Netflix explodes into two companies

Qwikster will rent you DVDs and Netflix will rent you streaming movies. Two separate sites/companies, no interop, you have to sub to both separately, etc. Here's the explanation from Netflix CEO Reed Hastings. This seems amazingly dumb at first blush. (ps. Qwikster?!!)

Update: This is an excellent level-headed analysis of the deal from Dan Frommer.

Netflix's holy grail is to get each person, not each household, to have a separate streaming subscription, the way everyone also has a separate Facebook account. Separating a per-household service like DVD rentals-by-mail helps simplify that eventual transition.

A budget for Babel

Last night I started thinking about e-books, partly because I was frustrated that I wanted to buy some books that aren't available for Kindle. (If you're curious, the two I was pining over were John Ashbery's new translation of Rimbaud's Illuminations and Eugene Jolas's Critical Writings: 1924-1951.)

Truth be told, I probably would have talked myself out of the purchases anyways, because I haven't had any spare money for my drug of choice (books) in a while. But I was bothered because I couldn't buy them. I wanted them, and if I had enough money, I wanted them all. And if I could have them all, I'd find a way to get enough money.

So I took to Twitter with this idea, with the following results.

So, so far, we've got a few different possible models (assuming everything could be worked out on the back end with author consumption, etc., which is a pretty gigantic assumption):

1. Every book that's ever been made digital or easily could be made digital (I'll come back to this second point later);
2. The same thing for movies and TVs. Which might be an even bigger, more popular idea;
3. A curated digital book club/book channel, a la Netflix, that offers you enough popular and backlist material to keep you busy;
4. What else?

Casey Gollan also pointed me to a similar thought-experiment a couple of years ago by Kevin Kelly:

Very likely, in the near future, I won't "own" any music, or books, or movies. Instead I will have immediate access to all music, all books, all movies using an always-on service, via a subscription fee or tax. I won't buy - as in make a decision to own -- any individual music or books because I can simply request to see or hear them on demand from the stream of ALL. I may pay for them in bulk but I won't own them. The request to enjoy a work is thus separated from the more complicated choice of whether I want to "own" it. I can consume a movie, music or book without having to decide or follow up on ownership.

For many people this type of instant universal access is better than owning. No responsibility of care, backing up, sorting, cataloging, cleaning, or storage. As they gain in public accessibility, books, music and movies are headed to become social goods even though they might not be paid by taxes. It's not hard to imagine most other intangible goods becoming social goods as well. Games, education, and health info are also headed in that direction.

And Mark Sample noted that really, you already can get almost any book, movie, TV show, etc., if you're willing to put in a little work and don't mind circumventing the law.

Here's a thought: How would this change the way we read? If I haven't laid down money for a particular book, would I feel less obligated to stick it through to the end? I'd probably do a lot more dipping and diving. I'd be quicker to say, "this isn't doing it for me -- what else is on?"

And remember, a lot of the books -- cookbooks, textbooks, reference material -- would be geared for browsing, not reading straight through. We might actually find ourselves plunking down extra money for a digital app with a better UI.

Ditto, imagine the enhanced prestige of rare books that were off this universal grid, or whose three-dimensionality couldn't be reduced (without difficulty, if at all) to an e-book.

Still, I think whatever I pay for cable, internet, my cellphone's data plan, newspaper and magazine subscriptions, Dropbox backups, etc. -- I'd pay way more for the Library of Babel.

What do you think? What would you need to make this work for you?

(Comments enabled. I'll shut 'em down at the end of the week. Be nice.)

Expiring Netflix Watch Instantly alerts

queuenoodle is a Twitter account that will tell you when movies expire from Netflix Watch Instantly so you can, uh, watch them. Brought you by Twitter's media pastamaker, Robin Sloan.

Bieber, Gaga, and Netflix: Internet heavyweights

Justin Bieber uses 3% of Twitter's infrastructure. Netflix Instant accounts for 20% of all non-mobile internet usage in the US during prime time. Now David Galbraith has done some back-of-the-envelope calculations that show Lady Gaga racking up a big bandwidth bill for Google:

My rough estimate: Lady Gaga has cost Google 10 petabytes in bandwidth same as 10,000 text messages for everyone on earth. If Lady Gaga's Google bandwidth was charged at what ATT charges for SMS, it would have cost: 10.5 trillion dollars.

The rate for SMS messaging is obscene but the real money is in ink cartridges, right? Apparently not. HP's basic black inkjet cartridge is available at Amazon for the astounding price of $29 and will print 495 pages. Assuming 250 words per page and six characters per word (five char/word + one space), 10 petabytes of text messages would cost only $503 billion to print out (excluding paper costs, which would add ~$89 billion to the total). Who knew that texting was more expensive than inkjet printing by a factor of 20?

When strengths become weaknesses

Using Blockbuster and Netflix (and Redbox) as an example, James Surowiecki writes about how big incumbent companies can lose out to smaller upstarts.

The problem -- in Blockbuster's case, at least -- was that the very features that people thought were strengths turned out to be weaknesses. Blockbuster's huge investment, both literally and psychologically, in traditional stores made it slow to recognize the Web's importance: in 2002, it was still calling the Net a "niche" market. And it wasn't just the Net. Blockbuster was late on everything -- online rentals, Redbox-style kiosks, streaming video. There was a time when customers had few alternatives, so they tolerated the chain's limited stock, exorbitant late fees (Blockbuster collected about half a billion dollars a year in late fees), and absence of good advice about what to watch. But, once Netflix came along, it became clear that you could have tremendous variety, keep movies as long as you liked, and, thanks to the Netflix recommendation engine, actually get some serviceable advice. (Places like Netflix and Amazon have demonstrated the great irony that computer algorithms can provide a more personalized and engaging customer experience than many physical stores.) Then Redbox delivered the coup de grace, offering new Hollywood releases for just a dollar.

From Scott McCloud, here's Blockbuster's new logo.

Map of Netflix nation

Fascinating map of Netflix rental patterns for NYC, Atlanta, Miami, and nine other US cities. I wonder if you could predict voting patterns according to where people rent Paul Blart: Mall Cop or Frost/Nixon. I wonder what the map for Napoleon Dynamite looks like?

Update: Here's how the Times' graphic was made.

Most of the interesting trends occurred on a local scale -- stark differences between the South Bronx and Lower Manhattan, for example, or the east and west sides of D.C. -- and weren't particularly telling at a national scale. (We actually generated U.S. maps in PDF form that showed all 35,000 or so ZIPs, but when we flipped through them, with a few exceptions, we found the nationwide patterns weren't nearly as interesting as the close-in views.)

How to build a long-lived culture of excellence

I loved this deck of slides from an internal presentation at Netflix on their company's culture.

This slide deck is our current best thinking about maximizing our likelihood of continuous success.

There are literally dozens of great ideas on these 128 slides...a must-read for anyone who wants their business to grow and last for more than a few years.

Netflix Prize won?

It looks as though the Netflix Prize might have been won through a combined effort of the top two teams. (thx, bergmayer)

Update: All teams have 30 days to better the current high score before the winner is declared. But, someone has won the Prize. (thx, all)

Netflix Prize progress

A check of the Netflix Prize leaderboard shows that the team in the lead is very close to the 10% improvement needed to win the $1 million prize with 9.71%. Three members of the top team recently wrote about their experience for IEEE Spectrum.

The Roku adds support for Amazon

The Roku is a wee box that hooks up to your internet and TV over which you can stream movies and TV shows. Until recently, the Roku only worked with Netflix (the streaming is free and unlimited with your Netflix acct) but the Roku added support for Amazon's Video On Demand service the other day, bringing Amazon's 40,000+ movie titles into the mix. I have friends that love this thing.

BTW, Amazon is getting good at closing the loop on this stuff. Like Apple (Apple TV / iTunes Store), they're not only selling the media but also the device.

The Netflix Prize and the Case of the Napoleon Dynamite Problem

Clive Thompson writes up the Netflix Prize -- which offers $1 million to the first team to improve upon Netflix's default recommendation algorithm by 10% -- and the vexing Napoleon Dynamite problem that is thwarting all comers.

Bertoni says it's partly because of "Napoleon Dynamite," an indie comedy from 2004 that achieved cult status and went on to become extremely popular on Netflix. It is, Bertoni and others have discovered, maddeningly hard to determine how much people will like it. When Bertoni runs his algorithms on regular hits like "Lethal Weapon" or "Miss Congeniality" and tries to predict how any given Netflix user will rate them, he's usually within eight-tenths of a star. But with films like "Napoleon Dynamite," he's off by an average of 1.2 stars.

The reason, Bertoni says, is that "Napoleon Dynamite" is very weird and very polarizing. It contains a lot of arch, ironic humor, including a famously kooky dance performed by the titular teenage character to help his hapless friend win a student-council election. It's the type of quirky entertainment that tends to be either loved or despised. The movie has been rated more than two million times in the Netflix database, and the ratings are disproportionately one or five stars.

This behavior was flagged as an issue by denizens of the Netflix Prize message board soon after the contest was announced two years ago.

Those are the movies you either loved loved loved or hated hated hated. These are the movies you can argue with your friends about. And good old 'Miss Congeniality' is right up there in the #4 spot. Also not surprising to see up here are: 'Napoleon Dynamite' (I hated it), 'Fahrenheit 9/11' (I loved it), and 'The Passion of the Christ' (didn't see it, but odds are, I'd hate it).

After finding that post, I wrote a little bit about why these movies are so contentious.

The thing that all those kinds of movies have in common is that if you're outside of the intended audience for a particular movie, you probably won't get it. That means that if you hear about a movie that's highly recommended within a certain group and you're not in that group, you're likely to hate it. In some ways, these are movies intended for a narrow audience, were highly regarded within that audience, tried to cross over into wider appeal, and really didn't make it.

If HD DVD wasn't dead before, it

If HD DVD wasn't dead before, it probably is now. Netflix has announced that it will stop carrying HD DVDs by the end of 2008 in favor of Blu-ray discs.

Since the first high-definition DVDs came on the market in early 2006, Netflix has stocked both formats. But the company said that in recent months the industry has stated its clear preference for Blu-ray and that it now makes sense for the company to initiate the transition to a single format.

However, with online movie rentals/purchases gaining momentum, it'll be interesting to see just how long Blu-ray can stay in the lead before selling bits on pieces of plastic becomes outdated. (via nelson)

Update: Best Buy is going to start recommending Blu-ray to its customers. (thx, fletcher)

Netflix has a "take as much as

Netflix has a "take as much as you want" vacation policy. "The worst thing is for a manager to come in and tell me: 'Let's give Susie a huge raise because she's always in the office.' What do I care? I want managers to come to me and say: 'Let's give a really big raise to Sally because she's getting a lot done' -- not because she's chained to her desk."

For the next fours years, any film

For the next fours years, any film released by Weinstein Co. will only be available for rental at Blockbuster (and especially not Netflix). What a stupid deal. I wonder what the filmmakers think of this, which will effectively limit the reach of their films (despite the positive spin Blockbuster and the Weinsteins want to put on this).

Love it or hate it movies

Netflix, the online DVD rental company, recently released a bunch of their ratings data with the offer of a $1 million prize to anyone who could use that data to make a better movie recommendation system. On the forum for the prize, someone noted that the top 5 most frequently rated movies on Netflix were not particularly popular or critically acclaimed (via fakeisthenewreal):

1. Miss Congeniality
2. Independence Day
3. The Patriot
4. The Day After Tomorrow
5. Pirates of the Caribbean

That led another forum participant to analyze the data and he found some interesting things. The most intriguing result is a list of the movies that Netflix users either really love or really hate:

1. The Royal Tenenbaums
2. Lost in Translation
3. Pearl Harbor
4. Miss Congeniality
5. Napoleon Dynamite
6. Fahrenheit 9/11
7. The Patriot
8. The Day After Tomorrow
9. Sister Act
10. Armageddon
11. Kill Bill: Vol. 1
12. Independence Day
13. Sweet Home Alabama
14. Titanic
15. Gone in 60 Seconds
16. Twister
17. Anchorman: The Legend of Ron Burgundy
18. Con Air
19. The Fast and the Furious
20. Dirty Dancing
21. Troy
22. Eternal Sunshine of the Spotless Mind
23. The Passion of the Christ
24. How to Lose a Guy in 10 Days
25. Pretty Woman

So what makes these movies so contentious? Generalizing slightly (*cough*), the list is populated with three basic kinds of movies:

Misunderstood masterpieces / cult favorites (Royal Tenenbaums, Kill Bill, Eternal Sunshine)
Action movies (Pearl Harbor, Armageddon, Fast and the Furious)
Chick flicks (Sister Act, Sweet Home Alabama, Miss Congeniality)

The thing that all those kinds of movies have in common is that if you're outside of the intended audience for a particular movie, you probably won't get it. That means that if you hear about a movie that's highly recommended within a certain group and you're not in that group, you're likely to hate it. In some ways, these are movies intended for a narrow audience, were highly regarded within that audience, tried to cross over into wider appeal, and really didn't make it.

Titanic is really the only outlier on the list...massively popular among several different groups of people and critically well-regarded as well. But I know quite a few people who absolutely hate this movie -- the usual complaints are a) chick flick, b) James Cameron's heavy-handedness, and c) reaction to the huge success of what is perceived to be a marginally entertaining, middling quality film.

BTW, here are the movies on that list that fit into my "love it" category:

The Royal Tenenbaums
Lost in Translation
Napoleon Dynamite
The Day After Tomorrow
Kill Bill: Vol. 1
Titanic
Eternal Sunshine of the Spotless Mind

The evolution of the design of the

The evolution of the design of the Netflix envelope. We started using Netflix pretty early on, but I don't remember the first 3 or 4 designs.

Another take on why movie theater revenues are declining

Another take on why movie theater revenues are declining. The ads suck, the movies suck, ringing cell phones suck, and you can watch your Netflix at home on your widescreen TV. Again, no mention of piracy.

There's a rumor that Blockbuster may stop offering online rentals

There's a rumor that Blockbuster may stop offering online rentals. The folks at Netflix must be beside themselves with glee.