Now this is one stat from an analyst that we wouldn't refute, but we do wonder how Versaly Entertainment acquired this information. How exactly does one calculate streaming revenue from a subscription service like Netflix anyways? To be fair we are only assuming that Netflix is involved here as it wasn't specifically mentioned, but we really can't think of any other subscription based video streaming service. Our best guess is that the revenue in question is based on what the studios are receiving and not for the service itself. Regardless, it isn't hard to figure out why no one is paying $4-$5 for the 24 hour rights to watch a movie on any of the pay-per-download services out there. Especially when you can rent a movie from just about anywhere via Redbox for $1.
Read -- Subscription downloads outperform pay-view.
Read -- Redbox undermining DVD value
posted Aug 7th 2009 8:22PM
Wtf this same post was just up yesterday...
But yea netflix is the only prominent video streaming service on the market right now, but that's OK with me as long as I can stream through my xbox! :)
Yeah on EngadgetHD. Gotta recycle that content for maximum advertising exposure!
I never go to engadgetHD, so meh.
I drink your milkshake!
bye bye, blockbuster.
"How exactly does one calculate streaming revenue from a subscription service like Netflix anyways?"
The accountant in me says:
Take the total expense of the streaming service (bandwidth, servers, advertising, etc)
Say it equals $100,000.
Take the number of movies downloaded in a given period (say quarterly or every 3 months)
Say 5 million movies
$100,000 / 5 million movies
= 0.02 or 2 cents in expenses for every movie downloaded (on average)
Add up total revenue from the streaming service.
Say it equals $300,000.
$300,000 / 5 million movies
=0.06 or 6 cents in revenue for every movie downloaded (on average)
0.06 - 0.02 = 4 cents profit per movie
Then just compare your 6 cents of revenue to what the pay-per downloads are making.
There is no "streaming service" you buy from Netflix.
It comes with your account.
So how exactly are they going to measure revenue from a service that is tagged on to an existing service?
It's a bit like taking the entirety of what people pay for Cable TV and counting it as revenue for the "On Demand" part of that service.
SiXiam
You're missing the point entirely. It doesn't matter what the per-movie revenue is, because the number of movies downloaded from subscription will be different (much higher, probably) than the number downloaded by pay-per-download.
It matters what the total profit is. In your subscription service case, that's $200,000. But let's say that the competing service (pay-per-download) only sees 50,000 downloads at $4 a pop. That's $200,000 minus any expenses... if those expenses are still $100,000, then you have only $100,000 in total profit.
nVidiot
I think SiXiam fully qualified the expenses and revenues as those coming from the subscription portion of the service, not the entire service. Yes, there are methods available to determine those values for a company like Netflix. Operating expenses are already separated, and it's easy enough to interpolate revenues by subdividing the number of movies a person watches into "by mail" and "by internet" categories, and distributing the revenues accordingly.
Well, Ben, I will tell you that I stopped using pay-per-view once DirecTV implemented the 24-hour limit BS. With Netflix, they get my fee every month, regardless of how much or how little I use Watch Instantly. And $1 Redbox movies for sure became convenient.
...as a film maker, i reserve the right to see all movies for free...
...so that i might learn to entertain the movie goers of tomorrow...
when I download something, i want it done in like NOW! FASTER! when something streams, I'm just happy if it doesnt have to buffer. I assume it would be easier on the available bandwidth to dish out a movie over its two-hour length as opposed to all at once as fast as possible. This would be the appeal overhead-wise
Download movie, watch movie, drm expires, [delete movie/renew drm] versus watch movie. Consumer appeal.
Wow, this is a good stat to have out there.
This was in yesterdays daily roundup. I never read engadgethd and would not have known except for the roundup. Try recyclling something not in a rou dup and fewer people will notice.
This is what makes me so mad with Apple: No Blu-Ray. I have to pay, what, $4.99 to rent an HD movie? I'm already starting to see BD's on Amazon around the $10 mark, and you get a hard copy, better quality and sound choices, and no download wait. What a concept!
Apple will get Blu-ray once the bag stops hurting.
It's a world of dirt.
To AJ in the East Bay: Do you mean Steve Job's scrotum?
(sorry a corrupt WI-FI signal made me write that)
Speaking of the growing popularlarity of Redbox:
Fox Tries To Strangle Redbox (NWS, CSTR)
by Rory Maher Aug. 6, 2009,
"Redbox, which offers $1 per day DVD rentals at kiosks, is starting to choke DVD sales. So some studios are trying to cut off Redbox's oxygen supply.
According to the WSJ, Fox has asked its distributors to withold sending DVDs to Redbox for at least 30 days after they are released. The company did say it would consider making its DVDs available on their official release dates if Redbox agreed to share more of the revenue with them, but Redbox declined."
Other articles have suggested other studios are likewise inclined.
Having reached a critical mass in American's consciousness where they're starting to affect DVD sales, Redbox may find themselves the victim of their own success.
on the "blu ray is a bag of hurt" comment by Jobs...
Like a good magician he is a master of misdirection.
Apple will get Blu-ray when it's more popular and cheaper...Then when they do everyone will forget that Apple didn't want it for so long and will praise Jobs some more, while everyone else has had it since the get-go. And, since it's cheaper, Apple can actually sell it for an exorbitant amount and make money!
Brilliant, really...
Blu-Ray adds cost and minimal benefit. What does the average person do with it? Watching movies off a computer screen is not the best viewing experience, and if you're hooking it up to a TV, there are better media center options out there than a Mac. Ripping BD discs takes way more time and space than it's worth when you can download a MKV version in a fraction of the time.
I'm not being an Apple apologist, I just don't see the practicality for the price right now. A BD recorder would be a useful tool, but they're prohibitively expensive. I'd rather have Apple give me a faster processor, more RAM and bigger HD before throwing in BD. Optical media is annoying outside the living room. Besides games and movies in the PS3, the only use for optical discs I've had in the last couple years has been operating system installs.
Flash memory is nearing the same price vs. capacity and is superior in almost all ways. Other than DRM'd media distribution, Blu-Ray is already obsolete for the desktop computer.
Too Expensive?!?!?
http://www.newegg.com/Product/Product.aspx?Item=N82E16827106254
Burner, $159
Then again, crapple will try to sell you a $150 intel processor for an "upgrade" fee of $300.
MBP 2.8GHz C2d standard (retail $109), upgrade fee of $300 to 3.06GHz C2D (Retail $149). $300 to go up a processor that costs $40 more...
http://store.apple.com/us/configure/MC226LL/A?mco=NjcxMTU1OQ
# 2.8GHz Intel Core 2 Duo
# 3.06GHz Intel Core 2 Duo [Add $300.00] ( http://www.newegg.com/Product/Product.aspx?Item=N82E16819115059&Tpk=3.06ghz%20core%202%20duo $149.99)
And don't try and tell me apple doesn't get volume discounts off what I would pay at Newegg...
Apple would have to pay Sony for every computer sold with a BRD drive. I'm sure that's not motivating enough for Steve to pay out when BRD have not entrenched itself into the market yet. It's still a niche product.
I share a netflix login with a couple other people. it serves its purpose well for us! Gotta love agreements to not add something to the queue to be shipped.. .heh
About Redbox:
It's nice if I want to see the particular new releases that they carry, but I often want to rent older movies, more obscure movies, or DVDs of TV shows, and Redbox simply doesn't do that. iTunes rentals fill that void nicely (with the exception of the DVDs of TV shows).
Netflix is great if you're into B-movies from 1980. You can watch a lot of those instantly, too bad there aren't any new releases!
Redbox is great if you actually bring the movie back the next day, which I seldom do, so $1 quickly becomes $5 out of laziness, which brings me to my next point.
I've been doing almost nothing but renting movies via Apple TV for the past year. It's great! My monthly expenditures are usually less than the cost of a month of Netflix and I get to watch "Watchmen" at the touch of a button instead of "Nacho Libre". No worrying about returning rentals. No waiting days or weeks for the movie you really want to see to come in the mail. I love it.
Um let's not forget w/ Netflix you get streaming and actual DVD rentals....For $8.99/mo (with an occasional Redbox supplement, usually free w/ coupon codes) I can watch a combo of newer releases on DVD, and tv shows (Dexter, 30 Rock, Weeds etc), older classic (not just B movies my friend), and foreign movies that I hadn't previously seen on streaming.
Or I could pony up $4 just to rent Watchmen from Apple...
or you could just torrent
that works just as well sometimes even better
now that blueray is out on torrents
cheers
mate
Stealing movies is so 2004...
Thank God for "Redbox".. I use them a lot as they have several locations that are nearby & they've even began installing units outdoors for 24 hr. access. Services like this are going to help with the exaggerated rates that iTunes & netflixs charge, Or so I hope. I have always refused out of principle to pay $2 to $4 for freaking downloaded movies. Plus, I can even rent several "Blue Ray" titles from several Redbox locations. I really like that you can use their website to view titles & even reserve a movie so that you're sure to get what you want & not waste a trip.
More like owning DVDs and Blu-Ray is beyond me at this point thanks to netflix. Typically I only watch a movie I buy on DVD maybe twice, and then never watch it again. At least with netflix I have an entire library of stuff I can see, and if I ever feel the urge to watch a movie again, I could just put it on the top of my queue. I think that hollywood is the new music industry, in that they don't quite realize it yet, but their product is being graded to be worth less, and are being forced into digital distribution, of which someone else is the gate keeper (like Apple is with iTunes).
At least it does one thing, put the independents on par with the big boys like how they are in iTunes. Ultimately I think that these sort of systems are more the demise of publishers rather than the content creators since it offers them a more direct connection with their clients.