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15Sep/11Off

Netflix in a pickle

TechOps Guy: Nate

I wrote on why I canceled my Netflix subscription when they jacked up their rates, it all came down to content - or lack thereof. I see people tout Netflix quite frequently, claiming to be willing/able to "cut the cord" to cable or sattelite or whatever and go Netflix/Hulu/etc. I'm in the opposite boat myself, I'm more than happy to pay more to get more content. Netflix is too little content for obviously too little money. They haven't achieved the balance for me (and it's not as if they had a more expensive tier that had more content).

They announced today they expect to lose a million subscribers over this, compound that with them losing a content deal with Starz recently things are not looking so hot for Netflix, if I were a betting person I'd wager their best days are behind them (as in now their content costs are skyrocketing and their growth will likely slow significantly vs past years). Their stock is down roughly 41% from the recent high when they announced the change.

I understand Netflix had to raise rates because their costs have gone up and will continue to rise, they just handled the situation very poorly and are paying for it as a result. It is too bad, at one point it seemed Netflix could be 'the thing' as in having a model where they could be potentially the world leader in content distribution or something(and they had the market pretty saturated as far as types of devices that can talk to Netflix to stream -- except of course for WebOS devices) - but at least with the way their negotiations are going with the content producers that seems unlikely at this point. As a side note, I read this about Netflix as well and that made me kind of chuckle at their operations as well. Though I'm sure in the grand scheme of things pissing a few million down the tubes for "cloud services" is nothing compared to their content costs.

Something I learned in the midst of these price changes and the uproar about them that I really didn't know before is that streaming titles come and go on Netflix, what is available today may not be available tomorrow (for no obvious reason - unlike losing a content deal with Starz for example). Could it be that they have rights to put up only x% of someone's content at any given time ? I don't know. But I was kind of surprised when I read(from multiple sources) claims that the same titles can be available, then not available then available again. There apparently is some means to get a gauge as to how long something might be available(don't remember what it was), just goes to show how far we have to go until we ever get to this.

Next up - the impact of the vSphere 5 licensing fiasco. This will take longer to unfold, probably a year or more but I have no doubt it will have a measurable impact (dare I say significant impact) on Vmware's market share in the coming years. I was talking to a local Vmware rep not too long ago about this and it was like talking to a brick wall - sad really.

I've spent more $ buying old movies and tv shows that I want to have copies of in the past week than a year's netflix subscription would of cost me(I went on somewhat of a spree I don't do it all that often). But at least I know I have these copies they aren't going anywhere, I just have to rip them and upload them to my colo'd server for safe off site backup.

15Sep/11Off

Delaying IPOs..

TechOps Guy: Nate

It seems the other major social media companies are delaying their IPOs, first Zynga, now Facebook. Even Groupon delayed though it seems they may be going forward now. I know it's a different situation but every time I heard news of these delays it reminded me of a brief(3 month) time that I had at freeinternet.com, as the bubble was bursting the company was in a hotel meeting hall and the CEO was talking about stuff, the only thing I remember from the meeting was that their investors were delaying their IPO due to "market conditions", that their investors wanted their "quality companies" to wait till things improved (this was about July 2000 if I recall right).

The conspiracy theorist in me thinks that Groupon is doing anything they can to get their IPO out the door because their model is by far the most shaky and they need to cash out before it's too late. Zynga not far behind.  Facebook makes some real money at the moment, though the hype doesn't hold water and I'm sure they hope in 2012 or 2013 they may be luckier.

Joke's on them though, the economy is still going to be in the crapper in 2012, and 2013, and 2014 and 2015 and probably 2016 and 2017 too.

One thing these IPOs do seem to have an impact on is the local housing market in the bay area, a lot of folks (especially in Palo Alto) are apparently wanting to sell their houses but are holding off until these IPOs to try to get some executive to buy them for big bucks.

Life without a bubble is tough..whether it's social media, or cloud computing, or the government trying to re-inflate housing (and other assets with low interest rates and stuff) there's a lot of interest in building another massive bubble.

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