customers, and its use, would "take more time and money to perform."
Two decades ago my dad began selling bar code hardware and software to small stores. Even people whe had really good knowledge of their inventory and sales, and were very skeptical of the benefits, were amazed at how it improved their business.
netflix costs are postage and inventory aquisition and inventory allocation. labor is proably a tiny cost.
Something sitting on the warehouse shelf at netflix costs money, it is a real cost. Netflix borrowed the money to buy x copies of "Movie A'" and to buy x copies of "movie B". If Movie A has a demand over inventory but Movie B is sitting there, movie B is losing them money every day.
Soem things are in common with a grocery store (maximize efficiency of in stock inventory) and some things are opposite (minimize turnover).
I'll bet dollars to donuts they already spend a lot of time predicting needed inventory, it is just one short, very cheap, step more going from that passive prediction to active manipulation of the customer. You must know that just like the highest profit itmes are eye level and closer to the front at at the grocery store, the items "featured" and "suggested" at netflix are the ones that tun over the least and/ or have licensing scemes costing netflix the least (they pay $1.50 per rental for most new releases, for old releases they pay ittle or no per rental surcharge).
here are some numbers. estimate 2 million customers x (maybe 4 out a month plans x one week tunover = 4x4x 2million) that would be 30 million transactiosn a month. 360 million pr year per year. let's say it is just 200 million transactions per year. a few man days per quarter of of a statistician, a marketer, a computer programer and an inventory expert creating algorythms to maximize profit through inventory control and churn reduction is a drop in the bucket.
It isn't a leap to think theyhaven't categorized their customers down to the minutest detail. EVERYONE in such high volume businesses does. Your box grocery stoer knows what kind of shoe polish you buy and has you guaged just like pavlov's dogs on how you respond to those yellow "sale" stickers on rainy tuesdays.
forgive the double analogy but film rental is already a data-mining "gold mine." -
I am cancelling my Netflix membership this week so this story comes at a good time. My reasons are:
1. I ran out of good movies to watch (after 6 months)
2. The turnaround time has definately slowed down. I'm down to 3 movies a week instead of 6.
3. I don't like waiting for new releases
Plus, I can always get new releases at my local grocery store for 99 cents. I just have to go early.
Overall, I did like Netflix for their large selection that Blockbuster can't even compete with. Unfortunately, I feel like I'm being cheated by their delay tactics now and I won't stand for it. -
The things I hated the most were when a disk showed avalable in your queue and it was at the top of your list, then when they recieve the ones you send back, al of a sudden it's got a short wait or long wait and they send you something else. They actually said that they were shipping one time and then changed it and sent me something else. I can understand why they do it. They lose money on customers like me that have the 8 out plan and ship back the day after I get it (sometimes the same day). I watch movies more than tv now days. Still, it doesn't serve my purposes. I get more movies with a three out movie pass then I did with netflix 8 out. I also like that I can take a risk on any crappy movie and 10 minutes into it, if I don't like it, I can run down the street and get something else. Blockbusters selection still sucks though, that seems to be the main drawback for me. Maybe I'll try hollywood video (I guess I'll have to pay those 50$ in late charges from two years ago).
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Maybe I'll try hollywood video (I guess I'll have to pay those 50$ in late charges from two years ago).
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(they pay $1.50 per rental for most new releases, for old releases they pay ittle or no per rental surcharge).
A few years ago when I registered with some of the big distributors there was never any mention of any surcharges, I just buy and rent them out. No extra money after buying! Though I never opened the store so I never bought em.
Has netflix got sometype of deal going to get new releases cheaper by paying a surcharge or something??
When you think about that it does not make sense. $20 a month for a membership and you get DVDs 3 at a time. I've seen alot of people mention spacing them out so a new one arrives everyday. At that rate it's about 25 or so per month, figuring no delivery on sunday, or you get 2 on Sat or Sun then it's still 30 a month.
But ok even just an average of 4 per week, that's 16 a month. Still more than $20 if paying a surcharge of $1.50
I actually wonder how they make anything with postage costs, labour, and buying disks anyway without any thoughts of surcharges added to that.
Oh ya, added this, was main reason for post though..
It makes alot of sense the less rentals the more profit, and no I don't think the disk sitting an a shelf unused is costing or losing any money.
Since this is a set fee membership plan, then as long as they get the monthly payment they got the money, who cares how few disks the customer orders then. Since they pay postage and what ever else to ship those disks each way, actually if it sits on the shelf it is saving them money.
Kinda like vehicle insurance, it did not cost or loose AIG or Geco any money because in the last 6 months 2 of my vehicles have not been used at all! As long as they got the money to insure them what do they care if I use them or not??? Well as long as I don't have a claim anyway they don't care.
1Ton box truck, $150
1/2 ton Van $100
Cost me $250 for 6months but I haven't used them once durring that time. But I still paid because I was planning too durring that time. Time to renew them now, and one I am dropping but the 1ton I am keeping on.
Kinda same thing with netflix, If I had an account there and paid the $20 every month but never rent anything, they make more money because it costs less to take the money and not do much else.
So figure those 10-15 disks I should be getting are actually sitting on a shelf unused, that is saving them money because they did not have to package and ship them to me.
Now if I dropped the account and stopped paying like on the 1/2van insurance, well ya that loses them money.
Maybe next report will be alot of loses due to canceled accounts?? -
Originally Posted by overloaded_ide
It makes alot of sense the less rentals the more profit, and no I don't think the disk sitting an a shelf unused is costing or losing any money.
Since this is a set fee membership plan, then as long as they get the monthly payment they got the money, who cares how few disks the customer orders then. Since they pay postage and what ever else to ship those disks each way, actually if it sits on the shelf it is saving them money.
#1) Labor, envelope supplies and postage: these costs basically move with the number of rentals. Less total rentals per account the more money they save and the more they profit. They have both an interst in keeping rentals down and a disinterst due to slow turnover eabling competition or other loss of customers (churn). Lost coustomers are lost per month revenu, and lost unrecovered start up losses associated with each new acocount
2) inventory issues. this is more subtle. In retail, inventory is is a cost, indeed often the main cost.
Now lets' take the category #1 costs and asume they have a average constant target.
they still have a huge interest in maximizing their use of their inventory
Every dollar netflix spends on buying a copy of Mary Poppins is a dollar tied up. there is an interest rate cost or an opportunity cost to that dollar. Indeed the entire reason behind their "que" system is to minimize peaks in demand and maximze use of inventory (those tied up dollars).
a grocery store makes about 10% on dry goods. they have a huge interest in knowing how many boxes of 20oz cheerios they need to buy this week, becauese too few is lost sales and too few many means they can't buy as much shredded wheat and may lose sales there. at 10% you can't screw around.
Well the month pre-paid rental business is this to the extreme. it is like each item has zero profit but they still have to carry it. those 15 copies of an unrented movie are sitting there in hte warehouse and because netflix bought them, they are costing money and doing nothing (yes I said "costing" present tense, not past tense "cost"; all money in business either performs or is a cost.)
My point is they hav an intense interest in knowing your habits, and obviously in manipulating them (the "recommendations" theyoffer are low demand movies) the more they know about you as an individual, or as part of a group, the better their chances of profiting.
Lastly, the reason the insurnace analogy doesnt work is that the cost you are refering to is a risk cost. Netflix inventoried movies are a different cost, they are either performing or non performing inventory, and basic to understanding retail -
I normally have about 20-25 movies in my queue; been with Netflix for the past year, and am totally satisfied with their service. I live in a rural area, but I receive my rentals the next day, 99% of the time. New or old releases. I just rented Farenheit 911, which released on Oct 5. Netflix sent it out on the 4th (the day before it released -- as they usually do), and I received it on the 5th. The same with the Star Wars DVD's.
I've received two or three damaged disc's over the past year, but Netflix ships a new one out immediately after reporting it -- so the replacement is usually received the next day. Since I live 35 miles from the nearest Blockbuster store, I've found Netflix the very best source -- for service, selection, and convenience. (Hell, half the time I went to Blockbuster, they didn't want what I was looking for. Even the new Blockbuster Online doesn't have some of the films I've been able to get from Netflix.) -
When you look at it, there really is no right or wrong here. Diffrent companies offer diffrent strong and weak points. The service a company provides may be great for one person, and crap for another. It is great to discuss it though. It helps us all find the best service to fit our needs, and the compitition beteen companies is even beter. It keeps them fighting for coustomers, which gives us the best service, price etc.
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both blockbuster and netflix pay a per rental surcharge to distributors on new releases. The why of it is kidna obvious, they are way more valuable. value comes from demand.
This is the same whether you have a blockbuster, netflix or Joe and Jim's Video Store. Am I not correct?
Unless of course, you lease your videos for rental... that's entirely different.
I don't think, however, that netflix or blockbuster are leasing there videos for rental. -
as someone that used netflix from the start and just canceled my account 3 months ago.. i had the 5 out plan and its a fact for a couple years i would get at least 20 movies a month and that got cut in half to ten a month,,do i think its a conspiracy to save money,,well of course,, i would see movies that were in my cue and available,(mind u i never rented new movies) sit there for two days and it happened constantly,, i got so fed up with this obvious tactic of screw the customer and make more money tatci i canceled with them,,,also their customer service sucks they never admit to faults. i was there when they opened the flushing distrubution center and every dvd sent back to them dissapeared,,if u do a check online u will see hundreds of complaints just like this,, did netflix ever admit to it,no,they blamed the post office yet they closed the flushing center..why?....also i might add while with netflix i rented at least 500 movies,,so i knew the exact patterns of shipments due to so many rentals on my part and yes they did change this pattern,, to save money yes i definitely think so
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There was a story from another site where some guy was using Netflix & his dvds started getting, short wait, long wait messages. So he got his wife a new account & had the same flicks in her list & strangely enough, suddenly those were 'available'....
I got the instore BB deal this month. They asked if I had it before & I said yes, but gave me the new, $10 cheaper rate. I was wondering if I cancelled each month, if I could keep getting the discount rate? That could be my next experiment. -
Originally Posted by smearbrick1
Just pick up a forbes or any business publication and read any story on blockbuser or netflix, ok.
here, it took me 20 seconds on nexis:
http://www.siliconvalley.com/mld/siliconvalley/3614404.htm
look at the shaded sidebar story on the right titled: "With newer releases, Netflix users can anticipate a `very long wait' "
eleventh graph:
"Under revenue-sharing agreements with most of the top studios, Netflix pays on average $1.40 to the studios each time a new release is mailed to a Netflix user, about 40 cents more than Blockbuster, the nation's largest brick-and-mortar video rental chain. Revenue-sharing costs now are equivalent to nearly 20 percent of Netflix's subscription revenue."
that is 20 months ago, new revenue sharing rates average $1.50.
most of blockbuster's brick and mortar revenue shring deals track over 26 weeks with the studios getting a decreasing portion (average 30% over first six months (vs 45% on old vhs agreements)) of actual rental fees for the title as time goes by. netflix has to pay per cycle sent per customer as they don't have a per rental fee.
You will also see an allusion to its software:
"Using a proprietary algorithm-based technology called Cinematch, Netflix filters likes and dislikes based on a five-star system subscribers use to rate movies. The system, Hastings said, often leads consumers to movies they might not otherwise have known about and it keeps Netflix's vast library in circulation.
[cinematch is now an even more highly developed piece of marketing, inventory and data-mining software)
One poster, LordSmurf, who is an expert on many more useful things here, but perhaps not this, made a comment about the utility of tracking customers. I attempted to explain it. I am sure he considers me credible just as I consider him credible in his area of expertise. But you had to add this sarcastic "I don't believe you"?
Normally I don't bother hit to nexis to forum discussions it is just better to let someone believe you have the facts or not. -
My NETFLIX experience has been very consistent. For $23/month I seem to get 18 movies in any 30 day period. A 5 day turn around is rare (return on Monday and recieve on Friday) Normal is 3. This was true in month 1 and its true now in month 10. The only trade off I experienced is in the selection of new releases but that is offset by the Huge selection. A year ago I averaged spending $40/month for 12 movies at Holliwood Video.
Big Government is Big Business.. just without a product and at twice the price... after all if the opposite of pro is con then wouldn’t the opposite of progress be congress? -
Originally Posted by BobV
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Originally Posted by aero
That NEXIS article is far too old to be of any use right now.
The following is just thoughts I have, BTW, not aimed at you Aero.
Anyway, I do have a bit of business knowledge, especially marketing related and net related. Data mining, aka collecting customer info, is but one part of this complex "conspiracy" equation, as I'm calling it. The tracking info is one thing, but that a machine-automated realm.
This gets a bit "gooey" to discuss, it'd be easier to debunk in person with some props, but I'll do my best.
The problem you have is ENTIRELY on the managerial/employee side. Let's face it, they're probably trying to run a supply-side chain that's going to look a lot like an importer/exporter or retail. You maintain stock, analyze buying habits, and predict future habits based on the past. A handful of people (sizes depends on the exact business) determine this, and control the business. They never see the ground level. They hide behind the old computer printouts. On the ground, you've got the grunts. It's a heavy-traffic situation, take stuff off the shelf, put more on. Check stock, maintain as needed. Add in the in-and-out shipping. Think WALMART, only smaller, and just DVDs.
There is no time to analyze on an individual basis.
This is just as ridiculous as Whataburger giving you a larger slice of cheese because they've determined that you go there a lot. This analogy fits best with the "they send more scratched DVDs to XYZ kind of people" conspiracy. They pull everything from the same pile. They cannot possibly train all Netflix employees to scan discs and make sure that YOU get that one special scratched disc.
Something like this is cut by audience grouping. The feedback varies FAR TOO MUCH for it to be this kind of cut.
Cut, you ask? People that "rent too much" being cut off is another exanple. This does make sense to some degree, and I can see it happening. There is a large enough complaint to see this happening to some degree. But it is awfully random, so the odds are not in its favor, not unless the various centers play by different sets of rules, not company-wide.
If you started to quantify and qualify in audience groupings, then you've also got to classify them. How many are there? Type A customers are good? Type B rent too much? What about all those other kind of issues? Are we to assume they have 50+ classes? Where does it end? Again, I don't believe in any of this. I'd bet the maximum thing they have is, much like a credit card company (they track your daily usage), too much activity may set off a red flag of some sort. The consequences have to make sense too. Limit access? How long? How? So far, nothing stated by forum users is making a good case as to "what" is being done. Not the sensible complaints, anyhow.
And to micro-manage the queue's per person?! This thing of "my account was 'long wait' but my wife's was not" is bunk. The complexity of something like this is probably FAR MORE EFFORT than it would be cost-wise. It may also depend partially on a "first come, first serve" style of priority.
And that's what matter in the end, correct? Money?! Of course. So while they may do things to maintain a better level of revenue, they're not going to spend it implementing new programs and constantly training new employees to death so that a few people get more scratched DVDs.
This is called CONSPIRACY THEORY. They are all out to get you!
You are just that freaking special, huh? No.
To answer the "long wait" kind of question, that changes the second you access the DB from your account. I've had movies in "very long wait" and "short wait" and "long wait" ... but later that day, it was gone, and sometime even jumped into my shipping queue. Why? Simple. During business hours, many things go on.
Another thing people do not realize is not all of the mailbags go out together. You can dump your DVDs in the mailbox, but they may very well be in different bags, and thus opened at different times, AND by different people. If SUZY gets your 2 DVDs, and handles it great, and then JOHN opens the bag late in the day, you may end up in that staggered system.
I would just chalk all of this up to the employees where your center is. There is not large conspiracy going on. Next thing I'll hear is "Elvis works at Netflix".
The world is just not that interesting. It's pretty dry actually.
Final note: Several of us have noticed odd coincidences between those "how many DVD blanks per month do you use?" and these kinds of "Netflix/Blockbuster/etc sucks" threads. Hmmm.....Want my help? Ask here! (not via PM!)
FAQs: Best Blank Discs • Best TBCs • Best VCRs for capture • Restore VHS -
But you had to add this sarcastic "I don't believe you"?
I don't believe I meant this as sarcasm. If I would have wanted to convey sarcasm, I would have said:
they pay 1.40 per rental to the big motion picture companies? Sure, I believe you.
That, my friend, was sarcasm. Albeit, not witty... but sarcasm. Maybe next time I'll try a limerick in my post.
Apologies all around if that is what you like. I quite enjoyed reading about Netflix and Blockbuster and how they contribute money to movie companies for each rental. -
Can anyone tell me how i can start a new thread? Ive searched this entire site for an hour now and cant tell how to start a new one. Thanks
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Originally Posted by lordsmurf
My downstairs neighbor (I live in a duplex) signed up for netfilx tuesday. The very same movie I have been waiting for since Sept. 28th
was immediately available to him. he got it in the mail today. My copy is still on very long wait.
They're delivering to the exact same place, it should not be due to other shipping centers or mail delays.
If occurences like this are "bunk" then I would really like to know how this can be explained.
I think they give new members priority over their new releases.drink up....the world's about to end -
No Anubis if you mail in your dvd's so they receive it on Monday the day before the new releases come out they will mail it to you that day. If you mail them where they receive it on Tuesday the release date then they are already mailed to the Monday people in queue. Remember if you want new releases immediately you have to time it perfect. (Meaning they get your returns Monday morning.) Mine takes one day from where im at so I mail all mine on Saturday and I get all the new releases at my house on Tuesday.
Please some help me how i can start a new thread!!! I still cant figure it out.
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