November 18, 2012 at 5:26 pm #814Quote:You might have thought that Netflix was destroying it, what with the service being everywhere and accounting for a sizable portion of evening internet traffic, but it turns out the the company is actually having some trouble. In fact, they are apparently losing $1 billion a year on Instant Streaming, the crown jewel in the Netflix hat.
Of course, Reed Hastings, the CEO of Netflix, doesn’t think that Amazon is doing much better. He estimates, based on the content deals that Netflix was able to eke out, that the company’s less complete offerings are costing them $500 million – $1 billion each year. That difference is made all the more recognizable when you look at the latest usage numbers. Sandvine, a broadband company, reported that Netflix makes up 33% of evening internet traffic. Amazon, on the other hand, made up a mere 1.8%. Though that number is likely to grow.
Hastings further went on to see that while Amazon wasn’t much of a competitor at the moment, they would be in he future. â€œAmazon is the best competitor weâ€™ve ever faced,â€ he explained. He sees a future where Netflix and Amazon vie for the title of top streaming company on the internet, something that Amazon has a bit of an advantage with, thanks to their tablets.
Read the full story here:
Netflix Losing $1 Billion a year on Instant StreamingNovember 18, 2012 at 7:58 pm #1922
This article doesn’t seem to make any sense. The closest it comes to proving the $1b figure is to say, “they are apparently losing $1 billion a year on Instant Streaming.” Apparently? Great reporting. Where do they get that number from?
Mega-players like Amazon and Apple can take a $1b hit in a growth phase because they have other revenues to prop it up. What does Netflix have? They’ve steered people away from the physical disc business and try to get everyone on streaming. If that’s their corporate focus and they’re losing $1b annually, no company could stay afloat since they’re a one trick pony. It’s not as if they have something else to fall back on.
Hastings makes an estimate about Amazon and somehow it extrapolates to a Netflix loss?
If you add the $2.1b content contracts they spent on content deals this year, according to the article, along with a $1b net loss, you get $3.1b lost. On Friday, Netflix market cap was $4.9b. That doesn’t leave much left over. So, if they’re losing $1b annually, their reserves should have been exhausted long ago. If we only count this year, they could only make it through next year before being flat broke.
Since their stock is sitting at $80, it doesn’t seem like anyone believes the numbers stated in this article.November 19, 2012 at 4:27 am #1923
Think gross, not profit.
RickledickleNovember 19, 2012 at 11:53 pm #1924
A market cap is the valuation of the company. It has nothing to do with profits.November 20, 2012 at 1:31 pm #1925
I just hope that Netflix doesnt vanish in thin air, due to the fact that its losing money consistently.
Amazon has deeper pockets and can afford this type of situation (losing money) much longer … :pNovember 20, 2012 at 5:13 pm #1926
I don’t believe Netflix is losing $1 billion a year, that or I’m not properly comprehending the article above, and believe you me, that could be the case.
Anyway, here’s another article that seems to say something entirely different…November 20, 2012 at 6:23 pm #1927
Probably both articles are far from truth.
But it makes sense that Amazon has to invest heavily to become a real contender in this area.November 21, 2012 at 8:02 pm #1928
Amazon has had a rough road with its video services. Amazon made a lot of enemies on their first attempt at it when people were suddenly losing access to the movies they bought because several studios pulled their rights to the content. They were a small player then and I hadn’t utilized them for any purchases. After that mess, it was a long, long time before I even considered them for video content. Even when I did, I only ever bought one movie from them. I only began using the streaming this month.
I find their digital content access via the website a bit of a mess. Sometimes you find the account or content information you want easily. Other times, it’s like they’re intentionally hiding things. I think it’s all a user interface issue and they need to do LOTS of work on that. The device front-facing interface always seems pretty decent but can be a challenge at times depending upon what device you’re using.December 1, 2012 at 10:08 am #1929
Using Netflix, right now im seeing every episode of “Once” (1st season).
But its true, that after 1 to 2 years its becoming dificult to find new and interesting stuff.
Netflix needs more content.
And regarding original content, perhaps its a good idea to make it available slowly, not all episodes at once as its planned.
You must be logged in to reply to this topic.