Tuesday, 11 October 2011

By on October 11th, 2011 in Barbara, dogs, netflix

09:25 – Barbara is doing well, and Colin is delighted that she’s home. The only thing I’m dreading now is Barbara returning to work after Colin having several weeks to get used to having her full-time attention. He’s always demonic on Mondays, after having her home for just two days, so I suspect he’ll take a long time to adjust after she finally returns to work.

The news is full of articles about Netflix’s reversal of its split. The general attitude seems to be that Reed Hastings is incompetent and that Netflix has made huge mistakes from which it may not recover. My attitude is that it’s a mistake to assume that a smart guy like Hastings has suddenly turned stupid. Everyone seems to think that the decrease in Netflix’s subscriber base is a Very Bad Thing, which simply shows that most people can’t think. Netflix may have lost something like 3% of its subscribers, true. But those 3% were mostly subscribers that Netflix didn’t want, ones that were actually costing it money rather than contributing to its profits. Ones like me, in other words.

If Netflix had left its pricing unchanged and somehow still gotten rid of those 3% of undesirable subscribers, they’d have increased their profits. As it is, they also increased their prices, which means many of the remaining 97% of their subscribers are paying significantly more than they had been. Much of that increase will be spent on licensing additional programming–Netflix has added about 3,500 new TV episodes in just the last couple of weeks–but no doubt some of it will go to the bottom line. Netflix will be much more profitable than they otherwise would have been. Which is why it’s stupid that the stock price crashed. It should have skyrocketed. And it likely will, once the market realizes what just happened. As I said, Hastings is a very smart guy.

11:00 – I just ordered a cane for Barbara from Costco. She’s currently using a walker frame that belonged to my mom, but she’ll probably be off it and using a cane before too much longer.

We actually had a big argument about which cane model to buy. She ended up getting her way, and I ordered her a plain old cane-cane for about $18 with shipping. I tried to convince her to go with an upgraded model with a built-in 12-gauge shotgun, but she flatly refused. So I went to Plan B, and tried to convince her to go with a model with a built-in 32″ (81 cm) sword blade. She wouldn’t go for that, either, so I went to Plan C and tried to convince her to get one with a built-in tear gas dispenser. No dice. So she’s getting just a plain old cane-cane.

11:53 – Barbara has been using the regular toilet since she came home, so we moved the potty-chair frame into the shower in our master bath for her to sit on while she showers. I didn’t want to move it, so I just took a shower in the downstairs bathroom, next to my lab. There was already soap, regular shampoo, and so on in that shower, but I happened to notice a bottle of oatmeal and baking soda shampoo with a picture of a pretty Golden Retriever on the front. It promised a smooth and glossy coat, so I decided to give it a try. Sure enough, when I came upstairs, Barbara commented, “You sure have a smooth and glossy coat”. Or something like that.

23 Comments and discussion on "Tuesday, 11 October 2011"

  1. Dave B. says:

    I’m not convinced Hastings is that smart. Netflix has made a couple of major mistakes. As a Netflix subscriber, I’m hoping that they will survive these mistakes. My question is was there someone in Netflix management predicting adverse reaction to their proposed changes? I think a pricing change had to happen, but I think it could have been done better.

  2. Robert Bruce Thompson says:

    Oh, I don’t think you need to worry about Netflix surviving. What alternative is there?

    I wasn’t even slightly surprised at the recent announcement. As I said when Netflix announced the split, it’d be foolish to give up the competitive advantage of having both streaming and discs. What Netflix is trying to do now is making streaming the default choice, and have people renting discs only when the material isn’t available streaming.

  3. Greg Lincoln says:

    I think they’ve made some big mistakes too. They redesigned the website and it is much less useful. Having to mouse over to scroll pictures of movies may make sense on a tablet, but not with a mouse.
    They had nearly 100% negative feedback on that change and ignored it, and it remains terrible right now, though they re-introduced a few features the redesign removed.
    Then they botch raising prices, and then they botch their backpedal to that, and then they backpedal on that. It looks to me like they have no idea what they are doing, and are running scared.
    I have many “mainstream” friends who are certainly not the types who Netflix is losing money on who are annoyed and disgusted and would jump ship in a second given an alternative. All but one have adjusted their plan so they are paying similar to what they were before. One clever person was switching back and forth between 2 disk and streaming based on what she wanted for that month. This is something that was easy, until they decided to separate the websites. I speculated at the time they were trying to prevent the very thing she was doing, but it was much more likely just to be incompetence.
    I think this is the time where a competitor could capitalize on Netflix’s directionless spinning about and do something interesting. It might even be Amazon, though they will need to significantly improve their product to do so.

  4. BGrigg says:

    I think Hastings started out smart, but his continuous involvement with Hollywood has eroded his intelligence.

  5. Chuck Waggoner says:

    Hastings is no genius, and that becomes more obvious with his every move. The last couple of months have made clear that his vision of the company is completely incompatible with what consumers want. And–as you say–what alternative is there?

    This is exactly the problem with giant monopolies. They serve the big boss, and the customer is the enemy. Don’t serve them; serve yourself.

    One analysis that I read says that Redbox has been a big winner in the Netflix slips, as the Netflix customers who rent only a few movies a year, but still pay for the monthly rental (the most lucrative customers for Netflix) have raced to Redbox. It gives them exactly what they want for a dollar.

    My dad was a cost-accountant at a couple different manufacturing firms before I was born, and he always told me that well-run companies raise prices almost imperceptibly, as they are constantly on top of their costs. David Pogue quoted a reader, ““It damages their brand and images, but 24 million customers paying $16 is still better than 25 million @ $10. Increases revenue by >50%.”

    Super. That’s genius stuff there. Somebody else can do better. And they will. I was actually thinking of subscribing before all this started, because we never had anything like Netflix in Germany. But I will have nothing to do with Netflix as long as Hastings is there. His entire success is due to accidentally stumbling onto something–not because he is any kind of genius. Quite the opposite, as events have shown. And it still is not over.

  6. Chad says:

    RE: Netflix

    I suppose you could look at it two ways:

    1: Netflix’s executives are wishy-washy on strategic vision and the shareholders should be nervous. They lack commitment and follow-through to implement any real change.

    2: Netflix is listening to customer feedback and make changes appropriately. The customers hated their recent change, so they rolled it back. This is a great thing from a customer service point of view and other companies should learn from it.

  7. Robert Bruce Thompson says:

    I wonder if Netflix is buying back its own stock. I certainly would be if I were them.

  8. SteveF says:

    Barbara was right to reject the 12ga cane. The kick would have been very high, probably too much for someone with one bad leg, and painful for almost anyone. Also, the barrel is too large and heavy and would make the cane unwieldy and clumsy-looking. No, for a cane what you want is a 20ga.

  9. Robert Bruce Thompson says:

    The problem with 20-gauge is that there just aren’t any good buckshot loads.

  10. BGrigg says:

    I bet Barbara can wield that cane just fine, as a weapon. And what she probably said was “You smell like a wet dog”. 😀

  11. OFD says:

    Now that you have a nice clean smooth glossy coat would you consider putting a new pic of yerself on yer blog? There must be hundreds of thousands of cute golden retrievers who would appreciate it.

    Speaking of buckshot loads, I notice that the local stores around here don’t have much except 00 and slugs. I prefer Number 4 Buck but apparently am going to have to mail-order it.

    Come to think of it, the ammo selections lately really suck around here, and this a huge hunting and gun-friendly state. WTF? How ’bout you’all around the continent? I would guess our Euro and Aussie friends are completely outta luck across the board?

  12. Robert Bruce Thompson says:

    I also prefer #4 buck. Just about the time it sheds enough velocity to be ineffective against soft targets, the pattern starts to get too loose. With 00, the pattern is too loose long before the pellets run out of steam.

    I always load four #4 buck first, followed by four slugs. I figure by the time I’ve used the first four whoever I’m shooting at is probably either dead or behind something that’d stop buckshot. I used to have some flechette rounds, but I don’t think they’re legally available any more.

  13. Chuck Waggoner says:

    Everyone in my family were satisfied gun owners, but me. That gene skipped me. I probably noted here that I auctioned off all my parents’ stuff–the equivalent of 3 households (my parents never got rid of anything, they just put it in storage when they bought new), and there were 16 guns of various sorts. I gave the 2 family rifles—passed down from my ancestors who founded Tiny Town after walking here with those guns from New Castle, Pennsylvania—to my young twin cousins who are career military. The rest went to auction. Those guns brought more than twice what all the other household goods did. This is a good part of the country to unload guns in.

    I engaged in various shooting sports with the gun-loving family members until I got married and moved away. But—like owning a television,—my real interest in the sport (and the guns, themselves) on a scale of 1 to 10, is about a minus 15.

  14. eristicist says:

    Mmmm. I, too, have little interest in shooting anyone or anything. By all means, let people be free to do it — but I can’t understand why they do.

  15. Robert Alvarez says:


    Though the UK spawned the USA, we have evolved into very different cultures today. The USA’s history and development required gun ownership and use by many of its citizens. It is a proud tradition still held by many of us and is protected by our Constitution and its amendments (re the 2nd).

  16. Alan says:

    From an article about the recent Netflix changes…

    “On Sunday night, Mr. Swasey sought to reiterate what Mr. Hastings tried to say last month when he announced Qwikster: that Netflix had failed to communicate effectively about the price changes. “We had to look at the reality of what it cost” to mail multiple DVDs to households each month, Mr. Swasey said, noting that the round-trip postage alone for one DVD cost almost $1.”

    A dollar? Really? I thought they had quite an attractive deal going with the PO?

  17. Robert Bruce Thompson says:

    I gave the 2 family rifles—passed down from my ancestors who founded Tiny Town after walking here with those guns from New Castle, Pennsylvania

    One of my ancestors may have made those rifles.

  18. Robert Bruce Thompson says:

    A dollar? Really? I thought they had quite an attractive deal going with the PO?

    I’m sure that Netflix gets the best rate available, but the USPS doesn’t do any “deals” in terms of mailing costs. Netflix is still paying the lowest high-volume first-class rate to mail an envelope. For returns, they should be paying the standard first-class rate plus the BRE rate, but I suppose it’s possible the USPS cut them some sort of deal on that. Still, I suspect that round-trip postage is in fact close to $1.

    Which is why I couldn’t believe they priced their streaming+1-disc-at-a-time for only $2/month more than streaming alone. Counting disc acquisition costs, handling, and so on, they’d break even on someone who rented one disc a month and lose money on anyone who rented more. I think I averaged eight discs a month when I was on that plan.

    I know what Netflix was thinking: that most people would watch mostly streaming and fill in stuff that wasn’t available streaming by renting a disc occasionally. In fact, most people, including us, were doing exactly the opposite: watching mostly discs. That model was obviously doomed from the start, as I told Netflix when they announced it. The guy asked me what I’d do instead, and I told him that to encourage streaming they needed to (a) make it financially attractive to mostly stream, and (b) get as much more stuff as possible available for streaming. That latter costs money, so I suggested doubling the streaming-only service to $16/month and including a fixed number of disc rentals (say, one or two) with that plan, with additional disc rentals in any given month charged at $2/disc.

  19. Chuck Waggoner says:

    So YOU’RE the guy who caused Netflix rates to go up so dramatically.

  20. Robert Bruce Thompson says:

    Nah, I can’t take credit. I only suggested that to them after they’d already announced the price increase.

  21. Chuck Waggoner says:

    Robert Alvarez says:
    11 October 2011 at 21:02

    Though the UK spawned the USA, we have evolved into very different cultures today. The USA’s history and development required gun ownership and use by many of its citizens. It is a proud tradition still held by many of us and is protected by our Constitution and its amendments (re the 2nd).

    I don’t know about that. There is an ordinance in Tiny Town, preventing the discharge of any gun for any reason–or even the loading of any gun–within the city limits. I would not say there is much protection for gun enthusiasts here–or anyplace that I have lived in recent years. Possessing a handgun in Boston is pretty much a criminal offense.

  22. Dave B. says:

    I don’t know about that. There is an ordinance in Tiny Town, preventing the discharge of any gun for any reason–or even the loading of any gun–within the city limits. I would not say there is much protection for gun enthusiasts here–or anyplace that I have lived in recent years. Possessing a handgun in Boston is pretty much a criminal offense.

    I would think the ordinance in Tiny town, at least as it pertains to loading a gun is invalid in Indiana, since a concealed carry permit holder can legally carry a loaded handgun anywhere in Indiana, except for government buildings and banks. I’m not a lawyer, so don’t take my word for it.

    I think that it’s generally illegal to discharge a gun inside the city limits of most American cities. But I’m pretty sure they don’t prosecute people for firing a gun at a range. I’m also not aware of any Indiana cases prosecuting anyone for discharge of a firearm where it was self defense. US law on self defense, at least in Indiana is completely different from law on self defense in the UK.

  23. Chuck Waggoner says:

    Yeah, I do not know how the law is enforced, but there is that ordinance in Tiny Town that prevents one from having a loaded gun or discharging it within the city. I suspect that means permit or not. I suppose you have the right with the permit to carry the unloaded gun around town, but who knows what happens if you are found with a loaded one. Tiny Town is basically 4 square miles — 2 miles on each side. In the county, it’s no holds barred.

    This is in sharp contrast to when I was a kid, and my brother took his rifle and weekly shot dead one of the pigeons on the roof of our 3-story house, which the wild cats under the barn carried off within minutes. (Btw, birds drop STRAIGHT DOWN when shot; then do not glide to a crash like most aircraft do when shot.) Our house was exactly 2 blocks from the courthouse (which sits on land donated by my ancestor who walked here from New Castle, PA), and a block-and-a-half from the (then) police station. Nobody would have thought to do anything about my brother’s excuse to shoot a gun good-deed habit of feeding those cats — much less could they. But times sure have changed.

    The town is overrun with deer, but another ordinance prohibits killing any of them. Seems to me culling that animal population is a good thing (both people in cars and deer are occasionally killed when colliding), would give work to the couple of slaughter houses around here, and could supply the soup kitchens that operate nearby and in neighboring communities.

    Berlin is overrun with wild pigs (not sure if they are exactly boars, but there is info on them around the Internet). Guns are illegal there without a permit, backed up by regular shooting practice — but even so, one is not allowed to kill those pigs with a gun. That is reserved for a program where licensed hunters are dispatched to kill the pigs, but those guys are getting old and younger people are not interested in becoming the hunters capable of doing that job. Not sure those pigs are safe to slaughter and eat, though.

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