Netflix, Inc. (NASDAQ:NFLX) has made a deal with CBS Corporation (NYSE:CBS) and The Walt Disney Company (NYSE:DIS).  The agreement is that Netflix members will be able to watch shows appearing on Disney and CBS the day after they air on TV.  This means if you are a fan of How I Met Your Mother or Hannah Montana and you have access to a Netflix account, you are in luck.  Even though many of the shows already appear on sites like Hulu and CBS.com itself, many of the shows on that site arrive days after the show originally airs. 

The effort by Netflix to make these deals indicates the pressure that the DVD market is in when competing directly against downloads.  Amazon.com recently created a new video site.  The sales of movies on iTunes is increasing at a rapid pace.  And Hulu and Joost are rapidly adding free video content. 

Those paying for monthly subscriptions on Netflix at $8.99 can already play select TV shows and movies at no additional charge.  This move alone was made in order to compete with Blockbuster’s DVD mail order in-store return strength.  Netflix hosts about 12,000 videos to watch online.  “With deals like CBS and Disney, we’re giving subscribers additional reasons to try it,” stated Ted Sarandos, chief content office of Netflix. 

Netflix, Inc. (NASDAQ:NFLX) has suffered several outages over the last week. It was the worst outage that Netflix has had since starting. Of Netflix’s 8.4 million customers, one-third of the shipments were halted due to shiping system issues. Shipments were not made this past Tuesday. Some shipments were made on Wednesday and Thursday, but Netflix has quite a bit of catching up to do.

Credit will be given to customers that suffered from the outage as the company continues to fix the problem.

Many customers did not mind the disruption because Netflix’s supply chain has been very reliable up until now. “Netflix’s service has been impeccable,” stated Cary Miller, a media executive that has been using Netflix for quite some time now. “I probably wouldn’t have noticed if they hadn’t informed me.”

“This time, the site’s been up but our shipping system is down. It’s worse than it was in March. We’re really backlogged,” stated Steve Swasey, a Netflix spokesman. Netflix sent out an e-mail to those who were affected by the outage. Below is what the e-mail stated.

“We are sorry for any inconvenience this has caused. If your DVD shipment is delayed, we will be issuing a credit to your account in the next few days. You don’t need to do anything. The credit will be automatically applied to your next billing statement.”

Related Link:
1. Reuters

As Apple is gearing to introduce new movie services at Macworld, Netflix is preparing itself to face the potential competition.  Netflix is removing the limit for how long users can watch movies online through high-speed connections.  Netflix will introduce this change tomorrow.  Macworld takes place on Tuesday and the media is speculating that Jobs will introduce new movie content via iTunes.

Depending on each subscriber’s plan, Netflix subscribers could watch a certain number of hours online at a time.  For example, subscribers who pay $16.99/month is able to rent 3 movies at a time and can watch 17 hours of streaming movies per month.  This service is called “Watch Instantly.”  But with the new service Netflix is offering, subscribers can watch as much as they want to online. 

One thing that I can appreciate about Netflix is their ability to take on the big players.  Everytime they add a feature, Netflix retaliates.  Blockbuster starts mailing DVDs and gives the ability to return them in the stores; Netflix reduces their prices, adds the online streaming service, and expands their movie selection faster.  Apple makes deals with big movie companies and plans to add movie rental services; Netflix responds by adding the unlimited streaming services.  I’m definetely a happy Netflix customer.

Netflix is also partnering with LG Electronics on an initiative that brings the ability to stream movies from the Internet directly to HDTVs. 

“Internet to the TV is a huge opportunity,” stated Reed Hastings, Netflix’s founder, Chairman, and CEO. “Netflix explored also offering its own Netflix-branded set-top boxes but we concluded that familiar consumer electronics devices from industry leaders like LG Electronics are a better consumer solution for getting the Internet to the TV.”

[Information Source: TradingMarkets.com]

Netflix, Inc. (NASDAQ:NFLX) pulled the rug out from underneath where Blockbuster Inc. (NYSE:BBI) was standing these last couple years. Netflix, the Los Gatos, Calif.-based online movie rental company, boasts 6.3 million subscribers and a library of 70,000 movies.

Based on an e-mail survey I received from Netflix a couple days ago, Netflix is also continuously finding ways to improve their transportation supply-chain. The e-mail survey asked me when I returned The Rundown starring Dwayne “The Rock” Johnson and Sean William Scott (a.k.a. “Stifler”).

Dear Amit,
Thank you for your recent return of The Rundown. Please tell us when you mailed back this movie by clicking on the appropriate link below.
* I mailed the movie Thursday, Nov 01, 2007
* I mailed the movie Wednesday, Oct 31, 2007
* I mailed the movie Tuesday, Oct 30, 2007
* I mailed the movie Monday, Oct 29, 2007
* I mailed the movie before Monday, Oct 29, 2007

My lazy side appreciates having movies brought to my door. There are three factors that I use to determine where my business goes between Netflix and Blockbuster. Two of them are price and speed. The third reason is the user interface. Netflix’s UI is a lot more friendly because they utilize AJAX-like tools to recommend movies and rate movies.

When Blockbuster released their third quarter financial results a couple days ago, shareholders of the company may have questioned how sustainable the company’s current business model is.

Jim Keyes, Blockbuster’s Chairman and CEO responded by providing a glass half-full perspective of the situation:

During each month this quarter, over 20 million customers around the world used the BLOCKBUSTER(R) brand to satisfy their needs for media entertainment, and that customer base presents us with a tremendous opportunity.

Keyes added:

Our goal is to continue to increase our membership base by providing even more ways for customers to get the entertainment they want through our stores, through the mail and through new technologies.

In my opinion, to increase membership, you do not close 526 stores in one year alone and do not pull the plug on the Total Access program. You increase membership by function as good as Netflix’s, reduce prices, and give a further incentive for its current members to stay. Another potential form of revenue that I have not seen Netflix or Blockbuster use is advertising.

Digital advertising companies are now backed with billions of dollars from companies as big as Microsoft, Google, Yahoo, and AOL. These companies must be anxious to find ways to get access to businesses that have large memberships. Will their a public outcry if ads show up on Blockbuster and Netflix’s homepages, not likely. Even if ads show up briefly before a streaming movie, I highly doubt that users would complain too much.

As a happy Netflix customer that doesn’t want to see Blockbuster forced to shut-down, those are my two cents. As a movie rental consumer, I want to continue to have my options.

Information Source:
[1] CNET News.com: Say goodbye to Blockbuster

Amazon.com, Inc. (NASDAQ:AMZN)[1] is rumored to be considering an acquisition of Netflix, Inc. (NASDAQ:NFLX)[2].  Yesterday, Netflix share prices gained $1.06 (5%) to $22.45.  Netflix’s shares have been struggling due to intensity of rivalry from other mail movie distributors such as Blockbuster Inc. (NYSE:BBI)[3].  Brian Bolan, a Jackson Securities[4] analyst heard about the speculation of the buyout from industry contacts.

In regards to Amazon, Bolan stated “They’ve got excess currency, if you will. Netflix, on  the other hand, has been facing stiff competition from Blockbuster and everyone  else, so they’ve seen their stock go lower.”

From a supply-chain management point-of-view, the potential synergy between Netflix and Amazon.com makes total sense.  Amazon has an online video streaming service called Unbox and Netflix has a similar service called Instant Movies Online.  If Amazon.com were to acquire Netflix, they would gain Netflix’s subscribers and add be able to add more to the movie inventory.

The founder of Netflix is Reed Hastings and he serves on the Board for Microsoft as well.  Jeff Bezos also interacts with Microsoft often as his company, Amazon.com is based in Seattle, Washington.  As more information is disbursed about the potential acquisition, Pulse 2.0 will write about it.  Keep checking back often.

[1] Amazon.com
[2] Netflix.com
[3] Blockbuster.com
[4] JacksonSecurities.com

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Netflix, Inc. (NASDAQ: NFLX) started its subscription service in 1999 and reached a million subscribers faster than America Online. Their model was simply successful. Eight years, 5.7 million members, and 75000 titles later both Wal-Mart and Blockbuster received a wake-up call that in terms of video rental, they may not have the most streamlined supply chain.

On December 20, 2006, TechCrunch wrote about how “Blockbuster changed the service in a way that can really hurt Netflix. Movies received by mail can be returned directly at any Blockbuster store. You get a free rental on the spot, and Blockbuster still sends out the next movie in your queue. And yesterday they announced that the monthly coupon for a free rental can be used for movies OR video games.”

Early this year, NetFlix then announced that its customers would have access to streaming movies and television shows including Steve Carell’s The Office and tv/movie studios wanted in on the new Netflix model including NBC, Sony, Fox, Paramount, Warner, and New Line Cinema.  Amazon created Unbox to compete with Google and iTunes streaming video also. Netflix followed and now Blockbuster wants in as evidenced by its reported talks with buying Movielink (formerly known as Moviefly), a streaming tv/movie website. For how much? Possibly under $50 mill in cash and stock according to PaidContent.

What exactly is Movielink, LLC? Movielink is a private venture between Paramont, Sony, Universal Studios, and Warner Brothers. Information regarding how many movies that have been streamed on Movielink or how many customers is a mystery to me, but obviously its worth a pretty penny to Blockbuster. As more information fleshes out, I’ll ensure to report it.

The online DVD rental service provider, Netflix has been actively searching for talent that can develop tools that improve upon Netflix’s current recommendation system. This system improvement is a response to increasing a competitive edge against Blockbuster and various other movie downloading services. Here is a [link] to the Netflix Prize homepage.

Netflix currently has 5.2 million customers and is looking into increasing their customer base by improving their movie recommendation services through this competition. In order for the software engineer to walk away with $1 million, he or she must be able to improve the current system by 10%.

Reed Hastings, the Netflix Chairman stated “Right now, we’re driving the Model T version of what is possible. We want to build a Ferrari and establishing the Netflix Prize is a first step.” However, Dennis McAlpine, an industry analyst in the field of entertainment proclaimed this prize competition as a “marketing gimmick.” “I’m a little surprised because their current system already works so well and the (customer) satisfaction level is pretty high,” stated McAlpine.

For the developers to create their tools, Netflix is releasing 100 million movie ratings from 500,000 Netflix users. For confidentialty, all the users’ personal information was removed.