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Netflix, Inc. (NFLX) Message Board

  • VoiceOfWisdom VoiceOfWisdom Jul 18, 2002 1:53 PM Flag

    NFLX is the future

    I have been a loyal Netflix customer for over 2 years. I have had a DVD player longer than that and use to go to Hollywood video to get DVDs, then Blockbuster. I have been using the 6 out plan and pay 29.95 a month. Do I watch that many movies in a month, not really. But my kids do.

    Netflix beats Blockbuster and Hollywood hands down. Queue up the moview you wnat to watch, get recommendations based on you previously rated movies, no late fees, and now due to the new distribution centers, I get my movies in a day.

    What about the future? I say netflix is well positioned for video delivery over the Internet. They already have an outstanding web presence and easy to use web site. They will continue to eat at Blockbusters market share especially as more people get DVD players.

    I like it so much I bought a piece of the company. Like Buffet says, buy what you know.

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    • I am glad that many of you are enjoying this service. But really, when you talk about
      making a company like this profitable you are
      reaching for the stars. People want to watch things when they want to watch things, not
      'well, maybe we can get it in a few days...'

      Impulse people are the ones that you can get high margin out of, all you regular users will eat this company to death by getting too much value out of your dollars.

      So short this puppy if you think it won't be
      bought out but I think this company has a
      distant sister company called Pay Pal that came out this year too with an IPO and then was bought by EBAY.. this company should get bought out by Best Buy.. makes sense....

      -LB

      • 4 Replies to longbeach_1
      • I agree with LongBeach: "I am glad that many of you are enjoying this service. But really, when you talk about making a company like this profitable you are reaching for the stars."

        Retail stores continue to thrive because:
        - they decrease delivery costs for some products;
        - they appeal to impulse buyers;
        - they satisfy most needs faster than mail-order;
        - they allow the potential customer to view and handle the product before making the buying decision.

        They decrease delivery costs for some products because they are like a mini-warehouse: they receive shipments in bulk. A mail-order business model attempts to "cut-out the middleman" (the retailer) and deliver direct from the factory warehouse to the customer, but this only works well where the shipping cost is lower than the profit margin otherwise sacrificed to service a retail outlet. This becomes more problematic if the product is not sold, only rented, so that the shipping cost is doubled.

        While DVDs are relatively easily mailed, I just don't see where DVD rentals are high-margin enough to support two-way shipping costs, in-transit loss from theft and in-transit damage. Sure it's doable if you minimize your inventory costs by using a minimal number of shipping warehouses and minimize your inventory selection at each one, but the whole point of NFLX's business model is to provide both a fairly quick turnaround and a large inventory selection.

        The trouble for NFLX is if it keeps building new distribution centres (shipping warehouses)in order to provide fast turnaround times and it desires to provide a significant DVD selection, then its fixed costs will increase tremendously and it will have an increasingly insignificant fixed costs advantage over BBI while incurring an additonal delivery cost and of course not benefitting from impulse buying of chips and soda etc. as BBI does.

        Also, of course BBI could add an internet site function whereby a customer could order a movie online. The online database could determine if the movie is curently available at a local BlockBuster or not. If available, the customer could choose to pick it up from the store or to receive it via mail. If not available, the customer could choose to reserve it for pickup at the store when it comes in or to receive it by mail. That is why I say "BBI can easily adopt a hybrid direct delivery model using its current distribution system."

        I've decided: if NFLX goes up on Monday, I am shorting it. This stock is simply over-valued IMHO. Time will tell of course.

      • �when you talk about making a company like this profitable you are reaching for the stars�

        What subscriber data, earnings, and cost analysis are you basing this on?

      • People want to watch things when they want to watch things, not 'well, maybe we can get it in a few days...'

        Under your reasoning, it�s actually quicker for NFLX.

        At all times you have 2, 3, or more NFLX DVD�s you already picked out sitting in your entertainment center.

        When you want to watch a movie, IMPULSE yourself over to the DVDs you�ve already picked out and choose the one you want to watch.

        It�s not like when you feel impulsive, NFLX is not an option because of the mail delay. THEY ARE ALREADY AT YOUR HOME. No waiting, no driving, no late fees, no $4.00 per movie, no lack of selection.

        On a side note, I live across the street form Blockbuster and I�ve been a NFLX subscriber since I purchased my DVD player more than 2 years ago. Blockbuster is a 20 second walk and I still use NFLX.

        I have rented about 3 movies from Blockbuster since I�ve been a NFLX subscriber. I assume other members have done the same from time to time.

      • I was concerned about the impulse factor when I joined but it honestly hasn't been an issue. The selection and convenience has more than made up for it. Also, getting an e-mail telling me what's been shipped has been kind of fun. It creates a sort of anticipation about the mail.

        Just watched "The Gift" with Kate Blanchette, Keenau Reeves, Greg Kinnear, Giovanni Ribisi (excellent) written by Billy Bob and directed by Sam Raimi. I'd give it four stars out of five.

    • <<..now due to the new distribution centers, I get my movies in a day.>>

      That's been my experience as well. I live in the Los Angeles area and the distribution center is in Santa Ana.

      <<..my kids do.>>
      That's another savings. I don't have to buy DVD's or VHS tapes any more for my grandkids. When I know they're coming over I call their mother and find out what they would like to see and I usually have it in 24 hours.

 
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