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Does Netflix Have an Identity Problem?

Netflix has been on quite a roller coaster ride this last year, going from a consumer darling to a consumer outcast and then clawing itself part of the way back. Adding to the customer confusion that often surrounds the company is the fact that Netflix goes out of its way to not promote the most profitable part of its business: DVD rentals.

Fortune has run an interesting article discussing Netflix’s dilemma when it comes to its DVD business. While the division’s numbers are down—9.2 million DVD subscribers currently compared to 14 million in Q3 last year—DVD rentals generated $134 million in profit for Netflix last quarter. The company’s much-hyped streaming business? It turned in a net loss of $6 million.

Despite these numbers, Netflix continues to go out of its way to ignore the DVD side of things.
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From the copany’s note to shareholders last month:

“Our core thesis is that we can build a large defensible global business as an Internet network for TV shows and movies . . . We can’t wait to serve a global audience with an amazing Internet video experience.
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Is Netflix shooting itself in the proverbial foot by allowing its DVD business to languish, or is the company just playing it smart by letting the format dwindle and embracing the future now?

[via Fortune]

 

11 Responses to “Does Netflix Have an Identity Problem?”

  1. Visitor [Join Now]
    Danofive0 [visitor]

    NetFlix is going to the future now! In about 5-7 years DVDs will have gone the way Laser Disc and VHS tapes did. Zip Zero Gone! Everything will be online. No DVDs in the mail.That will all be a thing of the past!
    Netflix will make it. As they take over the online streaming DVD movie business.
    In about 5 years they will have 100,000 + movies online. And 95% of them will have CC Closed Caption are SDH. For the hard of hearing.
    They are the future now! I think the price will go up to about $20.00 bucks a month. For all you can watch. And that will be a great deal. I have NetFlix Online now. And it is great! And you can’t beat the price. $8.00 a month..
    You are looking at the future now!

  2. Visitor [Join Now]
    BBQ [visitor]

    Yeah, just like the CD format (which came out over 20 years ago) has long disappeared in favor of MP3 downloads… Oh, wait – no, it is still by far the leading source of music distribution (85%, according to WSJ http://online.wsj.com/article_email/SB117444575607043728-lMyQjAxMDE3NzI0MTQyNDE1Wj.html).

    As long as the physical format is the only tangible (i.e., I own it, not some vague “rights”) and high-fidelity (i.e., not compressed, which means distorted) form of distribution of music, it will remain viable. Same for DVD and movies.

  3. Member [Join Now]
    Shemp Howard [shemp-howard]

    Online pennies off-line dollars.

    When will they get it! How can Netflix abandon or only neglect its biggest money maker?

  4. Member [Join Now]
    tomcole37853

    Netflix has the right idea but they have poor timing. Most people are not going to make the investment into a streaming device, do not have the technical know how to hook their computer to the TV and would not want to waste the money of another computer to dedicate to the TV. I have had a PC hooked to my TV for a couple years and no longer pay for cable but, I am the exception. I own close to a thousand DVD’s and have not watched any DVD in months because I can stream the content with less effort. There is no doubt to me that the DVD and the Blueray will go by the wayside the only question is when?

  5. Visitor [Join Now]
    mrphy42 [visitor]

    Are there any solid numbers on Netflix revenue between online content VS DVD?

  6. Visitor [Join Now]
    BH14 [visitor]

    If someone thinks DVDs and blu-rays will be gone in the near future, you also think Redbox will be gone. I don’t see it happening. Praising Netflix? Netflix is overpriced trash. They used to be good but that was many years ago when they also delivered DVDs by mail. Now, their online selection is very small and they pretty much have just a few new released movies. I watched about 3 different tv show series on Netflix but that was about it. Netflix movies? Ehhh. I am watching new released movies for $1 with Redbox. … I have amazon vod, vudu vod, verizon vod and I use Redbox way more than the other 3 combined.

  7. Member [Join Now]
    BlueDesert [bluedesert]

    I spent an hour yesterday ( @ instantwatcher.com ) and went thru EVERY available movie and TV show on Netflix streaming. I came up with exactly 3 movies and zero TV shows that I wanted to see.
    That is why I get DVDs in the mail. I want only NEW releases. I want Hollywood,indie and foreign releases. Netflix DVDs in the mail has ALL of them. Netflix streaming has NONE OF THEM.
    The only way any SERIOUS movie buff would use streaming would be if new release titles were available. The people who use streaming generally will watch anything. I’m very particular aout how I spend my free time.
    DVDs will die eventually- but their ‘life’ is nowhere near ready to kick the bucket.

  8. Visitor [Join Now]
    Bob In Tulsa [visitor]

    Netflix isn’t promoting it’s DVD rental business and it generated $134 million in profit last quarter? I’d say Netflix is doing something right. Keep at it.

  9. Visitor [Join Now]
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