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Netflix CEO Hesitant To Fight Cable 366

Posted by Soulskill
from the cowboy-up dept.
imamac writes "Those who were hopeful that Netflix would bring the fight to the cable companies may be disappointed in the latest comments from their CEO. 'Reed Hastings is pleased with his company's massive growth, but he fears that getting too large will start "an Armageddon" with cable networks.' It's a fight he doesn't think his company could survive."
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Netflix CEO Hesitant To Fight Cable

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  • Translation (Score:4, Funny)

    by TaoPhoenix (980487) <TaoPhoenix@yahoo.com> on Monday May 09, 2011 @12:49PM (#36073196) Journal

    "Nice little Netflix you got there. Pity if something were to happen to take you down, hmm? Your friend, Comcast"

    • If Comcast continues to purposely oversell its upstream connection [slashdot.org] so much that Netflix use is crowded out, watch Xfinity Internet customers switch to FiOS or high-end DSL where available.
      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Okay, but what happens when the FiOS and DSL outfits do the same thing?

        • by Lumpy (12016) on Monday May 09, 2011 @01:07PM (#36073408) Homepage

          Honest people call their congresscritter and demand that internet be considered "common carrier status" and a "utility" that instantly fines comcast high $$$ for their antics.

          Trusting the "free market" to do the right thing is for fools.

          • by Dunbal (464142) * on Monday May 09, 2011 @01:10PM (#36073450)
            No less foolish than trusting your "congresscritter".
            • by RKThoadan (89437)

              Yes, but the market for congresscritters is better than the market for ISPs, the only barrier to entry in the congresscritter market is money (and maybe your eternal soul). Act now and you too can have a congresscritter of your very own!

              • by idontgno (624372)

                Yes, but the market for congresscritters is better than the market for ISPs

                But it's a bidder's market, and in this market your ISPs are buyers... direct competition to you, in fact, and with very deep pockets... so good luck trying to outbid them for a congresscritter of your very own.

            • by dkleinsc (563838) on Monday May 09, 2011 @01:45PM (#36073840) Homepage

              I'm going to quote Noam Chomsky on this one:

              "Government has a flaw that General Electric doesn’t have. The government is potentially democratic. There’s a way of influencing the government and participating in it. I’m not joking, just think about it. When you’re saying that the government is doing this and that and the other thing to us, yes, the government is reflecting the interests of the people in it, but they could be representing us - there is no way for private tyrannies to be representing us. So yes, they would like you to hate the government. There is a lot wrong with the government, there is a lot to be hated about it, there is a lot to be changed about it. But the main thing about it is you can participate in it. And there are ways of changing what it does, and therefore, for at least people who believe in democracy, gives us advantages that other systems of powers don’t have. It is potentially our system of power, and the private corporations aren’t."

              • The participation is minimal because everyone who has a decent idea or principals gets washed out by idiots. Something is wrong with a country that cares more about Osama Bin Laden or abortion funding over the national debt, or the fact our rights in the Bill of Rights are being violated on daily basis by A) The RIAA lawsuits (cruel and unusual), B) The TSA (freedom from unreasonable searches) and... etc. You get the idea. Our country is full of morons and smarter people that are greedy assholes and that is
            • by Dan667 (564390)
              so your solution is to do nothing?
              • What is there to do? The companies suck and don't care. The politicians suck and don't care. They're all butt buddies of one another. Voting is for shit because the system filters out anyone but sociopaths even before the primaries.

                So give us *your* magical solution.

                If it's "contact your sociopathic congressperson in between fuck sessions with lobbyists" we will laugh at you, put dirt in your hair and steal your lunch money.

                Ooo! I know! An internet petition! Yeah! That'll learn 'em!

          • by cashman73 (855518)
            Too bad most Congressmen have apparently already been bought out by Comcast [techdirt.com],. . . Good luck with that plan!
        • It is still a danger, but on the other hand FiOS and DSL both have a reason to support rather then oppose netflix. Cable's main hatred of netflix isn't the bandwidth usage as they claim, but the fact that it directly competes with cable TV. Alternative internet providers biggest disadvantage when competing against cable in the home market, is that cable bundles cableTV with internet. If cable TV were to die off due to failure to adapt to new technology, that would not be a bad thing for alternative provider
        • by nabsltd (1313397)

          Okay, but what happens when the FiOS and DSL outfits do the same thing?

          Although Verizon can technically oversell FiOS, it won't happen in reality.

          The throughput available to the neighborhood concentrators is such that Verizon would have to have 100% of the homes in the neighborhood subscribe to at least 75Mbps download speeds. At 50% uptake it's impossible for Verizon to oversell FiOS download speeds (with currently available packages).

          In addition, Verizon does not offer a package with a fast enough upload speed to oversell uploads even with 100% uptake. In the future, there

      • I already downgraded from Comcast's "Digital Starter", which ran me over $80 a month *just for TV*.

        I'd can the cable internet from them too, if I could, but DSL doesn't represent a cost savings. There's no incentive to switch when, although oversold, DSL offers no speed advantage and no cost advantage.

        • by pnutjam (523990)
          I switched because of a teaser $20 a month rate. Uploads are slower and downloads are often slower, but I have found that bit-torrent is much faster on DSL, and while 100MB downloads are slower, GB downloads are faster. The cable connections seems to penalize you after that first couple minutes of speed burst.
          FYI
      • by Digicaf (48857)

        And watch a lot of them get turned away. The cable companies have been hard at work introducing legislation to greatly limit competition in a lot of areas. Try asking Verizon when FiOS will be available in Tennessee for example. In the entire Memphis area, your choice is pretty much Comcast or Comcast. There is DSL, but its throughput is laughable and the service is highly unreliable, and there is no "high end" DSL to speak of.

        • by Lumpy (12016)

          In your poorly wired city? yes.

          In my city, my DSL is better than the CableModem from comcast. I get far lower latency and jitter that even a 3Mbps connection blows Comcasts 5mbps cable modem service out of the water. And anything higher is a joke as most websites and services dont have a backbone to support it. Netflix will not stream faster to you if you have 200mbps incoming, you can just stream Netflix in the bathroom, Hulu in the kitchen, and run 20 torrents wide open in the master bedroom and hall

        • by tepples (727027)

          The cable companies have been hard at work introducing legislation to greatly limit competition in a lot of areas.

          What Google keywords should I try if I want to learn more about this?

      • If only AT&T would get off its ass and actually offer us FIOS. In fact, Comcast laid all sorts of Dark Fiber in my city a couple years back, so they are already poised to do FIOS cable if they really wanted. Or .. if my city would go the way I suggest and contract out FIOS deployment to all houses, and run its own switching system and lease FIOS to Comcast and AT&T or whomever.

        A guy can dream.

    • Re:Translation (Score:4, Interesting)

      by RyuuzakiTetsuya (195424) <taiki.cox@net> on Monday May 09, 2011 @01:15PM (#36073516)

      this isn't about bandwidth and network caps, this is about challenging cable companies where they're most visible.

      Cable TV and TV content.

      He's right in not going after cable companies in the content field. After all, they and satellite companies are basically subsidizing the content creation with their dues to cable channels(Well, in Comcast's case, they outright own a lot of channels).

      Sure, Netflix is venturing into new content, but, I'm pretty sure Comcast isn't seeing that as big of a threat as say, Viacom, who are producing way more shows and run many channels that show up in traditional retail markets.

      Plus, even with Netflix's own content, they're not doing live content like news or sports either.

  • Well (Score:5, Insightful)

    by The O Rly Factor (1977536) on Monday May 09, 2011 @12:50PM (#36073212)
    That could be the result of the fact that we gave the keys to the pipes to the same people who create content to push through those pipes. It's not difficult for them to decide that Netflix's traffic is a conflict of interest, and can be easily choked off.
    • by rolfwind (528248)

      Easy, just sue the cable company for fraud if they do choke it off. Afterall, they advertise themselves as an internet provider, not comcastnet or aolnet, etc provider.

      Also, don't they lose common carrier status if they do discriminate, thus are unprotected from copyright suits?

      • by Dunbal (464142) *
        Good luck with that, especially since now the Supreme Court has ruled that you can be forced to accept arbitration...
    • by alen (225700)

      all they have to do is not upgrade their internet gateway if they don't have a direct link to Level 3. then all the streaming traffic will saturate it and everything will be unwatchable.

    • by SQLGuru (980662)

      The electric industry went through deregulation where the pipes were divided from the generation.....hasn't exactly made it nirvana there, either.

  • He's 68...This can't be right?

    http://en.wikipedia.org/wiki/Vince_Cable [wikipedia.org]
  • by landofcleve (1959610) on Monday May 09, 2011 @12:52PM (#36073236)
    This is the first time in my computing history that I like my entertainment service, and don't feel like turning to alternative sources for my movies and tv. So please Netflix, take em to the mat, let us count to 10.
  • Noooooooo! (Score:5, Insightful)

    by gbutler69 (910166) on Monday May 09, 2011 @12:56PM (#36073294) Homepage
    Netflix, gives me, for the most part, exactly what I want in television watching. I pay a reasonable monthly fee. When I want to watch a movie, there is a selection of B-movies and older classics (I use the term lightly) for me to choose from. No commercials. Nice! I pay my cable/internet bill on-time and regularly. I watch on average 1.25 moviews per day. AS far as I can tell, everyone wins. I'll never go back to straight cable. If netlix dies, I'll throw the TV in the trash and be done with it.
    • by Culture20 (968837)

      As far as I can tell, everyone wins.

      Cable: "There can only be ONE!"

    • I hate Cable. The worst part about it is the endless commercials you have to watch and pay them for the privileged. Once I switched to netflix surprisingly most of the shows I want to watch are on their anyway, or they have been added over time.
  • by realxmp (518717) on Monday May 09, 2011 @01:00PM (#36073332)

    What it will take for true competitiveness happen here is a regulatory order to have the cable and DSL companies split their content purchasing sides off from their "pipes" business. Whilst they still have vertical integration there is going to be no further incentive for them to compete on usage limits and speeds. What they have today is "fast enough" for web access, email, etc. Their own digital content whilst travelling across the same physical infrastructure does not count toward usage limits.

    The problem is that market forces do not work towards efficiency in situations of "natural monopoly". I don't blame Comcast, or AT&T for how they behave, it's only natural and in the interests of their shareholders, however economically they are benefiting from an externality and this must be gradually dealt with.

    • by cpu6502 (1960974) on Monday May 09, 2011 @01:16PM (#36073522)

      >>>market forces do not work towards efficiency in situations of "natural monopoly".

      I agree with your viewpoint, but Comcast, Cox, et cetera are not "natural" monopolies. They are government-created monopolies. With modern technologies like fiber optics, there's no reason why every home cannot be wired with 50 incoming optical lines (1 cm thick bundle), each one carrying a TV lineup. Then the consumer could choose if they want Comcast or Cox or AppleTV or Verizon and so on.

      Water, electricity, sewer are "natural" monopolies due to space limitations (i.e. big fat pipes or poles). CATV has no such limitation and there's no reason for a monopoly to exist.

      • What is the government specifically doing then to create these cable monopolies?
        • by Surt (22457)

          Licensing the right to install said cables exclusively to a single entity for terms of typically 50, 100, or infinity years.

      • by PRMan (959735) on Monday May 09, 2011 @01:34PM (#36073716)
        The monopoly is so that you do not have your streets torn up every week by yet another competitor. People hate construction.
        • I hate construction, but not NEARLY as much as I hate DSL, cable, and internet monopolies. Do you have any idea how crappy my internet is because of that?
      • by DrgnDancer (137700) on Monday May 09, 2011 @01:50PM (#36073888) Homepage

        With modern technologies like fiber optics, there's no reason why every home cannot be wired with 50 incoming optical lines (1 cm thick bundle), each one carrying a TV lineup.

        No reason except the insane and wasteful expense of doing so (You don't think they're all going to let each other use their existing infrastructure do you? Each and every one of those 50 cables will have to have its own hole dug. That or the government will have to force the companies to share the resources, which seems contrary to your point.) When I lived in Lafayette, LA the local government decided to say "fuck you" to Cox and had the local power company lay FIOS (which, by the way, is working out great by all reports, government run and all). Even using the infrastructure they had laid in already it was a multi-year, billion dollar operation. These were people that already had tunnels, right of ways, everything they needed to run power straight to every house in the city and most of the parish, and it still cost them a fortune and took a good long while. How long, and how much would be required for Google or Apple to do it from scratch?

        • Re: (Score:3, Insightful)

          by cpu6502 (1960974)

          >>>That or the government will have to force the companies to share the resources

          (1) Why not? Government forces Baltimore Gas&Electric to share its electrical system with other companies, thereby giving me multiple choices. Even before government was involved, the electricity was shared across companies (most of my electric did not come from BGE, but nearby Edison Power's dam). They cooperated with one another.

          (2) Or the government could own the 50-fiber bundle itself, in the same way gover

          • I personally have no problem with either option, but you typically have a "government regulation always bad" slant to your posts. What you're talking about in your second option isn't much different from what your parent originally suggested. Indeed, why have fifty cables, why not one government owned cable with a government owned or regulated switching room that hooks it up to the upstream provider of your choice. You pay a small maintenance fee to the government for your physical "last mile" connection

        • Each and every one of those 50 cables will have to have its own hole dug

          That's not the way I read it. The grandparent said "50 incoming optical lines (1 cm thick bundle)", which I took to mean that the 50 optical cables contained in a single cover. So there is only one hole needed. I've been told that the major cost is not the cable, but the digging, so I say cram as many cables as you can while you're there. Sure there will still be some shared infrastructure where those cables terminate, but it's still the best option we're looking at.

          I just don't understand the pessimi

      • by Telvin_3d (855514) on Monday May 09, 2011 @01:52PM (#36073906)

        No reason why every home cannot be wired with 50 different lines? Really?

        If you mean that fiber optics are small enough that it is physically possible for 50 lines to be run to one home, then sure. But that has never really been a barrier to entry.

        Who is going to let 50 different companies dig up their yard? Is there room for 50 different switching stations in the neighborhood?

        Besides, it's great to say that with smaller technology anyone is free to run their lines. But the real barrier to entry is the need to duplicate what the incumbent companies have built up over half a century before you can offer competition. It's a massive and almost insurmountable barrier to entry. That's why it's a natural monopoly, not the lines to the houses.

        • by fallen1 (230220)

          You do realize that what he said was "there's no reason why every home cannot be wired with 50 incoming optical lines (1 cm thick bundle)" -- which means that you don't have to dig the yard up 50 times AND you could create one large switch station in the neighborhood and have each company utilizing it pay part of the maintenance fees. Yes, Virginia, you can pack an assload of fiber optic lines into one small bundle and run it to the house and to the switching station(s).

      • by hitmark (640295)

        State or county government, right? not federal?

      • As always, you and every libertarian out there is dead wrong on this. Comcast and Cox are natural monopolies because the hard part isn't pulling fiber into your home, it is building it out into a worldwide network - or at least building it out so that it can tap into a worldwide network. That little fiber in your house needs to be running to some central hub, where it is connected to a million other little fibers. The hubs and lines have to all be bought, built and maintained. Personnel needs health care, a

      • by jedidiah (1196)

        No. It's still a natural monopoly. Someone still has to own the conduit where the cables sit and do the work to wire everything up.

        That entity willing to lay the cable is going to end up with ownership of it. Anything else comes into conflict with GOP notions of corporate private property. This is something that has been in conflict with the individual for a VERY LONG TIME in America. This isn't just a new thing. This goes back to the beginning of large corporations in America.

  • Netflix just needs to wait a few years for some more streaming companies to get a foothold. Then when the cable companies try to crack down, there will be more than just one company to fight back. It's also a lot easier to get public opinion/lobbyists on your side if an entire industry is the defendant rather than just one company.
    • I guess maybe you're right, but if he did stand up and force the telecoms hand, it might expose a few more people to the truth of what's really going on.

  • Neither company is very well served by the way the telecommunications monopolies in the US work. If they teamed up with Google and funded alternate companies and bribed regulators and such, I bet they could create a telecommunications infrastructure that was independent of these monopolies and a whole ton better for everybody.

    • If Google rolled out a small fiber-to-the-curb network and charged a REASONABLE price they could expose the chicanery of our non-providers. It sickens me to see the monetary restriction of technology, particularly when we are in the midst of such a financial decline. I reckon our Fearless Leaders will help the monopolists keep us down until all of our third-world competitors have achieved parity, then they can control (bring down) wages with total impunity. I wouldn't say it's a conspiracy, but it's getting

  • Basically instead of having to produce content he's letting cable companies pay up front so cable and network channels produce content and he reaps the benefits later on when the DVDs ship.

    Producing content is an expensive and painful business. Why fight the guys who are in essence subsidizing his business plan?

    • Well Comcast, Disney, and the other content providers can always choose to go 1970s-BBC on themselves, deleting old content so that it "doesn't compete" with newer content.

      Or they could, you know, choose to not release that older content on DVD, thereby preventing Netflix from utilizing their fair rights to buy some copies and loan them out.

      (It goes without saying that they could choose not to license it to Netflix for streaming.)

      • by PRMan (959735)
        They already have. Look for Aladdin on Netflix. Deleted.
        • Disney has for decades made it a habit to take things in and out of print. For some reason they think it increases sales because they can advertise both "new" releases and things going "back in the vault".

          This shouldn't, of course, have any effect on Netflix' ability to store and ship DVDs. On the other hand, I wouldn't be surprised if Netflix finds a lot more of its out-of-print DVDs "accidentally broken" by customers. Netflix also signs deals with providers that may voluntarily limit their rights to sh

    • by Dunbal (464142) *

      Producing content is an expensive and painful business.

      Really? Then stop hiring Charlie Sheen and look for cheaper talent. Movies continue to be made for peanuts, you just don't know where to look or refuse to watch something that isn't overproduced and chock full of special effects.

    • by Lumpy (12016)

      "Producing content is an expensive and painful business. " No it is not.

      http://twit.tv/ [twit.tv]

      http://www.pioneerone.tv/ [pioneerone.tv]

      http://revision3.com/ [revision3.com]

      http://www.theonion.com/ [theonion.com] - they make a broadcast "news" show for almost nothing.

      Also The daily show and colbert report were dirt cheap before both of them got greedy as hell. John Steward started that show making a GOOD wage but now hew is making an obscene wage.

      The costs per episode tv show is complete bullshit and they know it. High quality TV can be made a LOT cheaper a

  • Never provide a media service that delivers what the customers want without a huge hassle or outrageous prices. Customers must be bled for every last cent!

    Netflix is an efficient use of available technology in the United States; therefore it must be annihilated.
  • If Reed wishes to avoid an all out confrontation with the cable and content providers, it would make sense that he would speak out against doing so. However, that doesn't mean he isn't still planning on competing. The more he can appear tame and docile, the more cunning the surprise attack will be when he finally unsheathes his weapon. If you give the lion a wide berth and a calm gaze as you circle him, eventually the lion will relax and be unprepared for a lunge from behind.
  • Netflix subscribers: 23 million
    Cable TV subscribers: 100 million

    Who do you think content producers are going to side with (NBC/Comcast type mergers aside) if push comes to shove? It's just a matter of numbers.

    Kind of ironic that the relatively recent push to get TV shows out on DVD as quickly as possible, as well as getting all the old shows out, is probably one of the leading causes of the decline in cable TV. This is what really allowed Netflix, especially Netflix Streaming, to take off. How many of you w

    • by dkleinsc (563838)

      At this point, there's a good argument that buying cable subscriptions is far from cost-effective.

      Monthly cable subscription: About $45 a month, or $540 a year.
      5 seasons worth of DVDs for the show I enjoy: $500.

      Intangible advantages:
      Cable - I can see the most recent shows, so long as I stick to the network's schedule or remember to record it in advance or organize some sort of recording system such as TiVo.
      DVDs - I can watch what I actually like whenever I want, without commercials, for less money. And if I

  • by ThatsNotPudding (1045640) on Monday May 09, 2011 @01:16PM (#36073526)
    How much boat-rocking could you expect from such a guy?
  • If I was a cable provider, I'd be looking to partner with Netflix. Netflix seems to have figured out video on demand, so I would have them be the official VOD provider for my customers. Netflix would just be an added service on my customers' bills. I'd get a cut every month. And my customers would get the most popular VOD provider.

    • by Surt (22457)

      Netflix is charging a flat rate for VOD, while the cable companies want to charge by the view, particularly for their own content. It will be an enormous revenue hit when they give that up, so that is a step they will never willingly take.

  • by roc97007 (608802) on Monday May 09, 2011 @01:27PM (#36073648) Journal

    Here's the thing about cable TV:

    It's really expensive for the content that most people actually watch.

    If you have a good ATSC receiver, you get a SIGNIFICANTLY better looking (less compressed) picture off the antenna for free than you do off the cable for large bucks.

    Netflix is, what, $4.99 a month for unlimited streaming, which is not an "introductory offer" that's going to triple in 6 months, and Roku boxes are about $100, a one-time cost, not the monthly rental that the cable companies want you to pay.

    "Triple play" packages are not really a very good deal. Minimal phone and internet is less than half the cost of the total package, and you're not paying for content you're not watching. Consider, even HBO and Showtime original series eventually make it onto DVD, and become available on Netflix.

    Even with the "triple" discount, our cost went from $135/month to $60/month just by dropping cable and returning the two set-top boxes. Now, they'll tell you that you're paying a (slightly) higher price for phone and internet, but the important thing is that your total bill is down by more than 50%. In a down economy, that's increasingly important.

    Get a phone base station that'll pair with your cell, (about $60) and you can even drop the land line and buy internet service only.

    Even if netflix gets extinguished, those red boxes at the supermarket are good enough for a significant number of people.

    Cable TV is becoming this century's AOL. More and more people are realizing it's a crappy high priced service for shlubs who don't realize that all you really need from them is an internet connection. I think this is why Comcast is trying to leverage their current capital (as did AOL) and branch out now, before the inevitable collapse comes.

    Frontier, the company that took over Fios from Verizon in our area, is getting out of the cable TV business. Comcast comes by about twice a month to remind us of that and try to get us to switch, so we can keep our cable TV. But we've already dropped it, and we suspect Frontier has seen the handwriting on the wall.

  • The only relevant question in business. Mr. Hastings says that he will not sell out, which means his price is very high. However, there is too much money out there hunting too few deals like this, and Netflix's position is too valuable to remain a wildcard. Somebody will make him an offer he cannot refuse. The only question is, "How much?" Investors want to know.

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