1st Netflix, 2nd Walmart, 3rd Blockbuster, 4th Amazon.com

[Bronx]

http://www.miami.com/mld/miamiherald/business/technology/9935882.htm?1c


Triple whammy for Netflix

STOCK PLUNGES ON PRICE WAR, COMPETITION

By Dawn C. Chmielewski

Mercury News


Netflix's stock plummeted by more than a third Friday, on the threat of new competition from online retail giant Amazon.com and a bruising price war with Blockbuster.

The Internet movie rental pioneer's stock fell 41 percent to $10.30 -- its largest one-day loss since it went public. The sell-off followed Netflix Chief Executive Reed Hastings' statement to analysts Thursday that he expects Amazon.com to introduce a competing Internet movie rental service.

Hastings said Netflix would respond by lowering its prices Nov. 1. He predicted the price cut, from $22 to $18, would double the company's subscriber base from about 2.2 million to roughly 4 million members.

But the effort would likely drain the company of profits in 2005. Hastings predicted Netflix would break even or show modest profits, but fall short of the $80 million analysts forecast.

``We heard recently, very recently, that Amazon was going to be entering. We felt obligated to tell our shareholders that on our call,'' said Hastings. ``We took decisive action.''

Netflix pioneered the movies-by-mail model. Subscribers pay a flat monthly fee for an unlimited supply of DVDs each month without incurring late fees. But its success has attracted larger competitors.

Eleven analysts downgraded Netflix's stock Friday, in the wake of the surprise announcement. Many wrote that the Los Gatos company would struggle to make a profit on reduced revenue, especially if it is forced to compete with Amazon.com. Online giant Amazon.com can introduce its new service more cheaply, to its established customer base of about 40 million online shoppers.

``Whenever you have a behemoth like Amazon coming into play, it doesn't matter how defensive you are. Your business model is at risk,'' said Safa Rashtchy, a senior analyst with Piper Jaffray in Menlo Park, who was among those to downgrade the stock.

Blockbuster signaled its intentions to start a price war with Netflix, further raising the competitive stakes.

Following suit

After Netflix announced its price cut, video rental giant Blockbuster -- which launched its own online DVD rental service with no late fees in August -- followed suit in less than 24 hours. Blockbuster said it will cut its monthly subscription fee from $19.99 to $17.49 on the week of Oct. 24.

Blockbuster also plans to sweeten its in-store giveaways. It has given subscribers coupons for two free movies a month, from its 5,600 retail stores. It will expand the coupon offer to games, as well.

``We're determined to do whatever it takes to be the market leader in the online rental space,'' said Shane Evangelist, general manager of Blockbuster Online in Dallas, Texas.

Evangelist wouldn't say how many subscribers Blockbuster it has attracted to its online service; but claimed that in six weeks, it has more subscribers than rival Netflix attracted in its first year and a half of business.

Jim Friedland, senior Internet analyst for SG Cowen Securities in San Francisco, said he began seeing problems at Netflix in the previous quarter, when a price hike caused it to lose more subscribers and the company began spending more money to find new ones.

And subscribers started watching more movies every month -- raising expenses such as mailing costs for Netflix.

The increasingly crowded competitive landscape only increased pressure on Netflix.

Unlike Wal-Mart, which introduced its own Internet movie rental service with little advertising or fanfare, Blockbuster signaled its seriousness by launching its offering at a $2 discount to Netflix.

New surprise

``Not only was the call about Blockbuster having a significant impact on the third quarter right,'' said Friedland. ``The icing on the cake -- the new surprise -- is Amazon is going to enter the market.''

Amazon.com spokeswoman Patty Smith offered few comments about the company's plans.

``Our customers have encouraged us to offer low-priced online DVD rentals,'' Smith said.

Hastings said Netflix is nonetheless up for the challenge. He said his service remains superior to its contenders. And it has strong momentum. Netflix ended its third quarter with revenues of $141.6 million, up 96 percent from a year ago. Its net income of $18.9 million represented a six-fold increase from the same time in 2003.

``Amazon, they're the gold standard of e-commerce,'' said Hastings. ``To beat Amazon is to beat Brazil in the World Cup. It's a rare honor, it's a big challenge and we look forward to doing it.''

[somebodeez]

Cool!
Now if only my cable co. had some competition like this

[westlaw]

HIP HIP HORRAY!

I know so many people who have canceled their Netflix subscriptions and have joined other DVD rental programs.

Even my grandmother reports that she's been unable to rent more than 10 DVDs per month, on her 3 out program, in the last few months -- and she lives less than 3 miles from the Nertflix San Jose Fullfiment Center!

Netflix's shady business practice of intentionally delaying shipments to contain cost and boost their profits has come back to bite them in them azz!

Karma is a biatch!

NETFLIX WILL GO DOWN IN FLAMES!

[BJ_M]

if they go down -- prices will go up elsewhere ...

[lordsmurf]

Having NETFLIX replaced by Amazon (a company that has long treaded in dangerous territory business-wise), Walmart (known to be fickle about what services it provides), and Blockbuster (the monster has been sued numerous times for shafting the customer) .... would not be a good thing.

All these anti-Netflix threads on this site represent how truly stupid the Internet can get when it concerns rumor and speculation.

It also shows, quite openly, how greedy and unreasonable customers can get. Those that feel they should make the company lose money by renting 100 DVDs to them and everybody in a radius are retarded.

Blockbuster and Walmart really are starting to push around smaller companies like a monopoly. This is bad.

[BJ_M]

i agree with lordsmurf 100% .....

walmart has come into 100's (if not 1000's) of small towns with their cheap junk (a lot of it is - some of it is ok) and just wiped out home grown mom and pop operations ..

[andkiich]

It's called capitalism. Don't hate the company that has success. Just beat them at their own game.

If Walmart didn't fill a niche in the market, they would not be in business. Look at the example of the blacksmith who made horse shoes when the car took off. They needed to find a way to either shore up the rest of the horse shoe making business or turn their metal working skills to another use. Those that did, flourished. Those that did not went out of business. It's just the way it is.

[lordsmurf]

<nevermind>

[westlaw]

I dropped my Netflix plan Oct 5. Just today, I signed up at my local Blockbuster for their 2-out unlimited monthly plan, at $15 for the first month.

I told the manager that I was a high volume user, defecting from Netflix and that he could plan on seeing me everyday, and sometimes twice-a-day! I work directly across the street from this Blockbuster and live just one block away.

After offering me a free cup of Java, the manager stated, "We'd love to see you EVERYDAY." He assured me that unlimited meant unlimited!

Get this, he told me that if I called the store in advance, before 3 pm, he could pull the DVDs for me and have them ready and waiting providing I pick them up within a 10-minute window.

Down with Netflix. UP WITH BLOCKBUSTER.

Oops, did I mention that Blockbuster DOESN'T MIND if more than ONE HOUSEHOLD MEMBER uses the same account? That sounds like a GOOD DEAL to me. What do you think?

[chas0039]

As much as Netflix plays with my rentals and delays shipping, they are still the best deal in town and I hope they stay in business for at least a year so I can deplete my cue and get all the stuff that they have that Blockbuster and Walmart don't bother with.

[axlish]

As a netflix customer, this is great news. Their 3 at a time service keeps me more than busy. Also, I refuse to believe that walmart and blockbuster will carry as broad of a range of titles as netflix.

[Gurm]

Let's see...

You have Amazon - shady. I wouldn't trust them with a monthly fee. Eep!

You have Walmart - who wants to rent censored versions of R-Rated films? Yikes!

You have BlockBuster - this is the same store that billed my credit card $100 for two DVD's that it claimed were returned 3 weeks late, despite the fact that we dropped them in the night box BEFORE they were due, then their manager had the gall to call my wife a liar to her face. We got TWO SEPARATE class-action settlements from them for gouging and screwing their customers. Yeah, I want them getting MY money.

Sorry guys, Netflix is the LEAST of all evils - too bad it's gonna go under.

[BJ_M]

who says they are going under ... ?

they still looking for the long haul ....

they should have opened in Canada - would have doubled their business as its a far snowmobile trip from the igloo to blockbuster

[dafoe]

Netflix should branch out into video games. I can watch a movie in an hour and a half. But I might keep a game for a week before I'm bored with it. Maybe even adult DVDs- you know Walmart would never touch that. Wouldn't want to tarnish thier pristine image

The other problem for Netflix is they have pissed off thousands of customers with thier well documented delay tactics. I have seen them first hand and would never go back to that company- no matter what the price. Unlike most, I have proof. But that's not something I'm not interested in debating.

Whether you believe the thousands of claims regarding Netflix's shady business practices, or you simply dismiss them as a "conspiracy theory", one thing is clear: there are a lot of people that are unhappy with the service they recieved and would never go back.

As far as them lowering prices. Didn't they just raise prices? Because they "had" to? Now they are going to lower them? That means that they will increase thier delay tactics even more to be able to make a profit. This will, in turn, chase away more customers.

I could be wrong, but I think thier days are numbered

[Brent212]

I've had Netflix for a little over a year and I probably average 5-6 dvd's a week. I've never experienced the delays people talk about, although I'm not going to say I don't believe you guys. I happen to live in Los Gatos, where they are based, so that's probably got something to do with my good service. I feel like I'm already getting a great deal, so when they talk about lowering prices, that worries me that they will eventually go out of business, which would totally suck.

[lordsmurf]

they have pissed off thousands of customers with thier well documented delay tactics.

References, please?
Sounds like more rumor and speculation to me.

[dafoe]

they have pissed off thousands of customers with thier well documented delay tactics.

References, please?
Sounds like more rumor and speculation to me.

References are all over the internet.

But you, like the many "Netflix Conspiracy" theorists, refuse to be deterred by the mountain of testimonials all over the internet from dissatisfied customers or the experiments and reports that prove Netflix is engaging in these practices.

I have documentation that proves Netflix held my rental returns for three full business days and then denied having them. They finally admitted to them being at the Post Office. They refused to ship the new releases because, get this, they hadn't picked up the old ones.

But that wouldn't interest you because it wouldn't advance your theory that everyone that complains about being screwed by Netflix is either involved in some grandiose scheme to discredit Netflix or an impatient demanding, movie obsessed, rental pirate. Feel free to add to the list of possible motivations for what you people seem to feel is mass slander. I'm sure I forgot a few.

Also, with all due repect, you are seriously mistaken if you think that I have any desire or responsibility to convince anyone of anything or "prove" anything to anybody.

Every possible angle of this Netflix issue was covered right here in this forum- in a battle titled "Netflix sucks".

It was during that flame war that it became painfuly obvious to me that trying to convince Netflix loyalists with the facts was pointless.

If you honestly believe that Netflix is a great company and that the avalanche of allegations and empirical evidence are bunk- that's your opinion. Good for you. I have absolutely no interest in convincing you otherwise.

My realationship with Netflix was poor. I will never do business with them again. End of story. They are a non-entity as far as I'm concerned. I could care less what you or anyone else thinks of them.

[jntaylor63]

The 1st one of these companies that starts renting p0rn will get my $$$$ !

[skebenin]

Here's why so many 'loyalists' think the conspiracy theory is a load of bunk.

For every 50,000 customers:

• 49,900 are satisfied; service meets or exceeds their expectations
• 100 are not satisfied
• 75 of those are lunatics for any of a variety of reasons (expecting 100 disks a month, outraged at a three day turn around, sees short wait but freind sees available now, whatever)
• 15 have legitimate complaints, but NetFlix isn't to blame despite their belief to the contrary
• 7 have legitimate complaints where NetFlix is to blame, but bail before there is any chance for the issues to resolve
• 3 have repeated issues, not because NetFlix is out to get them, but simply due to statistics; there are going to be periods of service disruption, and some unlucky few are going to get more than their fair share of bad luck
• 5 non-customers get into the fray posting false claims (my brother's friend's wife's kid had NetFlix loose 10 disks in a row, yadda, yadda, yadda)

There's loads of (unverified, unsubstantiated, anecdotal) evidence on the web for a conspiracy. 95% of it is from lunatics (and lairs), 4+% is from people who bailed at the first sign of trouble or who mistakenly placed the blame on NetFlix, and the remainder is from people who simply had a run of bad luck.

[Sturge33]

Have any of you tried Gameznflix? I have yet to sign up for any of the online rental services. I have been expecting at least one of them to begin offering video games along with movies and was holding out for that. Gameznflix looks to be the only company offering that, but they never get mentioned in threads regarding Netflix, etc. Can anyone vouch for their service.

[Gurm]

I, my friends, and in fact EVERYONE I KNOW who uses Netflix have never seen this "delaying tactic" per se.

We HAVE seen that NEW subscribers often see "no wait" when we see a substantial (more than just a day or two) delay, so THAT part of the "conspiracy" I'm more than willing to believe.

But last month alone I got a bunch of discs... my friend got easily 30 movies out of them in one month. I mean, c'mon - that's 3 movies a pop, 10 times in a row, with a 3-day turnaround that's pretty damn good!

And when I called to cancel my subscription, they offered to cut my fees in half to keep me as a customer!

I can't say I have a serious complaint, other than the "delay for non-new customers" thing, which all turned out to be for naught since the movie showed up after a 1-day delay ANYWAY even though it said a week's delay. *shrug*

I agree that most conspiracy theories are 1% true and 99% garbage.

[chas0039]

The 1st one of these companies that starts renting p0rn will get my $$$$ !

There have been a number of companies doing this for a while. Warm up your Google!

[chas0039]

I agree that most conspiracy theories are 1% true and 99% garbage.

Except when the head of Netflix agrees that the "new movie availability delay" is correct.

I really don't care about this delay as long as they ship me something in the cue.

[lordsmurf]

Here's why so many 'loyalists' think the conspiracy theory is a load of bunk.

For every 50,000 customers:

• 49,900 are satisfied; service meets or exceeds their expectations
• 100 are not satisfied
• 75 of those are lunatics for any of a variety of reasons (expecting 100 disks a month, outraged at a three day turn around, sees short wait but freind sees available now, whatever)
• 15 have legitimate complaints, but NetFlix isn't to blame despite their belief to the contrary
• 7 have legitimate complaints where NetFlix is to blame, but bail before there is any chance for the issues to resolve
• 3 have repeated issues, not because NetFlix is out to get them, but simply due to statistics; there are going to be periods of service disruption, and some unlucky few are going to get more than their fair share of bad luck
• 5 non-customers get into the fray posting false claims (my brother's friend's wife's kid had NetFlix loose 10 disks in a row, yadda, yadda, yadda)

There's loads of (unverified, unsubstantiated, anecdotal) evidence on the web for a conspiracy. 95% of it is from lunatics (and lairs), 4+% is from people who bailed at the first sign of trouble or who mistakenly placed the blame on NetFlix, and the remainder is from people who simply had a run of bad luck.

The voice of reason.
It's good to know other intelligent people are around.

[smilinpete]

Here's why so many 'loyalists' think the conspiracy theory is a load of bunk.

For every 50,000 customers:

• 49,900 are satisfied; service meets or exceeds their expectations
• 100 are not satisfied
• 75 of those are lunatics for any of a variety of reasons (expecting 100 disks a month, outraged at a three day turn around, sees short wait but freind sees available now, whatever)
• 15 have legitimate complaints, but NetFlix isn't to blame despite their belief to the contrary
• 7 have legitimate complaints where NetFlix is to blame, but bail before there is any chance for the issues to resolve
• 3 have repeated issues, not because NetFlix is out to get them, but simply due to statistics; there are going to be periods of service disruption, and some unlucky few are going to get more than their fair share of bad luck
• 5 non-customers get into the fray posting false claims (my brother's friend's wife's kid had NetFlix loose 10 disks in a row, yadda, yadda, yadda)

There's loads of (unverified, unsubstantiated, anecdotal) evidence on the web for a conspiracy. 95% of it is from lunatics (and lairs), 4+% is from people who bailed at the first sign of trouble or who mistakenly placed the blame on NetFlix, and the remainder is from people who simply had a run of bad luck.

Reminds me of a line from an S.J. Perlman essay: "Facts, which I am making up as I go along, definitely prove that..."

What process is at work here that converts a person with an mere opinion, into a "loyalist", then into an attack lackey? Is it the same phenomena that creates brawling sports fanatics?

[Gurm]

I agree that most conspiracy theories are 1% true and 99% garbage.

Except when the head of Netflix agrees that the "new movie availability delay" is correct.

I really don't care about this delay as long as they ship me something in the cue.

Right. I think the issue here is that people are claiming that Netflix purposely delays shipments to keep you from renting, say, 30 discs a month. I agree that they do delay new releases and get them to new customers first, but so long as your queue is big enough, you WILL get lots of movies despite what the conspiracy theorists claim.

[winifreid]

Why do you say his is the voice of reason when you asked a previous poater for references? Just because he says there are fifty thousand customers doesn't make it so. I sure there are some who have said there is a conspiracy, I simply think it is a policy. A conspiracy requires more than one party, and I doubt they conspire with the post office to withhold delivery. It is often that they will receive my disks and hold one or 2 for the next day. When I first started I could get 24 movies a month on a 5 plan. I only get 16-18, now, even though I return them just as fast. I would prefer to get more, but I understand they want to make a profit. But I agree with others when they say they should not advertise their service as unlimited. I will not drop them becaus they have a superior selection and website.

[lordsmurf]

By what process does a person have "proof" (document-free, attribution-free, of course) that many find to be nonsense (indeed half-wit drawn conclusions with no supporting or supplemental material) .... then to attack those that bring in common sense?

Though the post by skebenin is equally as made up, it proves that such make-believe methods go both ways. Neither side has any proof, but one side does err on the side of common sense WITH some supplemental info (Post Office information, mostly). This common sense side, of course, is the one that says this is all myth and speculation. Because it is.

Unlimited never means unlimited. Ask the FTC. This is a marketing term that means "within a certain number shown by research to be feasible to be considered 'unlimited' by most customers". Ever see the Homer Simpson episode when he goes to the seafood restaurant? Perfect example.

[Gurm]

Reminds me of a line from an S.J. Perlman essay: "Facts, which I am making up as I go along, definitely prove that..."

What process is at work here that converts a person with an mere opinion, into a "loyalist", then into an attack lackey? Is it the same phenomena that creates brawling sports fanatics?

No, it's more of a knee-jerk reaction on a forum such as this.

You see it all the time in the DVD->DVD forum.

"There must be a new copy protection, here's my proof!"

(No, there really isn't - well, there's one lately in use in parts of Region 2... but that's a new development.)

Essentially, the Internet is a breeding ground for misinformation. The number of urban legends, unfounded claims, and plain ol' untruths grows exponentially each day/week/month.

Look at poor PayPal. You've probably heard that PayPal is a bunch of jerks, right? Screw their customers all the time, right? Problem with that piece of misinformation is that PayPal has MILLIONS of satisfied customers. A couple hundred have had problems - and a few of those are very vocal. A couple hundred, or even a couple THOUSAND, out of MILLIONS of users, is a fraction of a percent. Problem rates like 0.001 (one tenth of one percent, which if PayPal has 20 million satisfied customers represents 20,000 people getting screwed - a much larger estimate than you might think) are cause for concern but NOT indicative of some kind of systemic malfeasance.

NetFlix has been maligned in much the same way. Some people don't get their movies very quickly. It's sad, I know. But you know what? They're sent like 3rd class mail. I sent something to my mom in Florida via first class mail, and then a week later sent something else, ALSO via first class mail. The second letter arrived in about 4-5 days, but the FIRST letter arrived two days AFTER the second one. Why? The Postal Service doesn't guarantee delivery times.

Send something via UPS ground. Sometimes it gets there overnight, and sometimes it gets there in two weeks. It's just the way a big system like that works.

You want it there guaranteed in 2-3 days? Pony up for the 3-day guaranteed delivery - at 10 times the price.

That's pretty much what it boils down to.

So yes, I think that they DO delay new releases and give new customers preferential treatment. But if you have 100 titles in your queue, and send back the movies TODAY, and the distro center is within a couple hours' drive of your house, then in 3 days you WILL see another batch of movies. Will there be some people who are the exception to this rule? Absolutely - just like there are some people living in rural Pennsylvania who, despite only being an hour from Philadelphia, get their mail a week later than most.

Have YOU PERSONALLY experienced REPEATED two-week lags in getting your movies, despite being an hour from the distro center? I have yet to hear from anyone who has. I've heard from people who, on occasion, have had problems where their regional distro center didn't pick up their discs from the post office... and of course wouldn't ship out new ones because the old ones weren't back. I'm sure this happens more often than they'd like - this is a gigantic operation, and not every gigantic operation is as efficient as FedEx. (As an aside, have you seen the FedEx central distribution center? It's insane - planes are coming down within 10 seconds of each other ALL DAY EVERY DAY!)

[Gurm]

[quote="dafoe"]

I have documentation that proves Netflix held my rental returns for three full business days and then denied having them. They finally admitted to them being at the Post Office. They refused to ship the new releases because, get this, they hadn't picked up the old ones.

How many times? Once?

Unless you show that they did it intentionally, multiple times, this amounts to a clerical error.

Let me guess - they sort of blew you off when you called, and you got irate. Right?

I've worked in customer service. Let me delineate how these calls usually proceed.

-------------------------------------

Customer: WHERE ARE MY MOVIES?

Rep: Sir, we haven't gotten your old movies back yet.

Customer: I SENT THEM IN!

Rep: Well we don't have them. We can look into it if you want.

Customer: NO, I WANT NEW MOVIES NOW. I SENT MY MOVIES IN!

Rep: Well I can't do that for you, sir. Our rules clearly state that you can't get more movies until the old ones are back here.

Customer: I DEMAND JUSTICE! I'LL GET YOU FOR THIS!

<click>

Customer: I HAVE PROOF! THEY WERE DELIVERED! THE POST OFFICE SAYS SO!

Rep: Yes, it turns out that they were left at the post office by one of our lackeys. We apologize for the inconvenience and 3-day delay... even though it falls well within the terms of our agreement.

Customer: I DEMAND FREE MOVIES! I DEMAND JUSTICE! YOU PURPOSELY ARE SCREWING ME!

Rep: I'm sorry sir, I can't continue this conversation if you insist on being like this.

Customer: LET ME TALK TO YOUR SUPERVISOR!

Rep: Certainly sir, please hold...

Supervisor: Hello, what seems to be the problem?

Customer: YOU ARE SCREWING ME! I DEMAND JUSTICE! I DEMAND FREE MOVIES! YOU SUCK!

Supervisor: Sir, your movies were returned, and we've sent out new movies. Instead of 3 days it took a week. We're very sorry but that's well within our terms of service. What seems to be the actual problem?

Customer: YOU SCREWED ME, THAT'S THE PROBLEM! I SENT MOVIES BACK AND I EXPECT NEW MOVIES TODAY BUT THE MAIL IS HERE AND THEY AREN'T HERE AND I CALLED THE POST OFFICE AND THEY SAID YOU ALREADY HAD THEM BUT YOU SAID YOU DIDN'T AND I WAS LIED TO AND I'M GOING TO MAKE AN INTERNET SITE SAYING HOW MUCH YOU SUCK!

Supervisor: That's certainly your prerogative, sir. Have a nice day.

-------------------------------------

I think the problem here is - and this may very well be Netflix' fault - that a LOT of people seem to have gotten the idea that they'd make out like bandits on this deal. That they'd get 3 movies at a time, run them off overnight, return them the next day, and be able to scam like 30+ movies a month off of Netflix.

Then when, in reality, it turns out that they only get about 10 films a month for their $20, they get really upset and irate. They feel cheated - even though Netflix never guaranteed them 30 films, or ANY number of films really.

So they start Internet web sites, where lots of like-minded individuals can complain. But you know what? There are a couple hundred pissed off people... and hundreds of thousands of happy people. So we're talking 0.01% unhappy customers, and 99.99% happy customers.

It's like my PayPal example above. You think it's a conspiracy when really it's procedural error, coupled with customer service people who don't want to kiss your irate ass. Not everyone is Disney. You complain at Disney, you get free shit. I've seen people who complain at Disney JUST to get free shit, even though their service was exemplary. Not everyone has customer service like that, sorry to say. Some places refuse to let their customers screw them. Oopsie!