Ouch. Reed Hastings addressed a room of investors and media experts this week in a bid to reignite confidence in his company. After his curious speech, it’s unlikely many of them will be jumping back on the Netflix bandwagon anytime soon.
During a Q&A in a New York ballroom, Hastings said overconfidence had caused Netflix to resemble the country’s most troubled bank, Bank of America. He later added that Netflix has a new strategy to be “the Moneyball of content providers” a reference to a book about how the low-budget Oakland A’s used a knowledge of stats to compete with much richer teams
Although the session reflected Hastings deep knowledge of the entertainment business, his “better times are coming” message seemed at times to vacillate between an apology and wishful thinking.
Recall that Netflix is in a dreadful bind. The company is burning through cash at a time when content owners — many of which are developing streaming services of their own — are demanding exorbitant sums to share their shows. It is also smarting from a botched effort to split itself into two companies and from a disastrous corporate finance decision in which it blew a bundle to reacquire shares near their peak price. To shore up its cash holdings, Netflix last month had to sell new shares at a much lower price, further diluting its remaining value.
So what is Hastings’s strategy to escape this dilemma? “If you fundamentally believe Internet video will change the world … we’re the leading play on that thesis,” he said. “As long as we don’t shoot ourselves in the foot anymore, we should be a fantastic opportunity.”
Hastings’s hope appears to lie in the fact that the future will be dominated by streaming, a field in which Netflix has long been a leader. He claims that Netflix and content-rich HBO will become neck and neck rivals to serve consumers looking to stream shows on many different devices. Under this scenario, the two companies would soon resemble each other as a result of Netflix investing in content and HBO investing in distribution capacity. Hastings dismissed Amazon, which is streaming movies to its popular new Kindle Fire tablet, as a serious competitor, saying he sees the market as a two-horse race.
The other potential bright spot for Netflix is international expansion. Hastings repeatedly cited the company’s success in Canada where streaming was introduced this year. But Canada is only one-tenth the market size of the U.S. and Netflix’s larger global strategy is on hold while it concentrates on returning to profitability.
It is not clear when that return to profitability will occur. Hastings deflected a question about a return to profits by 2013 though he suggested the first quarters of next year were promising because Netflix has doubled its content.
Much is riding on this recent content strategy that includes a decision to purchase exclusive rights to a 26-part political drama House of Cards. The problem is that Netflix is in a position where it must pay more than anyone else for content, a fact that Hastings acknowledged. Unlike its rivals, it doesn’t have a vault of its own material that it can swap or license. Meanwhile, new competitors are barreling in all the time, including Verizon which is rumored to be introducing a web video service of its own.
Hence, the Moneyball strategy. Hastings says Netflix is using statistics about user views and other metrics in order to find the optimal amount to pay for each scrap of content. This is like what the Oakland A’s did in the 1990s, obtaining hidden gems that let them win baseball pennants on a shoestring payroll.
It sounds promising but it is worth noting that the A’s finished at the bottom of the American League last year, trounced by rich teams like the Yankees and Red Sox who now have stats gurus of their own. Just saying.
Angry Birds has made its way into fashion before with the introduction of t-shirts and accessories, but the wife of a Rovio executive is taking the brand to a whole new level with an off-the-shoulder ballroom gown that pays tribute to the widely popular game.
Teija Vesterbacka – who is married to Peter, CMO of the company that created the game – wore an Angry Birds dress to an event on Tuesday night at the Finish Presidential Palace to celebrate Finland’s independence. The red dress features the iconic face of one of the Angry Birds characters
If you’re trying to understand why Facebookelicits such an emotional response, look no further than the name.
A study commissioned by Facebook examined how consumers’ brains responded to the site as well as to Yahoo’s and The New York Times‘s homepages. NeuroFocus, the Berkeley, Calif., firm that executed the study, found that of the three, Facebook scored highest on attention, emotional engagement and memory retention. [ Continue Reading… ]
John Lasseter, the chief creative officer at Pixar, was on Charlie Rose last week, talking about Steve Jobs, the evolution of animation and Pixar’s next project, Brave.
The episode is worth watching in its entirety. On the subject of Jobs, Lasseter refers to him as “being like a brother” and talks about Jobs’s drive for excellence. He also points out that Jobs invested more than $50 million of his own money in Pixar for nearly a decade before it ever made a profit.
Lasseter also talks about Pixar’s next film, Brave, which hits theaters in June. Brave features a female protagonist — a first for the company.
Lasseter, who also serves as the Principal Creative Adviser for Walt Disney Imagineering, discusses the importance of fusing new technology and new techniques with what fundamentally makes a great film: A good story.
What continues to make Pixar unique is that it is one of the few companies that fuses technology with stories and characters that stand the test of time.
In the interview, Lasseter shares an anecdote about Steve Jobs and how the late Pixar CEO looked at the legacy of animation. After remarking that with technology, a good product could last at most, five years, he said, “if you do your job right with these animated films, what you do can last forever.”
Google is on fire today: besides introducing the new activities recommendation engine Schemer, and the news aggregator Currents, the company also improved Google+with several nifty features, including face detection.
The new feature is called Find my Face, and it helps tag photos of people in pictures, provided they’ve activated the feature.
Google has obviously learned a lesson from Facebook, which suffered some backlash – even an EU probe – over turning its face recognition feature on by default. In Google+, you can accept or reject someone tagging you or turn the feature on and off and, most importantly, the feature is opt-in.
Find my Face will be rolling out to users over the next couple of days.
Gmail has also been upgraded with a couple of social networking features, making it easier to add people to your Google+ Circles from Gmail and share stuff on Google+ without leaving your inbox.