Lazy Man and Money

Thoughts on Netflix and Qwikster

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Earlier this week, Netflix announced that it was going to split Netflix’s businesses into two – a business that ships DVDs and a business that streams media over the Internet. This follows on the Netflix’s controversial pricing change where they raised rates for many consumers by 60% by splitting the $10 business and making it two $8 businesses.

On Sunday, Netflix CEO Reed Hastings made things even worse with this announcement on the Netflix blog. He said that Netflix will spin off the DVD business into a business called Qwikster and Netflix would remain the streaming video business.

Here are a few of thoughts I had while reading the blog post:

  • Qwikster, really? (Part 1) – I get the name Netflix, it makes sense for an Internet streaming movie service. However, when splitting apart two companies and one is known is for “Instant delivery”, it is curious to call the much slower option a name that implies it is quicker. This is like McDonalds trying to make itself into a healthy food chain and spinning off Double Quarter Pounders into a company called ThinBurger.
  • Qwikster, really? (Part 2) – Again, Neflix is aptly named. Qwikster doesn’t imply it has anything to do with movies or entertainment. Qwikster sounds like a name best used to describe Speedy Gonzales as in, “Senor Gonzales es un Qwikster.” (Excuse my Spanish, it’s a first for me on the blog and I’m at least ten years rusty.) I need to update my McDonalds analogy above to ThinHat to make it a completely irrelevant to name to the business model.
  • Qwikster, really? (Part 3) – Qwikster reminds me of Napster. You might remember it as the peer-to-peer music service that was shut down due to the illegal trading of music. The Napster brand is still alive as a Best Buy company that few people use. Really, Mr. Hastings? You could choose from any number of names to launch this new brand and this is what you go with?
  • Separate Websites – I realize that this is necessary when you splitting businesses. However, many people like to do all their shopping from one place. It’s probably one of the biggest reasons for the success of places like Target and WalMart. Comcast is in my face every ten minutes telling me that I can get my cable, Internet, and phone service on one bill from one provider. Mint has financial management so much simpler buy combining data from many sources and putting it in one place. When I want to watch a movie, I want to go to one place. I don’t want to look at NetFlix, find that it isn’t the extremely limited streaming service and then have to go order it from Qwikflix.
  • Separate Movie Rating Services – One of this is two different rating services. The blog post said, “… if you rate or review a movie on Qwikster, it doesn’t show up on Netflix, and vice-versa.” If I’m looking for a movie review, I don’t care if the person watched it on Qwikster, Netflix, or at ThinHat with my burger (come on, it’s catchy, right?). More importantly, what about the sharing of movies with friends. If my friend is a Netflix customer, they should still be able to refer movies to me as a Qwikster customer. Perhaps the other way around isn’t true due to the limited nature of the streaming catalog.

I could go on with a few more points, but I don’t need to beleaguer the point. (CNET has a bunch of articles if you are interested.) It seems like Netflix is clearly passing the torch from the service I use, DVD by mail, to Internet streaming. I think it will be many years before they are able to license the breadth of content and deliver it as 1080P HDTV quality. If they are able to pull that off, I imagine it will be quite expensive as a monthly service – possibly more than a hundred dollars a month.

Bottom line, if the company doesn’t see a future for the DVD service I use, perhaps I should take their cue and cancel, right?

Cutting the Cable TV (Part 2)

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Over three years ago, I posed the question of whether I could cut cable TV from my life. It’s odd to look back on the online media landscape over that time. YouTube was less than two years old. Hulu wasn’t announced yet. Finding a Redbox or DVDPlay in your town was a rare joy. Streaming video was so new to Netflix that they didn’t have a Instant Queue until a little more than two years ago.

At that time I tried to cut cable television, I’d need three things:

  • Polished DVRs with no subscriptions. I can’t have the OS crashing on me. I need an interface that everyone can use. Perhaps this is not a problem. I’ll need to research this. There is likely going to be a one time cost. Perhaps I can get something pre-built on Ebay.
  • Slingbox and good bandwidth. The original Slingbox’s picture is okay for most television viewing, but it’s tough on sports with small details such as a baseball or football.
  • I need to get one of those HDTV antennas. They are cheap and easy to get on the Internet. I’ll probably pick one up this weekend.

Looking back at that a few things jump out at me…

  1. The idea of putting a Slingbox at a friend’s house and sharing a cable connection was a total cop-out. I think it was a great idea at the time considering the lack of alternatives, but a lot more can be done today. Some people mentioned it was even against Slingbox’s terms of service. To those people, I’d just say that I believe a company has to offer a service to offer a terms of service. If you buy a product that requires no service, you are free to use it as you see fit (as long as it is within the laws of the US).
  2. The HDTV antenna that I tried was horrible. I think I simply went too cheap on that.
  3. I was a horrible writer who relied on lists too much… even for short items that don’t require lists like this one.
Cutting the Cable TV
Cutting the Cable TV


My idea of cutting the cable had been dormant after my failed attempt three years. Recently four factors have resurrected the idea. We had an accidental deletion of an episode of Glee (yes guilty as charged) and I had to resort to Hulu to catch up. I had a conversation with some friends who I haven’t seen in some time and they mentioned dropping their cable. They are exclusively using a combination of Netflix, Hulu, and MLB TV – a subscription service streaming live Major League Baseball games over the Internet. CNN Money says that 1 in 8 people will drop cable and satellite in 2010, which led to Lifehacker asking what would you need to ditch cable television? Finally, I learned that a new co-worker is quite adept at building polished media boxes from open source software (with no ongoing subscriptions) and he’s willing to help set me up with the software if I buy the hardware. This interface would give us easier access to Hulu and Netflix.

The mitigating factor is not that I won’t have enough to watch if I cut the cable. It’s not even the quality of what’s available online. The combination of Netflix and Hulu would give me more TV than I should be watching anyway. The problem is with live television – particularly sports. Like my friends, baseball wouldn’t be much of an issue because of MLB TV. That would cost us $110 a year. However that represents a savings from what we pay our cable company for MLB Extra Innings for out-of-town coverage of our beloved Red Sox. The next problem is getting NFL games. There is no NFL equivalent MLB TV available in the United States. It’s not because the NFL can’t do it, but it’s because DirecTV has paid the NFL handsomely so that they can have much of the exclusive rights to out-of-town football games. Since I don’t have DirecTV anyway, I’m still stuck going to the sports bar to bar to watch the Patriots. The only loss here is the ESPN coverage of Monday night games (2 Patriots games this year).

Have you cut cable television? If so, do you have any tricks or secrets that I missed?

Netflix – Six Months Later

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Nearly six months ago, my wife and I decided to get a Netflix subscription. Many of our favorite television weren’t going to have full seasons due to the writer’s strike. Some, like 24, didn’t have seasons at all. We thought that this would be a good time to catch up on the classics that we missed through the years. It’s worked really well in that regard… We switch off picking one movie that we’d like for the other to see and every so often we come across one that we both missed.

I’ve been choosing movies like Fight Club and Momento – ones with a great twist from what you’d expect. I would have had 12 Monkeys at the top of this list if I didn’t already own it already. I’ve also been trying to catch her up on more traditional classics like Pulp Fiction and Reservoir Dogs. The Indiana Jones movies have been tough to get recently, so I’m going to switch to the Godfather. Some say that I should have started with the Godfather, but I belong to the Peter Griffin school of thought when it comes to the movie.

Energi Gal has been choosing movies that she feels will add a little culture to my life. As usual, she’s been right. We started with Ghandi. In a sad reflection of my public school system, I was not familiar with the tremendous role he played in our world. I’ve always heard of him and I had developed a bit of knowledge, but our text books always seemed to focus on the United States. Even then, they’d go from the past to the present often ending around far before Ford’s assembly line. Ghandi spurred me to read a lot more on Wikipedia.

It hasn’t all been history lessons though. My wife has been big on musicals lately. She transitioned from Ghandi to Evita – keeping with the historical figure theme. I loved it. It was a great story and Madonna was great in it to the point we couldn’t think of anyone else who could have pulled of the role. We also saw Hairspray and Hair (unrelated musicals, if you don’t know them, but both very good). Next up was Chicago. Maybe I didn’t give it full attention as I was writing at the time, but I didn’t agree with the message it was sending (I didn’t think “he had it coming”). Recently she’s got things going in the right direction again with Phantom of the Opera. I loved that as well. Soon she’s going to piece together that my favorite television show is a musical and my myth of not liking musicals will be busted.

So you’ve been following thinking, “What does this have to do with personal finance?” My wife knows that spending $100 a piece on two theater tickets is not something that fits very easily in our budget. When watching the movie, she often laments, “the play is always better.” I try to explain that I’m not spoiled by that experience, so getting the story with million dollar sets and actresses works for me. If you look at it from that perspective, Netflix has saved us hundreds of dollars. However, I try to look at it as the value that I get for a dollar spent at Blockbuster or Redbox. In that comparison, we don’t watch enough movies to get a great value out of Netflix – it feels very fairly priced for what you get.

Netflix vs Blockbuster

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The continuing television writers’ strike has greatly reduced the value of our cable television subscription. Yet there’s still just enough need for us to continue the subscription. The last month we’ve turned to renting movies via a DVD Play kiosk at our local Safeway. We love this option since it’s only a $1.50 for a day. However, the selection has become limited. This has turned us towards the local Blockbuster.

Renting videos at Blockbuster really adds up. At $5 a movie, we could spend nearly $150 a month. In reality we wouldn’t get a movie every night, but 20 days out month, or $100, is not a stretch. The answer for us is to join a program that sends DVDs by mail or allow an unlimited plan. There are two companies that provide these services… it’s Netflix vs Blockbuster.

How does one choose between the two? It really comes down to a personal decision. For us to watch a movies 3 out of four nights, we need to look at a plan that allows us to have multiple DVDs at one time. Netflix has a plan that will allow to have 3 movies by mail at one time for $17.00. Blockbuster will do the same for $16.00. That’s close enough for me to look at some of the intangibles. Blockbuster will add 5 in-store returns per month for another $4.00. This is valuable to us because a Blockbuster is just a few blocks away. On the other hand Netflix includes 17 hours of streaming movies over the Internet each month for the $17.00 price. Since, my wife travels for her job 1-2 weeks a month, it would be very helpful if she could log-in with her laptop on the road and watch a movie from her hotel room.

After discussing it, we have decided that the 17 hours of Internet viewing, plus the savings of $3/mo. makes Netflix the winner. Instead of being able to drive to Blockbuster and get instant gratification from a store, we can get instant gratification from hooking up a laptop to our television and watching a movie that way. The 17 hours should allow us to watch 7 or 8 movies.

I’m a little nervous about trying this new service. It could very well lead to an addiction to always having movies on hand. I can only hope that I don’t get caught up in lifestyle inflation.

[Update: In the last hour, I noticed Redbox has become available at a nearby supermarket. It’s selection is very similar to DVD Play, but the cost is only a dollar. We will look into this to see if there’s a few movies that interest us before we officially sign up with these.]