Netflix Faces a Scary Plotline

[LiviaOlivia]

latimes.com
http://www.latimes.com/business/la-fi-netflix16oct16,1,697932.story?coll=la-home-business

Netflix Faces a Scary Plotline
The online DVD rental company's shares tumble 41% as new rival Blockbuster cuts its monthly fee and analysts warn of a race to the bottom. Amazon might also enter the market.

By Lorenza Muñoz
Times Staff Writer
October 16, 2004

Investors hit the rewind button on Netflix Inc. shares Friday, sending the DVD rental company's stock down 41% amid an intensifying price war. The plunge came as rival Blockbuster Inc. disclosed plans to reduce its monthly fee to $17.49 for unlimited online rentals from $19.99. Blockbuster's move followed Netflix's announcement Thursday that it was slashing its fee for the same service to $17.99 from $21.99 starting in November.

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Analysts said that Netflix Chief Executive Reed Hastings told investors Thursday that the Los Gatos, Calif., company needed to cut fees because of competition from Blockbuster and the possible entry into the DVD rental market of online retail giant Amazon.com Inc.

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Meanwhile, Amazon looms as a potential threat. The leading retailer on the Web has distribution centers across the country and the marketing muscle to promote a DVD rental service, should it decide to launch one. Patty Smith, a spokeswoman for Seattle-based Amazon, said that although customers have asked the company to offer a movie-rental service, it had no plans to announce one at this point.

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DVD rental companies face "Wal-Mart on the retail side and on the rental side digital cable, video-on-demand, better satellite and TiVo," said Jim Friedland, senior Internet analyst for investment bank SG Cowen. "They are in a situation where they are going to get attacked from all levels."

[helnwhls]

1. shades of webvan

glad for the cost cut but poop! netflix does not have everything, but it does not edit content either like WalMart and Ballbuster. I love netflix. I would hate to seem them go under.

[qnr]

2. Didn't Netflix just buy into TiVo? Going to offer streaming

videos or something, from what I read. Can't remember if it was TiVo or not, but I think it was.

Edit: yup: http://www.netflix.com/PressRoom

[LiviaOlivia]

3. Deal with TiVo

http://www.washingtonpost.com/wp-dyn/articles/A36875-2004Oct15_2.html

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But even as it defends against new competitors, Netflix is preparing to open a new front in the online movie rental business. Earlier this year, Netflix signed a deal that will allow it to deliver digital copies of movies over the Internet to TiVo Inc.'s 1.5 million subscribers.

Subscribers would be able to download the movie onto the TiVo digital recorder and replay it, just as they do with television programming that has been stored on the device's hard drive.

Cable and satellite companies are already delivering similar video-on-demand services. In many cases, cable companies give customers up to 48 hours to view the movie with all the same features as a VCR, including the ability to fast forward, rewind and pause a program.

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[BuelahWitch]

4. Netflix is offering "Going Upriver" starting 10/19

Netflix has an excellent selection of DVDs. I rent alot of documentaries from them. Is Blockbuster's selection as good?