MCN Blogs
David Poland

By David Poland poland@moviecitynews.com

MoreOn Netflix

I’ve written about this so much that I have tried to deal with recent events on Twitter only. But there are now stories on stories on stories, so I figured I should state my opinion as clearly (and concisely) as possible.

NETFLIX & DREAMWORKS ANIMATION – Nothing really new going on here, though I am shocked that the New York Times has become so enamored of Netflix that they run virtual press releases without asking any of the hard questions that have become clear in recent months. There is nothing significant here. Netflix is playing over retail. No one else is. They can’t afford retail for STARZ Disney & Sony deals. So not happening. DWA is a smart attempt to plug that dike. But 24 movies will not change the game.

Few people believe that the deal is really $30m per movie. But there is a real chance that the deal is $60 million a year, which would represent 2 new movies each year as well as the 24 film library (not all of which is immediately available, btw). The price is high for Netflix, but would be the rare exclusive in their library. The vast majority of other deals are non-exclusive.

While the New York Times positions this as a comeback, it is much more of a desperation play. But it does confirm, yet again, what I have been saying, which is that Netflix’s biggest problem right now is not pricing, but content perception. They have gone from the perception (however false) that they are the Everything Everywhere company to being the Lots Of Stuff, But A Bit Like Cruising Through 300 Cable Channels And Not Really Wanting To Watch Anything company.

This deal should cut the stock price of Netflix and raise the stock price of DWA, which is being overpaid. Also, the issue of when films start streaming on Netflix is, it seems quite likely, well after the DVD window. So paranoia about this cutting into DWA’s DVD business is probably unfounded.

NETFLIX & INDIES – indieWIRE is running its second piece on Netflix abandoning the indies in the last couple of weeks.

Again, it has nothing to do with wanting the indies or not wanting the indies. Netflix has spent itself into some serious trouble and they are hoping that international expansion will save them. But even the relatively inexpensive buys, streaming and hard DVDs, like Criterion Collection, are money that Netflix cannot afford to spend right now. They need to overpay for DWA by not having Criterion anymore.

The sad part, for small distributors, is that they ask so little of Netflix that having it pulled away is really painful in some cases. The margins are very narrow in that business and losing 5% of revenue means something real to these companies.

Anthony Kaufman has it wrong when he mentions “the long tail” because this IS a function of the long tail, not a cleaving off of it. The long tail expands, conceptually, to broaden access, which it has done. But it also narrows the financial value of each specific item on the tail… which it is now doing.

The fantasy of The Long Tail was that it would be a Communistic ideal… that everyone would be able to live modestly as things averaged out. This was always ridiculous when it came to films because the cost of production is not easily scalable. In other words, films that are happy to be selling Netflix under 100 copies are okay… but the longer part of the tail, between that and Mid-Indie level and above, were happy to have something, but not paying the bills with what they were getting from Netflix. The problems in the sell-thru DVD business have been taking their toll for a while. The dream was that Netflix streaming would raise the bar and be another revenue producer. But instead, their ambition to be in the thicker part of the tale is not only failing to come true, but these films are being squeezed even further into the thinner part of the tail.

No matter how good your indie film is, the perception of its value on Netflix is based on marketing, the same as a theatrical opening is. A great unknown doc is “more filler” to most Netflix customers.

The longtail still exists for indies. If you want to stream for free, there are plenty of places to go. But the fantasy of the long tail for film, which was always pie in the sky, is no longer gaining believers. It’s hit the wall. And as with so many other things – and think Anthony was saying this as well – when times are tough, the wins go to the biggest profile, least needy partners.

This all goes back to the piece I wrote last week… someone needs to get some big bucks in their deep pockets and start the commune of the indie players’ fantasies. There is a business model that can work… it just requires a lack of raw greed on everyone’s part. If there are 10 different places streaming indies with differing proclivities, it will remain an untenable market. The niche needs a target. And I still think that SnagFilms and Ted Leonsis’ deep pockets would be the best way to go. They’ve spent a good amount of money and this would be an even bigger investment, but I truly believe that they could get a base of subscribers of over 5 million within the first two years after making themselves the place to go with your small, quality films, giving them greater cache with the higher profile indies. Think of the platform just for domestic screening on foreign films that haven’t been over here.

5 Responses to “MoreOn Netflix”

  1. “It has nothing to do with wanting the indies or not wanting the indies.”

    As a user, it doesn’t really matter WHY Netflix is cutting back on indies, all that matters is the fact of it. It’s obviously a wise move for them in the current climate, but it’s another strike in the “Get rid of Netflix” column as I consider dumping them.

    It’s already tempting to jettison the physical DVD part of the plan, but their streaming seems to be getting weaker at the moment and I’m not sure it’s worth 8 or 9 bucks a month anymore. A few Dreamworks titles won’t fix that.

  2. James says:

    “There is a business model that can work… it just requires a lack of raw greed on everyone’s part.”

    I dont see how David. I’ll say this more bluntly, for those interested in “indie” product (defined by the studios you mentioned last week), the quality of product we’re talking about is extremely low and has very little demand. We’re talking about the films that play to small audiences at film festivals or made for peanuts horror films

  3. Foamy Squirrel says:

    That’s the whole principle behind bundling though – if one of those films was on a local theatre and you’d be looking at a poorer turnout than Bucky Larson. Stick it as part of a festival, and at least you get the morbidly curious.

    As you get a larger and larger indie scope, the likelihood that something will catch your fancy also increases – “Now streaming 10,000 international films” or whatever might attract some attention. Throw it in for an extra $2 on your Amazon Prime, Netflix or Dish monthly bill, and suddenly those films have a chance to pass the convenience threshold and start earning some money. Heck, that’s the whole principle behind cable channels – how many channels do you think would vanish overnight if you didn’t have to choose “160 channels” vs “170 channels INCLUDING HBO!” etc.

  4. krazyeyes says:

    Is Netflix still planning on producing that original content that was reported ages ago? I haven’t really been looking but I din’t think i’ve heard a peep about any original content since the original press release.

  5. Bennett says:

    Another problem for Netflix might be this new Amazon Kindle Fire. I am not sure what kind of 3G/WIFI connection it has but I am sure that people will be using Amazon Prime on it. As Netflix starts losing more and more content people might start looking at Amazon Prime as a possible replacement.

    Smart move Amazon

The Hot Blog

Quote Unquotesee all »

“Ten years ago at Telluride, I said on a panel that theatrical distribution was dying. It seemed obvious to me. I was surprised how many in the audience violently objected: ‘People will always want to go to the movies!’ That’s true, but it’s also true that theatrical cinema as we once knew it has died. Theatrical cinema is now Event Cinema, just as theatrical plays and musical performances are Events. No one just goes to a movie. It’s a planned occasion. Four types of Event Cinema remain.
1. Spectacle (IMAX-style blockbusters)
2. Family (cartoon like features)
3. Horror (teen-driven), and
4. Film Club (formerly arthouse but now anything serious).

There are isolated pockets like black cinema, romcom, girl’s-night-out, seniors, teen gross-outs, but it’s primarily those four. Everything else is TV. Now I have to go back to episode five of ‘Looming Tower.'”
~ Paul Schrader

“Because of my relative candor on Twitter regarding why I quit my day job, my DMs have overflowed with similar stories from colleagues around the globe. These peeks behind the curtains of film festivals, venues, distributors and funding bodies weren’t pretty. Certain dismal patterns recurred (and resonated): Boards who don’t engage with or even understand their organization’s artistic mission and are insensitive to the diverse neighborhood in which their organization’s venue is located; incompetent founders and/or presidents who create only obstacles, never solutions; unduly empowered, Trumpian bean counters who chip away at the taste and experiences that make organizations’ cultural offerings special; expensive PR teams that don’t bring to the table a bare-minimum familiarity with the rich subcultural art form they’re half-heartedly peddling as “product”; nonprofit arts organizations for whom art now ranks as a distant-second goal behind profit.”
~ Eric Allen Hatch