Netflix has been on a bit of roller coaster ride as a company, as most people who subscribe to the service or love movies and follows such things already know.  The story is not unlike a bad M. Night Shyamalan movie; it’s got twists, turns, and is often based on such lame and asinine premises that one just has to laugh at the crazy plot points.

But rather than chronicle all the wrong moves Netflix has been making as of late, such as separating their streaming and DVD rental business into two Web sites and now backtracking on that decision (interestingly, in a letter not from CEO Reed Hastings as the other infamous letters were, but just from “Netflix”), let me offer the letter I think Netflix should have written to their customers in light of their recent price hikes.

One could argue the price increases were the wrong decision as well, but I’m not convinced of that.  In fact, I think there’s an argument to be made that Netflix did NOT, in fact, raise their prices.  This point will soon become clear.  Here is the letter:

Dear Netflix Customer,

As you know, Netflix’s streaming service has grown by leaps and bounds over the past two years, and we now currently offer thousands of movies and TV shows that you can stream instantly to almost every device in your household.  From the iPhone to the big screen TV, Netflix built in to hundreds of devices that make using our streaming service so convenient.

As a company we continue to invest in our streaming service, and we strongly believe streaming is the way most customers prefer to consume their entertainment.  However, in order to continue to invest in expanding the number of titles and overall quality of our streaming services, we have decided to adjust our pricing model.  In most cases, the new prices will not change how much you pay on a monthly basis for Netflix.

You may have noticed that our streaming service has grown tremendously in the past few years.  In fact, on a plan-by-plan basis, the average customer now consumes [INSERT % HERE] more total titles today than three years ago.  The number of titles available, the convenience and the high quality our streaming offers are a testament to that.  As you can imagine, while the number of customers streaming content has grown considerably, those who receive DVDs by mail are holding on to them longer.  Given the choice, our customers have demonstrated to us that they prefer to stream rather than wait for a DVD.

So, in order to continue to invest in and expand on our streaming services, we are going to adjust our pricing model.  In essence, we are leaving our prices the same, but reducing the number of DVDs out at a time on your account by one.  In other words, if you had a streaming plus 3 DVDs out at a time subscription, you will be switched to a streaming plus 2 DVDs out at a time.  Your monthly rate will not change.

Of course, if you prefer to only receive DVDs by mail and not stream any content, there will be no changes to your account and you will continue to pay the same rate.  We also have streaming-only options for those who prefer that option as well.

We believe these changes reflect the value we’ve added to the Netflix streaming service over the past few years, and will allow us to continue to invest in and add further value.

We sincerely appreciate your business and I invite you to write back with any comments, feedback or questions you might have about these changes.  I look forward to hearing from you.

Sincerely,

Reed Hastings
CEO and co-founder, Netflix

* Note: The pricing changes suggested in this letter reflect the pricing changes Netflix actually made; they’re simply presented in a different light.

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Apple recently stopped offering $0.99 TV rentals, saying that their customers prefer to buy TV shows instead of rent them (the price to purchase is $2.99 for HD content, and $1.99 for standard definition).

In a business sense, obviously the reduced price did not significantly increase sales volume to justify keeping the rental vs. the purchase model. But I don’t think it’s correct to say customers prefer to buy vs. rent as such. The truth is, Apple’s iTunes user interface (UI) was terrible for renting TV shows, and customers and the rental model were never really given a chance.

The iTunes interface suffered from a number of functional problems. For example, when you rented content, you could only play it on the device you rented it on. But worst of all, iTunes had no bookmarking feature that kept track of which shows you’ve rented, so it was nearly impossible to keep track of where you were in any particular show. Nor did the customer, as renter, know when a new episode of a TV show became available for download. One can buy a “Season Pass” on iTunes, and get the content of that TV show pushed to you automatically. Not so with a rental.

Netflix, on the other hand, has a bookmarking feature. And whether you switch between the home TV set, your computer, your iPad or iPhone, or any other device you might have, the last show you watched is marked as such. All you have to do is tell Netflix you want to watch the “next” episode in the series of the show you’re watching and it knows what to play next. It’s easy to keep track of which shows you’re watching (via a ‘recently watched’ list) and which episode you’re on in any particular show.

Without bookmarking or season passes for rentals, Apple customers likely lost track of their place and just gave up, frustrated—or forgot about it altogether. The real problem wasn’t that customers prefer to buy vs. rent, nor was it about price; it was that the cost of using their UI was too high.

When Conan O’Brien moved to TBS after his Tonight Show gig was cancelled, he also pushed back George Lopez’s late night show an hour.  According to news reports at the time, this was done with the full blessing and possibly even the invitation of Lopez.

The obvious reasoning behind the move is that Conan would bring in a huge influx of new viewers to the network, and while Lopez would be on later, the carryover from the Conan boost would more than make up for it.

Unfortunately, that bet didn’t pay out.  This week TBS announced they’ve canceled Lopez’s show, due to low ratings.  And a recent article in Variety posed the question: Did Conan Undercut Lopez?  It’s an interesting analysis of the ratings and speculation as to the reasoning behind the move, and anyone interested in the matter should read it.

The dirty little secret in this story is that a large portion of Conan’s audience is watching him online or with their DVRs, i.e., when time slots are irrelevant. So while TBS is happy with the overall take-in of Conan-based revenue, it doesn’t help much with the rest of TBS’s programming.

Perhaps, if anyone is taking notes here, it should be Conan. People are showing up for him and his brand, not for any particular network.  So what if he were to cut the cord, so-to-speak, and produce his show exclusively online?  Sure, at the beginning, the overall ad revenue pie might be smaller for his show, but he’d get the full piece of it and not have to share it with a network.

Internet based video content is exploding and maturing.  And many shows produced for internet consumption are increasingly grouping themselves together under “channels” or “networks” of their own.  Look at Leo Laporte’s TWiT.tv network, Jason Calacanis’ This Week In network, Streamin’ Garage, etc.

If Conan is happy producing his show and that’s all he wants to do, then yes, he should definitely be with a network that can manage his online presence and let him do what he loves to do.  But if he wants to join the pioneers of online content production, the data clearly shows that the opportunity is his to seize—if and when he wants to seize it.

RELATED POSTS
• Jan. 2010 – Conan Takes Principled Stand
• Oct. 2009 – Eight Reasons to Quit Cable TV

Atlas Shrugged movie producer John Aglialoro said recently, according to an article in the LA Times, that it’s now unlikely he’ll make parts 2 and 3 of Ayn Rand’s epic novel.  And, even though Aglialoro expects the picture to make a profit, the main reason he cites for abandoning the project is because of poor reviews.

The LA Times pieces reads like his motivations for making the picture were mainly to get good reviews by the press.  But why should that matter?  Sure, the picture isn’t great, but given its low budget and rushed production schedule, I highly doubt a cinematic masterpiece was thought possible.

Could the picture have been better, even given these constraints?  Yes.  But it’s also very easy to Monday-morning quarterback the whole endeavor, and the “I could have done it better,” attitude amongst critics and even Objectivists is easier said than done.

That’s not to say that that we the audience—movie reviewer or not—aren’t entitled to our opinions.  Even if the reviews are bad, Aglialoro should be cashing in on this fact, embrace Rand’s individualist philosophy and say: “Judge for yourself: see the movie.”

Still, to blame the Atlas’s modest success at the box office on poor reviews is a cop-out.  The fact that the movie was reviewed as widely as it was only helped gain exposure for the movie, regardless of what those reviews said. Algialoro implicitly knows this, as he cites The New York Times’ decision not to review the movie as the biggest blow by the media at large.  Further, given that the movie received almost no marketing beyond press reviews and grass-roots efforts, that Atlas posted box office results in the millions of dollars is pretty good.

And, anyway, reviews in and of themselves do not make or break a picture, and there are countless examples at the box office to demonstrate this.  Even if one believes reviews do have an impact, their biggest impact would be on the movie’s first weekend at the box office.  Yet Atlas Shrugged earned a modest taking in its opening weekend.  After that, it’s mostly up to word of mouth and marketing.

I believe Atlas Shrugged’s box office earnings is directly correlated to the quality of the movie: not terrible, but not great.

If Aglialoro didn’t want to venture on to Part 2 and 3 because he was not able to make the kind of movie he wanted to, then fine.  Or if his investment will not earn the kind of returns he wants to get with his money, that is certainly understandable.  But to blame it on reviewers is not only a red herring: it also implies a second-handed motivation to making the movie to begin with.

Making a martyr of oneself to the mainstream media certainly isn’t going to garner any sympathy with audiences—and will only hurt his chances in selling his movie to those ancillary markets he so desperately needs.

I’ve had a few months under my belt now as an audio podcast producer and my two shows, The Movie Film Show and The Independent Entrepreneur, are off to a modest start. Bootstrapping these shows with almost no budget is not easy and the struggle to grow my audience has been, at times, frustrating.

But I’ve learned a lot so far about what works, and I’m sure there’s plenty more to do. Most importantly, I’m realizing the need to create mobile-friendly versions of my shows.

I’ve set up my shows on a Wordpress Blog using Blubrry’s PowerPress plug-in, which is terrific. It’s saved me an enormous amount of development time and allowed me to focus on creating content. One of the services Blubrry provides is a measurement tool that shows how many downloads my shows have received, including what form people are downloading them.

I’ve produced twenty episodes of The Movie Film Show, and I finally have enough data to draw some conclusions. But first, the facts:

Few people listen on the Web. Only 7% listen through the Web site’s flash player tool. The rest are people downloading the shows through iTunes and on their mobile devices.  In fact, 53% of downloads come from applications like iTunes, and the remaining 40% are from mobile devices.

I was amazed at the number from mobile devices, especially considering I don’t currently have a mobile-friendly version of my shows.  It makes sense, though.  Audio podcasts are best listened to on the go, whether in the car or at the gym, and Smart Phones are a great way to grab such content while out and about.

I’ve concluded that enhancing the mobile experience is my top priority. Here are three action points I will begin to execute and want to share with my fellow audio-podcasters:

1. Create a mobile-friendly site. If the current version of your site is mobile friendly, that’s great. But if you have things like a Flash player and what not, they will not work on devices like the iPhone.
2. Create a ‘download MP3’ link for each show. Most mobile devices can download and play these files just fine. That means all listeners have to do is visit your URL and click on the latest show download link to listen. Get rid of any links or features that don’t work on a mobile device (like Flash players).
3. Make sure the file size of your MP3s doesn’t exceed mobile download limits. Some ISPs, like AT&T, limit downloads on mobile to devices to files sizes less than 20 megabytes each. Make sure your shows are under that limit. If they are longer, split them into multiple files on the mobile version of your site, if possible.

Related Article: Why I Prefer Audio Podcasts