Streaming Service Trends and Updates

Who among us hasn’t shared a password or two among friends and family? Well, those free rides may soon be over starting with a new Netflix policy.

The company has been wringing its hands for nearly six months trying to figure out how to approach its tsunami of sharing which is estimated to be 33% of all Netflix subscribers.

Doing the math, that’s a fairly substantial choke on the company’s revenue stream, too – nearly $739 million a month possibly lost to password-sharing.

Netflix isn’t going to try and recoup all that lost revenue by making every password sharer repent for their sins, but it is instituting a plan that it thinks is a win-win. Beginning in early 2023, it will add fees to anyone’s plan who has “extra member” sub-accounts outside of a subscriber's household.

How much is this going to cost you?

While the company did announce its intentions, it remained mum on how much this is going to cost any rogue customer. However, the fee schematic is currently being tested in a handful of Latin American countries and weighs in at close to a fourth the rate of a "standard" Netflix plan. 

Grumbling aside, if that winds up being the case in the U.S., each subaccount would cost somewhere between $3.50 and $4, a far cry from being a total deal breaker. Besides, Netflix can probably make up more of its lost revenue as new subscribers buy into its new ad-supported streaming service. 

The forecast for that new ad-driven model is good, at least in the company’s eyes. “We really anticipate that [the ads-based plan] is going to be a pro-consumer model that will be more attractive, bring more members in because the consumer basic price is low,” Gregory K. Peters COO & Chief Product Officer of Netflix, commented in the company’s latest earnings call.

If you can put up with a few ads, Netflix has a new deal for you.

As forecast in July, the mother of all streaming services is rolling out “Basic with Ads” beginning November 3. The new tier is priced at $6.99 a month and available in the U.S. and 11 other countries.

Subscribers who pay for other packages can rest easy, too. They will not be impacted in any way, shape, or form, and still have the Basic $9.99/month, Standard $15.49/month, and Premium $19.99/month

The difference between Basic and Basic with Ads

The company says that Basic with Ads comes with the same features as the current Basic plan, but just a few shades different. 

Still the same: Netflix says that the ad-supported tier will have a wide variety of great TV shows and movies; a personalized viewing experience; and will be available on a wide range of TV and mobile devices.

One plus is that where some subscription services make consumers pay for a whole year to get a big discount, Netflix isn’t. It says subscribers can change or cancel their plan at any time.

New and different: Where is Netflix cutting back? Video quality up to 720p/HD (the same as its Basic plan); a limited number of movies and TV shows won't be available due to licensing restrictions, which the company says it’s working with rights holders to turn around; and there’s no ability to download titles so you can watch something on-the-go.

Now, about the ads: When it comes to ads, Netflix said the new package will have an average of four to five minutes of ads per hour. That's a tad more than the likes of HBO Max and Peacock which reportedly cap ads at under five minutes per hour.

How will those ads play out? To begin with, ads will be 15 or 30 seconds in length and play both before and during shows and films. For parents who want to shield their children from adult’ish ads that might contain sex, nudity, or graphic violence, not to worry – at least, not too much. Netflix said that advertisers have the “ability” to prevent ads from appearing on content that might be inconsistent with their brand. Whether that “ability” comes with agreements from advertisers is too early to tell. 

And other streamings are raising prices

Down the streaming street, Netflix’ competitors are going the other way with their prices. Just this week, Hulu raised the price of its ad-supported on-demand service from $7 to $8 per month, and its ad-free tier from $13 to $15 per month. 

CordCutter’s Jared Newman said that Disney is also raising the price of Hulu + Live TV, Disney+, and the Disney bundle, a package that includes Hulu, Disney+, and ESPN+, on December 8. 

In fact, consumers can expect more bundling – which, like cable TV packages, comes with channels you don’t want.

“The main takeaway here is that Disney really just wants you to bundle everything together, hence the major price hikes on all its individual services, and relatively modest hikes on the Disney bundle,” Newman said, adding that streaming lovers better get ready because we may well be entering the era of nickel and diming.

It didn’t take long after Netflix CEO Reed Hastings hinted that low-end, ad-supported plans might be on their way for the streaming platform to make a move.

On Wednesday, Netflix announced that it is partnering with Microsoft on a “lower priced,” ad-supported plan for consumers that will be offered in addition to its three tiers of ad-free plans. Microsoft’s role in the partnership will be to manage sales, advertising technology, and privacy protection.

“It’s very early days, and we have much to work through,” said Netflix COO Greg Peters. “But our long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.”

In the company’s announcement, no actual prices for the service were mentioned.

Netflix took it on the chin a bit in April when quarterly results showed a loss of 600,000 subscribers in the U.S. and Canada. Its quarterly profits were slightly down, sending its stock value falling as much as 25% in after-hours trading. 

Netflix has been served with a shareholder lawsuit that accuses the company of misinforming investors about its capability to keep adding subscribers over the past few months.

The suit, filed in a U.S. District Court in San Francisco, asks for damages over declines in Netflix's share price, which has dropped by 69.94% over the past six months. The company originally estimated that it would gain an additional 2.5 million new subscribers, but it actually lost 200,000 in the final tabulation.

While the lawsuit is against Netflix as a company, the real target is Netflix’s executives and their failure to admit that the company’s growth was slowing down because of increased competition. Claimants say that has caused the platform's net subscriber count to dwindle.

“Public documents and statements issued or disseminated in the name of the Company were materially false and/or misleading,” the suit read, adding that Netflix knew those statements would be disseminated to the investing public and “knowingly and substantially participated” in getting that message out.

What’s the real reason behind Netflix’s slide?

Netflix’s troubles are real. It lost subscribers for the first time in more than a decade during the first quarter of 2022. Unfortunately, things may not be getting better anytime soon because the company is projected to lose another 2 million subscribers in the second quarter.

Tech expert Jared Newman theorizes that Netflix's price hike was the real reason behind its subscriber loss. For U.S. subscribers, Netflix pushed the cost up to $9.99 per month for its cheapest plan during the last quarter. It also now costs $15.49 per month for a standard plan and $19.99 per month to get access to 4K video.

“Never mind the clear cause and effect on display here; Netflix argues that the bigger sources of its current woes are competition and password sharing. It plans to address the former with better content, and the latter with stricter countermeasures,” Newman said. 

"People have a limited amount of money they’re willing to spend on streaming services, and each time the cost of Netflix increases, competing services and password sharing start to look like more compelling alternatives. The hard truth for Netflix is that it can’t keep raising prices without exacerbating those other issues. That may explain why the company doesn’t want to fixate on those price hikes too much."

Netflix’s growth seems to have hit the proverbial wall. When it unveiled its first-quarter earnings on Tuesday, the streaming leader said its hope to add 2.5 million subscribers in the first three months of 2022 came up empty – drastically empty. Instead, it lost 200,000 subscribers in Q1 and expects to lose two million more by the end of June. 

The company’s reported revenue was up 10% to $7.9 billion, likely due to an increase in subscription prices. But, its quarterly profit was slightly down at $1.6 billion; the company earned $1.7 billion during the same timeframe in 2021. The sting from the company’s admission was swift and strong, with its stock value falling as much as 25% in after-hours trading. 

While Netflix admits that its revenue growth has slowed considerably, company officials are reportedly telling investors that streaming is winning over "linear" TV (e.g., a regular TV network like CBS.) Officials also claim that Netflix titles are very popular globally. 

At a crossroads 

Netflix stopped short of blaming COVID-19 for the downturn in revenue, but it did say the pandemic-driven surge in streaming had an effect.

“The big COVID boost to streaming obscured the picture until recently,” the company said in a filing. “However, our relatively high household penetration - when including the large number of households sharing accounts - combined with competition, is creating revenue growth headwinds.”

The company didn’t stop there with its blame game. It also pointed its finger at “sluggish economic growth, increasing inflation, [and] geopolitical events such as Russia’s invasion of Ukraine"

There’s also a tsunami of competition that Netflix didn’t count on facing. In its filing, the company pointed to Prime Video (Amazon), Disney+, Hulu, and YouTube as “robust” competitors that were created by traditional entertainment companies that realized streaming is the future.

The two competitors that Netflix charted with the most growth were Prime Video and Disney. However, it claims that its subscribers seem to be happy and that its U.S. television viewing share has been steady or ascending, according to Nielsen. “We want to grow that share faster. Higher view share is an indicator of higher satisfaction, which supports higher retention and revenue,” the company stated.

Advertising revenue might also be a salve that could boost the company's bottom line. CEO Reed Hastings said Netflix will try to figure out if it can add in "low-end, ad-supported plans over the next year or two" -- a move that MarketingDive said would put Netflix at parity with other streaming platforms like HBO Max and Disney+.

Is there a password-sharing crackdown on the way?

One thing that Netflix is likely to keep chipping away at is password sharing. Earlier this year, it announced that it may start charging subscribers more if they share their passwords. And there seems to be a lot of that going around – an estimated 100 million households are reportedly breaking Netflix’s rules by sharing passwords.

The big question is just how far Netflix will go to stop password sharing. Hastings said in a previous quarterly review that he knows the company has to be careful with whatever approach it takes.

“We test many things, but we would never roll something out that feels like ‘turning the screws,’ as you said,”  Hastings said. “It has got to feel like it makes sense to consumers, that they understand. And [Netflix’s chief product officer has] been doing a lot of great research trying variants that harmonize with the way consumers think about it.”

Hastings described the practice of password sharing as "something you have to learn to live with" and that much of it is "legitimate" between family members.

Since the start of the pandemic, steaming videos at home has become increasingly popular. If you’re a Netflix subscriber, the cost of streaming is going up.

Netflix has announced a price increase for all packages in the U.S., the sixth since 2014. The price hikes will be phased in over the next few weeks for existing subscribers, but they are going into effect immediately for new customers.

The basic plan, which allows for viewing on one device at a time, is going up by $1 to $9.99 a month. The standard plan, which provides HD streaming on two devices at once, is going up from $13.99 per month to $15.49.

The premium plan, which gives subscribers the capability to view in 4K quality is also going up by $2 a month, pushing the price to $19.99 – on par with some premium cable channels.

Unhappy customer

Michael, of Arcadia, Calif., may balk at the increase. In a ConsumerAffairs review of Netflix last month, Michael said he had the basic plan, not realizing he would be required to pay more to steam in 4K

“I Googled it today and found out that because we're on the basic plan we only get the SD (standard definition) quality I mentioned above,” Michael wrote in the review. “If we want better-looking movies on our TV then we have to pay for it by upgrading to Standard for full HD (1080p) for $13.99 or Premium for 4k quality for the cost of $17.99.”

Of course, those charges were in effect last month. Now it’s $2 a month more.

“I never heard of such a thing and we're not willing to pay more to get the high quality we should be getting,” Michael concluded.

Investing in content

Netflix says the higher prices are necessary to pay for its investment in programming. In a statement to Deadline, Netflix said the company realizes that consumers have lots of viewing options and that it must compete on quality, not just price.

 “We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options,” a company spokesman said. “As always we offer a range of plans so members can pick a price that works for their budget.”

Netflix has formed a new partnership with Walmart to market products associated with its hit shows, including “Squid Game” and “Stranger Things.” The products will be sold on Walmart.com.

The tie-up is an expansion of Netflix’s current foray into retail sales, with the company seeking to monetize more than just its streaming business. The company already sells T-shirts, stickers, dolls, and other consumer products through select retailers.

The Walmart deal takes it to another level, with the retailer turning over a dedicated space on its website to exclusively sell Netflix merchandise.

“Through this new partnership, Walmart will not only offer products that bring the imagination of Netflix creators into reality but Walmart customers and Netflix superfans will also find a new, exciting entertainment destination,” Jeff Evans, executive vice president, Entertainment, Toys, and Seasonal, Walmart U.S., wrote on the Walmart blog.

Netflix Hub

Called the “Netflix Hub,” the section on Walmart’s website will try to entice fans of the Netflix shows with products that identify with the hit shows. For Netflix, it will be the first digital storefront on a national retailer’s website.

“We’re proud to partner with them on this new adventure that will let our customers dive even deeper into their favorite stories and characters,” Evans said.

The companies already have a list of products that will be offered to Netflix fans. They include:

• Ada Twist cuddle plush, which will sell for $10.97

• CoComelon 4 pc toddler bed set with bonus blanket, selling for $36.97

• Nailed It! baking kits, for $15.98

• Squid Game T-shirts in a variety of styles and price ranges

• Stranger Things collectors box, for $54.96

Fans can suggest new products

Fans will also be encouraged to make suggestions for new products that tie into Netflix shows. “Netflix Fan Select” will allow fans to vote for merchandise they’d like to see from various Netflix shows, and Walmart will try to find manufacturers to make them.

It’s part of Netflix’s strategy to expand beyond movies and TV shows. The company recently purchased a video game maker and plans to offer online games. 

“We want to continue to meet fans wherever they are, whether that’s through our biggest online marketplace at Walmart, or the more boutique and curated Netflix shop,” Josh Simon, Netflix’s vice president of consumer products, told the Wall Street Journal.

With a strong presence in the film and TV market, Netflix thinks that video games are the next profitable frontier and plans to set out to capture a niche in that space.

The company is reportedly looking to roll out video games on its platform sometime within the next year. Netflix isn’t building out a separate channel for the games; instead, they’ll appear alongside its other content. The good news for Netflix subscribers who also happen to be gamers is that the company’s plans don’t reportedly include an extra charge for the content. 

That’s good news for some customers like Joel from New Jersey. In a ConsumerAffairs review of Netflix, he asserts that the platform’s “base content is never strong enough to justify its pricing.” With the addition of a whole new type of content, maybe signing up for an account may be more worth it to some people.

The company is starting this new venture from a position of strength. It hired Mike Verdu, the vice president of Facebook’s virtual reality and augmented reality content and previously the head of EA Mobile. In that position, he oversaw a portfolio of games that included titles like Star Wars: Galaxy of Heroes.

Moving into video games also gives Netflix a leg up on competitors like Disney and Amazon, which, for the moment, don’t have gaming as part of their lineup. 

Are video games the next great frontier?

If you’re someone born with a joystick or controller in your hand, you’re probably thinking Netflix's move into gaming isn’t new. And you’d be correct -- at least historically speaking. However, Statista reports that video games are experiencing a renaissance, and the market is only at the beginning of its newest revolution. 

Researchers say revenue in the video games segment is projected to reach over $154.6 billion in 2021 and continue to grow at a rate of 9.28% over the next few years. Those numbers speak volumes to content services like Netflix. The company also has to be licking its chops over future forecasts.

The number of users in the video games segment currently sits at around 2.8 billion, and it’s expected to grow to 3.1 billion by 2025. If Netflix was successful in signing even a small percentage of the new users, it could be swimming in tens of millions of dollars in additional revenue each month.

“This feels like a significant event with broad ramifications across the video games landscape,” Citi analyst Jason Bazinet wrote in a note Thursday. He said Netflix’s move creates “obvious risks” for larger game developers and publishers. 

Netflix has announced the launch of two new features for families. First, subscribers will see a new “Kids Top 10 list” on kids and family profiles. The most popular children’s shows and movies will be shown and updated daily. 

The leaderboard -- a feature that was previously only available for adult members -- can be viewed in the kids homepage or in the “New & Popular” section in the menu bar across all devices, with the exception of Apple TV. 

The streaming giant also announced on Wednesday that it will start sending out a biweekly email newsletter that will let parents know what their children have been watching. 

The recap email will also include recommendations based on kids’ viewing habits, kids’ favorite genres and topics, and tips on how to best utilize Netflix Kids. The newsletter will also provide some screen-free activities, such as printable coloring pages featuring your child’s favorite characters.

Family-friendly features

The first newsletters will go out later this week to subscribers who have set up a Kids profile on their account. Netflix said the new features are the result of discussions with parents and more than six months of testing.

"Shows and movies are an important way for kids to connect with the world—helping to teach them about new places, create bonds with family or friends, and understand other perspectives," Jennifer Nieva, director of product innovation at Netflix, wrote in a blog post.

The recap emails are intended to “give parents a better understanding of their child’s preferences and new ways to engage those interests,” and the new Top 10 ranking is intended to help younger viewers find new content.

“We’ve seen how Top 10 rows help our members find something to watch, and helping families make the best decisions has always been important to us,” the company said. 

A special heads-up to everyone who shares their Netflix accounts with friends and relatives: The streaming video service is testing a new policy regarding the sharing of accounts. In the test, a group of customers will get a prompt to sign up for a separate account if they aren’t watching with the actual subscriber.

The message reads: “If you don’t live with the owner of this account, you need your own account to keep watching.” 

It’s important to note that the Netflix police aren’t on the prowl and this isn’t a full-fledged crackdown… yet. But the company has made noise about this before. A Netflix spokesperson told The Streamable that the tests will only be on TV devices and that they are “designed to help ensure that people using Netflix accounts are authorized to do so.”  

The household issue

The company didn’t say if users in the test must all be using the same IP address to be considered in the same “household,” but the company’s terms of use specifically state that an account can only be shared with members of your household. 

“The Netflix service and any content viewed through our service are for your personal and non-commercial use only and may not be shared with individuals beyond your household,” it reads.

Netflix has long had a tight stance on sharing passwords and accounts. "We expect that Netflix is a household level purchase, and that sharing with members of the household is a reasonable thing to do," Neil Hunt, Netflix's Chief Product Manager, told Digital Spy back in 2016. Drilling down on what is and what isn’t a “household,” Hunt gave an example that many families are likely to run into.

"When the kids go off to college, are they going to use that login? Well, that's probably OK, but when the kids go off and form their own household, they want the control of having their own account, so eventually that turns into a new revenue stream for us there as well."

Hunt said that the company expects the service will be shared “within the household,” but admitted that you're unlikely to get a slap on the wrist for pushing the envelope a little.

"I don't think we are obsessed with enforcing compliance with a one-household-per-account constraint. Because, in reality, it's a high-value programme, so that's what people are going to do,” he said.

Netflix has confirmed that it’s testing a new timer function on Android devices. 

A select group of users will be able test the feature by tapping a clock icon labeled “Timer” in the upper right hand corner of the content they’re streaming. From there, users can select 15, 30, 45 minutes, or “Finish Show.”

The feature may come in handy for users who doubt their ability to stay awake for multiple episodes. The timer should make it easier for users to keep their place in a series, as well as help conserve the battery life of Android devices.

For now, the time functionality is only being tested among adult Android users. If the test yields interest among Netflix users, the streaming giant could expand its availability to other devices, according to The Verge. 

Testing new features

Netflix also recently announced that it’s planning to launch a new “Shuffle Play” feature in the first half of 2021 following tests last summer. The feature lets consumers choose to have Netflix select content for them based on their viewing history.

The shuffle option is geared toward people who turn on Netflix “and they’re not really sure what they want to watch,” Netflix COO and chief product officer Greg Peters said earlier this month. 

“It’s really working for us where our members can basically indicate to us that they just want to skip browsing entirely, click one button and we’ll pick a title for them just to instantly play,” Peters said during the company’s Q4 investor interview Tuesday. “And that’s a great mechanism that’s worked quite well for members in that situation.” 

Netflix is launching a new “Shuffle Play” feature in the first half of 2021, Variety reports. The new feature lets users allow Netflix to serve up randomized content based on subscribers’ viewing history. 

The company said it’s been testing the feature since last summer. In its fourth quarter earnings report, Netflix COO and chief product officer Greg Peters said the shuffle option is geared toward consumers who turn on the service “and they’re not really sure what they want to watch.” 

“It’s really working for us where our members can basically indicate to us that they just want to skip browsing entirely, click one button and we’ll pick a title for them just to instantly play,” Peters said during the company’s Q4 investor interview Tuesday. “And that’s a great mechanism that’s worked quite well for members in that situation.”

Selection based on viewing history

With Netflix’s pool of content growing deeper each year, the company said it saw an opportunity to alleviate feelings of overwhelm for users. The company has previously attempted to make it easier to find content to watch by adding a “New & Popular” tab. Added last year, the tab shows users a selection of new, popular, and upcoming content. 

Netflix’s new shuffle tool will show users shows or movies similar to the ones they have watched previously. 

“Titles served up by Netflix when you hit the ‘Play Something’/’Shuffle Play’ button will be either shows or movies similar to ones you’ve watched previously; titles in genres you’ve viewed; or content you have saved in the ‘My List’ section,” Peters explained. “For example, when I recently clicked “Play Something,” Netflix started streaming ‘The Crown’ Season 1 (explaining that it was a drama similar to “The Queen’s Gambit,” which I binge-watched last month).” 

Netflix users will be given the option of clicking a “play something else” button if the content selected for them doesn’t sound appealing. 

TV and movie lovers who have feasted on Netflix Originals like “The Crown,” “Stranger Things,” “Ozark,” and “The Queen’s Gambit” are about to get a lot more attention from the reigning streaming video king. 

According to a research report from Bankr, the service will spend about $19.03 billion in 2021 to produce exclusive video content, nearly 10 times what it churned out just five years ago when it first tested the original content waters with “House of Cards.”

Here we come, 2021!

COVID-19 didn’t hamper the company much, if at all. “Since the almost-global shutdown of production back in mid-March, we have already completed principal photography on 50+ productions and, while the course and impact of C-19 remains unpredictable, we’re optimistic we will complete shooting on over 150 other productions by year-end,” the company wrote in its Q3 2020 letter to shareholders.

To demonstrate its aggressive stance, the company said that it expects the number of Netflix originals launched to be up year-over-year in each quarter of 2021. A key target for that content will be an emphasis on Netflix’ burgeoning growth in the Hispanic and Asian markets. 

While the company said that it strives “to be a global entertainment service that can satisfy the needs of members all over the world,” it’s not leaving the English-speaking world empty-handed. Season 3 of Cobra Kai will debut on January 8, 2021. There’s also season four of ‘Stranger Things,’ the action film ‘Red Notice’ (starring Dwayne Johnson, Gal Gadot, and Ryan Reynolds), and season two of ‘The Witcher’ for fans to look forward to.

Go big or go home

If it walks like a duck and talks like a duck, then Netflix is no different than a traditional TV network like NBC, CBS, or ABC when it comes to competing for eyeballs. In addition to its 195 million user base, Netflix subscribers are rather smitten with the service, with 59 percent of young users rating it as their most indispensable TV network.

To push that number higher, the company has to go big or go home -- and it’s going big in 2021.

In reality, Netflix has little choice. In the last year, consumers have been wooed by the debut of Comcast’s Peacock and Disney+. Disney, in particular, has shown just how serious it is about being a big time player in the streaming game by adding in features like co-watching, bundles, and partnerships with the likes of Verizon, which gives the wireless network’s customers a chance to score a free year of Disney+.

“Overall, Netflix needs a lot of video content to remain competitive. However, the shows need to retain subscribers especially those onboarded during the pandemic,” commented Bankr’s Door Justinas Baltrusaitis. “If the subscriber growth slows down, Netflix might need to look for other ways to attract more users.”

Netflix has confirmed that it will stop offering free trials to U.S. customers. Instead of touting a free 30-day trial, the streaming giant has changed its sign-up page to emphasize that it lets subscribers cancel anytime at no cost. 

“We’re looking at different marketing promotions in the U.S. to attract new members and give them a great Netflix experience,” a Netflix spokesperson said Tuesday. 

Those promotions include content sampling for consumers in the U.S. For example, Netflix recently made one of its films (“To All the Boys I’ve Loved Before”) available to watch without a Netflix subscription. It has also posted some educational content on YouTube for free. The platform says content sampling promotions like these are expected to continue into 2021. 

The Verge noted that Netflix has spent the last couple of years gradually pulling the free trial option in other countries. Meanwhile, newer streaming platforms like Apple TV and Disney Plus have extended their free trial periods in order to grow their customer base.  

Netflix currently has more than 192 million subscribers. 

Netflix has announced that it will put 2 percent of its cash holdings towards supporting the economic development of black communities. The company said its initial commitment will be as much as $100 million.

In a blog post on Tuesday, the video-streaming giant said the money will go toward narrowing the financial divide between Black and White families created and perpetuated under the nation’s long history of systemic racism.

“Banks that are Black-owned or led represent a mere one percent of America’s commercial banking assets. This is one factor contributing to 19 percent of Black families having either negative wealth or no assets at all,” wrote Aaron Mitchell, a Netflix director of talent acquisition, and Shannon Alwyn, Netflix’s treasury director. 

To start, Netflix will move $25 million to the Black Economic Development Initiative, a fund recently set up by a non-profit called the Local Initiatives Support Corporation. The non-profit will invest the fund in financial institutions serving Black communities. Another $10 million will be deposited at Hope Credit Union, which focuses on obtaining funding outside of the underserved regions it serves. 

“Over the next two years, HOPE estimates the Netflix deposit will support financing to more than 2,500 entrepreneurs, homebuyers, and consumers of color,” the company said.

Supporting Black communities

Mitchell and Alwyn noted in their blog post that 19 percent of Black families have “either negative wealth or no assets at all,” while just 9 percent of White households fall under that category. 

“Black banks have existed to fight this for generations, spurring economic growth by extending credit in often underbanked communities,” the company wrote. “But they’re disadvantaged in their access to capital, especially from large multinational companies, when compared to other banks.”

Earlier this month, Netflix CEO Reed Hastings and his wife Patty Quillin pledged $120 million to Black colleges in response to the killing of George Floyd and the nationwide “Black Lives Matter” movement.

“Both of us had the privilege of a great education, and we want to help more students — in particular students of color — get the same start in life,” Hastings and Quillin said in a joint statement.

Word came down from Netflix corporate on Friday that inactive subscriptions run the risk of being canceled. The company is asking subscribers who haven't used the service in a year or more to let them know that they still want to be a member -- even if they're going to keep their membership turned off until further notice.

According to Netflix' Eddy Wu, the inactive accounts represent less than half of one percent of its overall member base -- about a few hundred thousand.

Expect a nudge

Netflix will be sending out email and in-app nudges over the next few weeks to find out what the dormant subscribers want to do. If the service doesn't receive a user's confirmation, their service will be canceled with no penalties or fees.

"If anyone changes their mind later, it's really easy to restart Netflix," Wu said. "As always, anyone who cancels their account and then rejoins within 10 months will still have their favorites, profiles, viewing preferences and account details just as they left them. In the meantime, we hope this new approach saves people some hard-earned cash."

CNBC's Jessica Bursztynsky called Netflix move "extremely unusual among companies that charge an annual subscription, and shows a measure of confidence in Netflix's value proposition for customers." 

Bursztynsky also thinks a little "hello, remember us" nudge may help Netflix retain some top-of-mind recall -- especially as new competitors like Disney+ and NBCUniversal's Peacock continue elbowing in for a piece of the streaming service action.

In a recent filing with the Securities and Exchange Commission (SEC), Netflix shared how many subscribers it has in several global regions for the first time. While the bulk of its subscriber base is still made up of consumers from the U.S. and Canada, the report shows that the streaming giant is growing quickly in other global markets.

In the two-year period between 2017 and 2019, Netflix increased its subscriber base in Europe, the Middle East, and Africa from just over 26,000 to over 47,000. In Latin America, that number jumped from under 20,000 to over 29,000; and in the Asia-Pacific region, it went from around 6,500 to nearly 14,500. 

Revenue generated from foreign markets also made a big leap in those two years. In those same three markets, overall revenue jumped from $4,081,357 to $7,080,948 from 2017 to 2019. In contrast, revenue generated in the U.S. and Canada moved from $6,660,859 to $7,379,300 over the same time period.

Expanding services and content

The findings underscore how Netflix has become more of a global giant as a streaming service. It is currently working on several initiatives that company officials hope will generate more excitement and draw in more subscribers. 

Earlier this month, the company said it was testing a new yearly subscription plan that could save consumers up to 50 percent if they paid in advance for a full year of service. The company also recently offered $2 billion in debt to fund content creation on its platform.

These initiatives and competitive pricing have made Netflix a hit with many consumers. In a recent ConsumerAffairs review of the service, Sally from Sarasota, Florida said that it can be a great alternative to cable TV. 

“Unless you have cable to access movies, Netflix has proven a winner with our family. Their list of outstanding movies, past and present, are always available, and at a reasonably low price,” she said.

To read more consumer reviews about the service, check out ConsumerAffairs’ page here.

On the heels of the launch of Disney+, Netflix appears to be mulling a change to its pricing plan options. A new, cheaper pricing plan is currently being tested in India, Reuters reports. 

Under the plan, new and existing subscribers who pay for a full year of the service can save 50 percent. Those who sign up for six months or three months of the service get 30 percent and 20 percent discounts, respectively.

When applied to the most expensive plan in the U.S. (the Premium plan), consumers would end up paying $7.99 per month if they opted for a one-time payment of $95.94. The Premium plan currently costs $15.99 per month.

"We believe that our members may value the flexibility that comes from being able to pay for a few months at once. As always, this is a test and we will only introduce it more broadly if people find it useful," a spokeswoman for Netflix India told Reuters. 

Competitive pricing

Although Netflix has said it’s not worried about competition from Disney+, the introduction of an alternative pricing option on Netflix would allow it to offer similar pricing when compared to its streaming service rival. 

Disney’s new service costs just $6.99 per month, or $5.83 for those who pay for a full year of Disney+ access. The service garnered more than 10 million subscribers at launch and could hit as many as 20 million subscribers by the end of the year, according to recent estimates from Credit Suisse.  

According to a report from BloombergNews, Netflix, HBO, and others are about to set out on a hunting expedition for password-cheating consumers. The companies are loaded for bear, too — forming an unofficial coalition to crack down on password sharing and trying to find a way to re-color the gray area that is allowing subscribers to share in the first place.

“You’re not scared, are you?” Netflix Co-Founder & First Netflix CEO Marc Randolph told Yahoo Finance’s YFi PM.

“Well you know there’s abuse and that’s not fair,” Randolph added. “But, the whole time you want to make it easy for people to be flexible. You know, we travel (and) we have family that’s living in different places… from the very beginning it was like this, (and) you don’t want to put in place barriers that impede people who are trying to do the right thing.”

Where the confusion lies

There are a couple of gray areas that might turn from lines in the sand to concrete barriers if Netflix decides to play hardball.

• Household vs. family. In its terms of use, Netflix states that its “service and any content viewed through the service are for your personal and non-commercial use only and may not be shared with individuals beyond your household.”
  
  That begs the question of what qualifies as a “household,” what qualifies as a “family,” and what doesn’t. Even Randolph used the word “family” in his interview. One reader responded to Yahoo’s coverage of the story by doubling down on the deductive reasoning that “my brother lives at his own place. He's still my family... and my Netflix account is for my family.”

• The number of screens used. Another conundrum is the number of screens Netflix allows users to watch its service on. In its description of its Premium plan, the company says that all plans “offer unlimited TV shows and movies, on as many devices as you want” instead of saying that its plans “offer unlimited TV shows and movies, on as many devices as you want as long as those devices are used from the same location.”

Netflix is not alone in this fight for eyeballs and billfolds. Reviewers at ConsumerAffairs have also expressed similar concerns over how terms like “family” and “unlimited” are advertised, how streaming companies define those terms, and on how they might lay down the law by using those definitions as weapons.

“I understand that Hulu wants to limit the sharing of their services between people when someone is only paying for one account,” wrote one reviewer. “However, I travel for a living and … now I would be able to continue watching my shows live when on the road. However, within 3 days of using liveTV on "unlimited" devices (paid extra for this as well) it became apparent that they may have an issue with truth in advertising.”

And that consumer’s perception of the truth? “Yes, I can utilize liveTV while traveling but am only allowed to do that 4 times a year - well, that is also not quite true. You see, they limit your ‘unlimited’ ability to just one IP address. If you travel you can change your location 4 times a year, but included in those 4 times is the change back to your actual home location. So essentially you are just limited to traveling with their service twice a year.”

Too much money to leave on the table?

The root cause for potentially shutting down password-sharing is, like many other things, money. Password-sharing has become rather commonplace —  recent surveys found that anywhere from 20 to 27 percent of U.S.-based Netflix users are more prone to share their subscription with others living outside their household. The lost revenue from those shared accounts is apparently costing Netflix and its streaming peers more than company executives would like.

How much are we talking about? ConsumerAffairs ran the math on what Netflix may be losing using the factors of a) its annual subscriber base of 151 million; and, b) what would happen if the company could cut its number of password-sharing users from 27 percent to 26 percent. 

Assuming all of those extra users signed up for a Premium Netflix plan of their own for $15.95 per month, Netflix would stand to make just over $24 million more per month, or nearly $290 million per year. 

What consumers can expect

Vegas isn’t publishing odds on this predicament, but something is likely to happen to the chagrin of consumers. However, what that something is could be anyone’s guess.

“A couple of the techniques that they've discussed are doing things like making you change your password pretty regularly to make sure that you know friends can't just store the password,” said Bloomberg’s Lucas Shaw in a video interview. 

“They have also talked about using what's called have two-factor authentication where in addition to logging in with your password you then have to get to a text message to your phone to log in with through the course make it so that only the core of the person with the credit card and with that phone number assigned to that account could use it.”

However, if those measures don’t get the streaming services the clampdown they’d like, Shaw says that more extreme measures are being discussed like fingerprint-identity. “I say that is pretty unlikely because that would be really cumbersome for the user. I know Netflix already will if they see an account that they think is violating or is using too much of a password. Where they'll kind of send an email saying is this really your account sort of gentle reminder that maybe you're breaking the rules,” Shaw said.

Another industry observer — Jared Newman of Cord Cutter Weekly — tweeted that the consumer might have about a year of breathing room before the “draconian stuff” kicks in. “Hardly anyone (except maybe Charter) wants to do anything that pisses off paying customers, which thumbprints and 2FA (two-factor authentication) almost certainly would,” he said.

Without warning, Netflix quietly dropped support for Apple’s AirPlay streaming feature on iPhone, iPad, and iPod touch. In a statement on one of its support pages, first spotted by MacRumors, the company said the technology is “no longer supported for use with Netflix due to technical limitations."

The vague explanation initially sparked theories that the move was intended to hurt Apple, which recently announced that it would debut a new TV service that will compete with Netflix. However, Netflix later clarified that no issue with Apple prompted the move.

The streaming giant said it pulled support for AirPlay due to the growing number of third-party devices supporting AirPlay and its inability to distinguish between AirPlay compatible devices.

“We want to make sure our members have a great Netflix experience on any device they use,” Netflix said in a statement. “With AirPlay support rolling out to third-party devices, there isn’t a way for us to distinguish between devices (what is an Apple TV vs. what isn’t) or certify these experiences.”

“Therefore, we have decided to discontinue Netflix AirPlay support to ensure our standard of quality for viewing is being met. Members can continue to access Netflix on the built-in app across Apple TV and other devices,” Netflix said.

Subscribing to Netflix, Amazon, or Hulu costs less than $15 a month -- a bargain some might say. But there are still a lot of people who avoid that modest monthly subscription by using a friend or family member’s login.

These video streaming services spend billions of dollars each year obtaining existing and producing original content yet they have to contend with consumers sharing a subscription. A new report from CordCutting.com estimates that about 20 percent of people watching a pay video streaming service are using someone else’s account.

The report finds that Netflix has the most freeloaders. Nearly half -- 48 percent -- are using their parents’ account. Another 14 percent use another family member’s login.

Netflix has responded to this trend by creating a level of service -- at a higher rate -- that allows two users to be logged in at the same time.

Freeloading millennials

Broken down demographically, the report shows that millennials tend to make up a large segment of the freeloaders. They make up 18 percent of the Netflix pirates and 20 percent of those piggybacking on someone else’s Hulu account.

No doubt they view it as a victimless crime, but the study shows that the practice can have a rather large impact on a video streaming service’s bottom line. In the case of Netflix, which spends more on content that Disney, the company is estimated to lose as much as $192 million a month from piracy.

Piracy losses for Amazon are estimated to be $45 million and Hulu loses about $40 million a month.

You could make the case that people freeloading on someone else’s Netflix account probably wouldn’t subscribe to the service anyway, but there are plenty of analysts who think otherwise. Netflix continues to add subscribers but much of its growth is coming from overseas.

How much better could it do?

The study suggests Netflix could be doing a lot better if everyone played by the rules. It surveyed a sample of people using someone else’s account and found that nearly 60 percent said they would pay for the service if they lost access. That would add an estimated $112 million a month to Netflix’s revenue.

That said, the company appears to be doing just fine. In its latest earnings report, Netflix said it added 8.8 million new subscribers, a better-than-expected performance. It earned 30 cents a share on revenue of $4.19 billion.

Netflix, which last week raised its monthly subscription prices for all 58 million of its U.S. subscribers, may see a slight drop in its subscriber count in response to price increases, a new study suggests.

News site Streaming Observer recently partnered with Mindnet Analytics to "gauge [subscribers'] reaction to the latest round of price increases."

Of the 607 adult subscribers who participated in the survey, nearly one-fourth (24 percent) of respondents said they "might cancel" Netflix over the higher prices. Three percent said they would “definitely cancel" their subscription.

However, most subscribers (71 percent) said they would keep their Netflix subscription despite the latest round of price increases.

Interest in ad-supported model

Ten percent of those who responded to the online survey said they planned to downgrade to a lower-priced plan. Two-thirds (65 percent) said they would consider a lower-priced or free version of Netflix with advertisements, which is a change from past survey results.

“In the past, many Netflix users were adamant they would never tolerate ads on the streaming service," the site's founder and editor-in-chief Chris Brantner said in the survey results. The new prices have most subscribers “reconsidering” whether they’d still subscribe to Netflix if ads were included, he added.

In response to whether they would consider a discounted, ad-supported version of Netflix, 35 percent of respondents said "No discount is enough" to have to sit through advertising. The rest of those polled had different ideas on how much of a discount they would require if commercials were thrown into the mix.

Fifteen percent said they would want the service for free, 8 percent said that would require a 75 percent discount, 29 percent wanted the service to be half-price, and 13 percent would require 25 percent off to watch ads while using the service.

Price increases largely tolerated

Netflix’s new monthly prices will cause consumers’ bills go up anywhere from 13 percent to 18 percent -- the biggest price jump in Netflix’s history. Existing customers will see the price increases reflected on their bills “over the next few months.” New subscribers will already see the new pricing on the company’s website.

Netflix said it changes pricing on occasion to financially bolster its efforts to provide “great entertainment” and “improve the overall Netflix experience.”

Streaming Observer noted that Netflix’s previous price increases haven’t taken much of a toll on its overall subscriber count, even when large numbers of subscribers said they might cancel the service over the change.

“In the past when Netflix has raised prices and subscribers have threatened to cancel in large numbers, analysts predicted only a very small percentage, roughly 3%-4%, of subscribers would actually do so. In that case, the price increase would still prove to be quite profitable overall for Netflix,” the report said.

Going forward, Netflix subscribers will have to pay a little more for the streaming service.

The company announced Tuesday that, effective immediately, its basic plan will cost $9, up from $8; its HD standard plan (Netflix’s most popular plan) will cost $13, up from $11; and its 4K premium plan will cost $16, up from $14.

Netflix said existing subscribers will see the new pricing reflected on their bills “over the next few months.”

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” the company said in a statement.

Netflix has not yet returned a request for additional comment from ConsumerAffairs.

Offsetting content cost

The new monthly prices equate to an increase of 13 percent to 18 percent -- the biggest jump in Netflix’s history.

The higher subscription costs are intended to help Netflix grow its lineup of original content, as well as help the company dig itself out the debt it’s acquired while striving to compete with Amazon, Disney, and AT&T.

Netflix has raised its prices for U.S. subscribers four times, most recently in late 2017. However, this is the first rate increase that will impact all subscribers at once. News of the most recent subscription price hikes caused Netflix shares to rise about 6 percent in morning trading Tuesday.

Netflix is no longer allowing new members to sign up for its service through Apple's app store, according to an update on the frequently asked questions (FAQ) section of the company’s website.

"We no longer support iTunes as a method of payment for new members," Netflix says. "Existing members who currently use iTunes as a method of payment can continue to do so."

The move to cut Apple out the equation will translate to a financial loss for Apple and a financial gain for Netflix. By asking all customers to use its website or app for billing and payments, Netflix will be able to keep all of the subscription revenue that comes in instead of giving 15 percent to Apple.

The change could result in a loss of up to $700,000 per day in iOS revenue for Apple, while Netflix stands to save millions annually.

In May of last year, Netflix got rid of the option to subscribe to its streaming service via Google Play. The company’s moves to boost its overall revenue by cutting out exorbitant fees come as an increasing number of consumers are turning to mobile streaming entertainment first.

"Consumers honestly don't care about screen size — they simply want to be entertained at a compelling price/value,” Rich Greenfield, media analyst and managing partner at the investment firm BTIG, told Axios.

The uptick in mobile streaming consumption has fueled Netflix’s growth in recent years, resulting in a boost in mobile revenue of nearly 100 percent year over year in its fiscal third quarter.

Across the entire internet, Netflix consumes 15 percent of the total downstream volume of traffic worldwide, according to October’s Global Internet Phenomena Report from Sandvine. That percentage is more than any other single application and represents a 3 percent increase from the previous year’s report.

The streaming service is responsible for an even larger number of total traffic in the U.S., at 19.1 percent. Peak times -- such as when a new, highly anticipated show is released on Netflix -- drive that number even higher.

“At peak hour on fixed networks, this number can spike as high as 40% on some operator networks in the region,” the authors of the report wrote.

Amazon, YouTube also large consumers

The research firm said that the sheer volume of Netflix traffic in North and South America is what’s behind its market domination on a global scale. And due to its superior stream compression technology, Sandvine believes “Netflix could easily be 3x their current volume at 40% of network traffic all the time.”

Additional findings from the report showed that Netflix ranks third in the Americas top 10 up-streamers, while Amazon Prime Video ranks 4th. Amazon Prime Video consumes more data (7.7 percent of downstream traffic) than YouTube (7.5 percent).

HTTP media streams, such as embedded videos on websites, also eat up a sizable amount of bandwidth, at 13.1 percent, according to the report.

As of July, Netflix boasts over 125 million users. The company recently said it expects to add 10 million new subscribers in the current quarter compared to the quarter before it. Earlier this year, the streaming video giant disclosed that it signed up 26 million new subscribers in the past year.

In April, Amazon CEO Jeff Bezos revealed that Amazon Prime had passed 100 million global subscribers.

Netflix says it will not remove a documentary series that participants say was edited to make them appear crazy. Afflicted, which began streaming in August, chronicles the lives of patients who suffer from rare chronic diseases. Interviews with relatives and psychiatrists in the film suggest that the patients are imagining their symptoms.

The filmmakers used manipulative editing and ignored medical research to push that narrative forward, according to an open letter signed by the film’s cast, several medical researchers, doctors and celebrities such has Monica Lewinsky, who is now an anti-bullying advocate. The group is asking Netflix to take the series offline.

The people featured in the film say they were misled about how they would be portrayed and say that they're now being bullied by strangers.

A Netflix source tells ConsumerAffairs that they have no plans to remove the documentary. In a prepared statement through the Netflix press team, the film’s producer Dan Partland says that the filmmakers were trying to evoke compassion for their subjects.

He did not address the specific claims that the cast made about manipulative editing. Participants claim, for instance, that they were instructed to repeat interviewers’ questions back to them before answering each question. They say footage was later edited to make it appear as though the words were their own. They also say that the filmmakers personally arranged visits with questionable doctors in some cases. Other doctors depicted speculating about the patients’ conditions never actually treated them, the participants say.

"Our intention was to give the world a compassionate window into the difficulties of patients and families suffering from elusive and misunderstood illnesses, to humanize their struggle and to show that struggle in all its complexity,” producer Dan Partland said in his statement responding to the controversy.

Participants said they were told the same thing before filming, but they disagree that the final result was sympathetic.

“Afflicted was introduced to participants as a series that would ‘compassionately’ represent their experiences with diseases that lack proper diagnostic tools and effective treatments,” the open letter from participants, doctors and celebrities says.

“But rather than authentically depict these participants’ experiences and the biomedical research that might explain their illnesses, Afflicted used every creative tool and untenable journalistic practice to advance a narrative that suggests these patients’ problems are primarily psychological, a theory that is not supported by the evidence.”

Over the last few days, Netflix announced two new changes that will alter users’ experience moving forward.

For starters, the platform stated months ago that it would be doing away with user reviews, and that time has finally come. Additionally, though just in the testing phases as of right now, the company has started showing short promo videos of Netflix shows in between episodes of other Netflix shows.

Consumers have been exceptionally vocal -- particularly regarding the second issue -- as the updates have the potential to change the familiar Netflix experience.

User reviews

Netflix announced in early July that it would doing away with user reviews on its website come the end of the month.

In an email to users that had recently left reviews, the company said that the feature was being eliminated due to lack of use in recent months. Many speculated that Netflix didn’t want to give subscribers the power to publicly disparage shows or movies. The company has also reported issues with users who bombard the comments sections because they disagree with the content of certain movies or shows.

Earlier this year, Netflix removed it’s five-star rating system and changed it to a simple thumbs up or thumbs down, and this option remains available to users.

Backlash over ads

There have been rumors flying around online that Netflix was going to start showing commercials in the middle of shows.

The company began showing commercials between shows and movies -- strictly as a test -- and users were able to skip them with a quick click. The ads were only during shows Netflix produced -- not during shows produced by outside production companies. Users were less than pleased with this test, but Netflix was quick to dispel the rumors and provide insight.

“We are testing whether surfacing recommendations between episodes helps members discover stories they will enjoy faster,” a Netflix spokesperson said. “It is important to note that a member is able to skip a video preview at anytime if they are not interested.”

Reddit quickly became a popular forum for users to share their frustrations.

“If I get ads shoved in my face on Netflix then I fully expect the service to be free without paying anything for it,” one user wrote. “Plenty other sites that deliver quality content without pushing ads in the customers face.”

This same discussion saw many users touting Hulu for their transparency in offering customers both ad-free and ad-supported options.

Netflix attempts to quash concerns

Some users took to Twitter to express their concerns, with some users who weren’t affected by the testing threatening to leave the streaming service.

“I’ll be one of the millions to say it,” one user tweeted. “If you introduce any ads to your service that we pay for, I am cancelling my subscription that I had for years and move on somewhere else.”

Netflix did rebut, though. On top of informing users that this feature is strictly in the testing phases and does not affect all users, the company also released an official statement. “A couple of years ago, we introduced video previews to the TV experience, because we saw that it significantly cut the time members spend browsing and helping them find something they would enjoy watching even faster,” the company said.

To opt out of future Netflix testing, users can go to netflix.com/donottest at any time and provide information to avoid promotional materials.

Netflix hopes that binge-worthy, not cringe-worthy, will remain the name of its game after the movie platform suffered through a beta test of running what appeared to be commercials between episodes and movies.

The move created a serious backlash from subscribers even though they could “skip” the message with the click of a button.

"We are testing whether surfacing recommendations between episodes helps members discover stories they will enjoy faster," a spokesperson for Netflix said. "It is important to note that a member is able to skip a video preview at anytime if they are not interested."

Netflix users voiced their frustration on a Reddit discussion.

“If I get ads shoved in my face on Netflix then I fully expect the service to be free without paying anything for it. Plenty other sites that deliver quality content without pushing ads in the customers face,” wrote one embittered subscriber. Others went as far as suggesting that people pirate Netflix’ content.

In the same discussion, disgruntled users applauded Hulu’s transparency for offering both ad-supported and ad-free tiers to its service. “Scummy of Netflix to just slip it into their sub with no warning,” wrote one user in the Reddit conversation.

In response to the public outcry, Netflix stated that the new promotional materials were simply all part of its normal process.

"At Netflix, we conduct hundreds of tests every year so we can better understand what helps members more easily find something great to watch. A couple of years ago, we introduced video previews to the TV experience, because we saw that it significantly cut the time members spend browsing and helped them find something they would enjoy watching even faster," a company representative told ConsumerAffairs.

"Since then, we have been experimenting even more with video based on personalized recommendations for shows and movies on the service or coming shortly, and continue to learn from our members."

A tempest in a teapot?

It’s hard to gauge how this dust-up will affect Netflix, but the company seems to be determined to create a new revenue stream off the backs of its enormous audience -- estimated by Statista at over 130 million.

Close to a year ago, the streaming service boosted rates on two service plans which had the potential of lining its pockets with an extra $100 million a month. ConsumerAffairs also reported that Netflix appeared to be testing a new tier called “Netflix Ultra” in European markets with a price point of approximately $16.99 a month.

Watch up or hush up?

Netflix has pulled back when it comes to consumer comments lately. First, in July, it removed reviews from its website. In the recent Reddit discussion about the inclusion of ads, Netflix put the kibosh on the discussion and locked the thread so only Netflix moderators could manage the posts.

If Netflix is looking in its rearview mirror, it has to be seeing other services -- especially Hulu -- gaining ground. Thanks to exclusive shows like ‘The Handmaid’s Tale,’ Hulu now has more than 20 million subscribers, an 18 percent increase since the fourth quarter of 2017. In a recent survey, 23 percent of respondents stated that they had an active Hulu Plus subscription, with the service being a favorite amongst millennials.

Hulu also has a leg up on Netflix and is edging closer to becoming a "real" network by offering live TV in addition to streaming, including content from Disney, NBC, and Fox -- all of which are Hulu shareholders.

Starting July 31st, Netflix users will no longer be able to leave written reviews for movies or TV shows on the company’s website. According to an email Netflix sent to users that had recently left written reviews, the change is being attributed to declining usage of the feature.

Early last year, Netflix removed its five-star rating system and changed it to a thumbs up or thumbs down feature. Netflix was criticized for the move, as many thought it was overly simplistic, but the company is adamant that it’s received more ratings since implementing the new rating feature.

Written reviews on Netflix were only featured on the company’s website -- not its apps. Additionally, a Netflix spokeswoman noted that written reviews didn’t affect the way the platform recommended shows to users. Users will still be able to use the thumbs up/thumbs down feature when written reviews become obsolete.

“This feature is only offered on the website and has seen declining in usage over time,” said Netflix spokesperson Smita Saran.

Reasons for the change

Though the news comes when Netflix is seemingly at its peak with over 125 million worldwide subscribers, many believe the removal of written reviews is seen as a way for Netflix to maintain its image.

According to a report by Engadget, Netflix is spending billions of dollars on original content, and may want to limit the potential to be publicly disparaged. As such, users will no longer be able to comment on third-party content that has been removed. The platform will not release information regarding the popularity of its shows -- whether original content or not -- and the written reviews served as a forum for subscribers to voice their opinions on shows and movies they both liked and disliked.

The Engadget report also notes that Netflix has had an issue in the past with users bombarding the review section with negative comments simply because they disagree with the content of certain movies or shows. Just before Netflix removed the five-star rating feature last year, comedian Amy Schumer’s Netflix special tanked in ratings because of individuals who allegedly disagreed with her views. Other recent releases -- like The Last Jedi -- revealed similar trends.

While users will no longer be able to submit reviews after July 30, reviews will still be available on the website through mid-August.

Consumers are increasingly turning to Netflix for their video entertainment, preferring the platform's video-on-demand model to traditional television.

A survey by Cowen & Co., a Wall Street financial services firm, shows 27 percent of consumers said they get most of their television entertainment through Netflix, compared to 20 percent who mostly watch basic cable, and 18 percent who watch over-the-air broadcast television.

The report backs up the recent findings from Leichtman Research (LRG) which shows cable TV providers have lost 3.4 million subscribers since 2012. The largest pay-TV providers lost about 305,000 customers in the first quarter of 2018.

Millennials driving the trend

The Cowen research shows young adults are clearly driving the trend. Nearly 40 percent of adults 18 to 34 list Netflix as their preferred video platform, compared to 12.6 percent for basic cable and 7.5 percent for broadcast TV.

Netflix also holds a dominant position over both YouTube and Hulu among this age group, building it by providing collections of popular TV series to supplement its movie offerings. In recent years, Netflix has spent billions of dollars producing original content to solidify its leadership position.

Currently Netflix offers three subscription plans, but might soon offer a fourth. The company has confirmed to CNET that it is testing Netflix Ultra, a subscription plan that would allow four devices to view Netflix content in HD audio and video at the same time.

Current plans

The current Netflix Basic plan costs $7.99 a month and allows content to be viewed on only one device at a time. Standard, which costs $10.99, allows content to be shown on two devices at the same time and Premium, which costs $13.99 a month, allows streaming to four devices simultaneously.

Netflix appears to be testing the new tier in European markets, such as Germany and Italy. The Italian blog Tutto Android first reported the testing of Netflix Ultra, with a price point of approximately $16.99 a month.

CNET cites a Netflix spokesperson as saying the company is currently testing several different price points to learn "how customers value Netflix."

The fact that research shows Netflix holding a dominant position in American living rooms could give the company confidence that it can launch a more expensive subscription level.

In its first-quarter earnings update, Netflix disclosed that it signed up 26 million new subscribers in the past year. In the first quarter alone, the streaming giant added 7.4 million subscribers worldwide.

Subscriber growth expectations were high prior to the release of the earnings report, but the company’s user growth was much higher than expected in the first quarter. Its earnings met expectations, and its revenue managed to top estimates.

Netflix said in its letter to investors that quarterly revenue grew 43 percent year-over-year in Q1, “the fastest pace in the history of our streaming business.” The results of the report caused Netflix shares to jump more than 5 percent in after-hours trading on Tuesday.

A new record for the first quarter

As of the end of March, Netflix had 125 million subscribers worldwide. The streaming giant reported $3.7 billion in revenue for Q1 and a net profit of $290 million.

Its higher-than-expected revenue in Q1 was due to a 25 percent increase in average paid streaming memberships, plus a 14 percent hike in the average subscription price. Netflix previously raised rates on its plans in the U.S. and other territories at the end of last year.

Going into the second quarter, the company said it expects 6.2 million global net additions -- an increase of 5.2 million from last year’s first quarter. Netflix expects content spending to hit between $7.5 billion to $8 billion for 2018, which is on par with previous estimates.

Adding more original series

The company announced earlier this year that it would be focusing on adding more original titles. Netflix said it will “continue to raise debt as needed to fund our increase in original content.” As of March 31, the company had $6.54 billion in long-term debt and $3.4 billion in long-term content payment obligations.

Netflix says that adding more original series, such as sci-fi thriller “Altered Carbon” and returning seasons of “Marvel’s Jessica Jones,” should help to fuel subscriber growth and retention.

“We’re investing in more marketing of new original titles to create more density of viewing and conversation around each title (i.e bigger hit in a nation or demographic),” the company said in the report.

“We believe this density of viewing helps on both retention and acquisition, because it makes our original titles even less substitutable. Because we operate in so many countries, we are able to try different approaches in different markets, and continue to learn.”

A federal lawsuit filed by the City of Birmingham Relief and Retirement System accuses Netflix of rigging its executive bonus program so that “multi-million dollar windfalls” could be awarded to some of its top executives.

The lawsuit alleges the Netflix board “rigged the compensation process, guaranteeing Netflix officers huge cash payments while misleading investors into believing that these payments were justified by attainment of real performance goals”.

The suit claims the company awarded unwarranted compensation to top management in order to take advantage of a prior tax loophole, which stated that bonuses for employees earning a salary of more than $1 million must be performance-based in order to qualify for a federal tax deduction. Performance-based tax deductions were eliminated under the new tax law.

$18 million paid to top executives

Netflix’s board of directors reached their goals in seven out of eight quarters leading up to July 2017. The suit alleges that the milestones were either changed or managed to make them easier to achieve.

The lawsuit referred to the behavior of missing just one percentage point in the other quarter as “artificial precision.” Top members of the board were paid approximately $18.73 million out of the $18.75 million set aside in a target pool.

The four executives named in the lawsuit are: chief content officer Ted Sarandos ($10.5 million), former chief product officer Neil Hunt ($12.5 million), current chief product officer Greg Peters ($3.2 million), and general counsel David Hyman ($800,000).

The lawsuit is asking for damages and a new system of corporate governance to prevent another violation of board members’ fiduciary responsibilities. The suit also demands the executives give back “all compensation and remuneration of whatever kind paid by Netflix” that is determined to be unlawfully gained.

“We intend to respond to these claims at the appropriate time,” a Netflix spokesperson said in a statement.

If you receive an email from Netflix informing you that your credit card no longer works, be very careful how you respond.

Mailguard, an Australian cyber-security firm, is warning that fraudsters are using "brandjacking" emails in hopes of capturing consumers' credit card information.

Brandjacking is an increasingly common tactic used in phishing scams. The email is designed to look like it's coming from a well-known institution. It might be a major bank or a utility company.

In this case, the bogus email appears to come from Netflix -- a video streaming service with millions of subscribers worldwide -- and at first glance the email appears to be the real thing.

Payment declined

In bold letters at the top, the email informs the recipient that payment for Netflix services has been declined and that credit card information must be updated.

There is a button to click to update credit card information. But the link takes you to the scammer's website where you are asked to enter credit card information, which will then be sold on the Dark Web.

This scam is dangerous because so many people who are receiving this email are Netflix customers. Their first response may be to click the button and provide the requested information.

But there is a safer course of action. Should you receive one of these emails, type the Netflix URL into your browser and log into your account. After you’re signed in, click on your personal icon in the upper right corner of the page, then click on "account." Then click on "update payment info."

If there is a legitimate problem with your credit card, you'll see a message there informing you of that fact. If you're still not sure, you can re-enter your credit card information or enter the information for a different credit card.

Tell-tale clues

A closer look at the email, however, might save you the trouble. If the email mentions that your American Express card was declined, but Netflix uses your Visa, then the email is an obvious fake.

Also note the spelling of certain words. Emails sent to customers in the U.S. should refer to the "Help Center," not the "Help Centre."

Phishing scams can take different forms. Besides directing a potential victim to a phony website, they can also contain attachments that can unleash malware, including ransomware.

The Federal Trade Commission (FTC) offers these tips to stay safe.

More people are getting their video entertainment from Netflix and most will pay a little more for it.

The streaming service says the price of its standard tier will go up from $9.99 a month to $10.99, and the premium tier will go up from $11.99 to $13.99. The cost of the basic, standard definition video version of Netflix will remain at $7.99 a month.

Netflix confirmed the price move in an email to ConsumerAffairs, saying the new price structure is effective immediately for new customers but won't take effect for current U.S. customers until next month.

"From time to time, Netflix plans and pricing are adjusted as we add more exclusive TV shows and movies, introduce new product features, and improve the overall Netflix experience to help members find something great to watch even faster," a company spokesperson said.

Rate hike cheered on Wall Street

Wall Street is betting that the price increase will go over well with consumers, who have grown increasingly dependent on Netflix as they continue to "cut the cord" with cable TV. Netflix stock surged on the news Thursday, gaining 5.39 percent, a dime shy of its 52-week high.

Barton Crockett, an analyst with FBR Capital Markets, told CNBC that investors fully expected Netflix to boost rates this year, and the company's increase "is right on target."

"Everything we're seeing is that the consumer likes the service and these guys are going to continue to have very robust subscriber growth," Crockett said in an interview.

Another reason consumers may be a little more accepting of the price hike, says Crockett, is that the company doesn't change its prices all that frequently, while continuing to add content.

Formal notice coming later this month

Starting October 19, current Netflix subscribers will start receiving formal notification of the price increase at least 30 days in advance, based on their billing date.

"The price change will roll out to members over the course of the next several months," the company said in a statement. "As always, members can view pricing information within their account settings."

Netflix was established in 1998 as a way consumers could order DVD movies online, with the discs delivered by mail. A year later it adopted a subscription model, with subscribers able to order an unlimited number of movies each month for a single rate.

In 2007, with a dramatic increase in broadband penetration in the U.S., Netflix began its current video streaming service.

Netflix subscribers will notice that some recently released Hollywood blockbusters will disappear from the on-demand line-up soon.

The company has announced it is ending its relationship with Epix, the cable network that holds the rights to popular movies like Hunger Games: Catching Fire, World War Z, and Transformers: Age of Extinction.

The movies go away at the end of September when the Epix contract with Netflix expires. But if you think it is Epix that is pulling the plug on Netflix, then you would be mistaken.

Focusing on exclusive content

In an announcement Sunday, Netflix Chief Content Officer Ted Sarandos said Netflix has chosen not to renew its agreement because Epix movies are available from other providers. It's part of the company's strategy to focus on original and exclusive content.

It appears to be a very different situation from four years ago, when Netflix was primarily an on-demand movie service heavily dependent on Starz Entertainment's vast library. In September 2011, Starz announced it would not renew its contract with Netflix.

Netflix was willing to pay Starz's price for the movies, but that was not the issue. The issue, apparently, was that Netflix did not charge consumers enough to view the content.

“This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content,” Starz CEO Chris Albrecht said at the time. “With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business."

Starz also licensed its content to cable TV providers, who charged a lot more for their services. The implication being that allowing Netflix to provide access to movies at $8 a month was a threat to services charging 10 times that amount.

Turning lemons into lemonade

Then an unexpected thing happened. Netflix did not crumble as perhaps many in the industry hoped it would. It began buying up rights to TV series – the only content it could find to replace the lost movies. Subscribers seemed to embace it.

“Binge watching” entered into the common vocabulary, as viewers would sit down and watch an entire season of a series in a weekend. It helped that many of the series that were available, like “Breaking Bad” and “Mad Men,” were of higher quality than most movies.

Since then, Netflix has more or less redefined itself and now has an emphasis on original programming, with series like the award-winning House of Cards and Orange is the New Black. Sarandos says the emphasis on original content will continue, and will also extend to feature films.

“Just like we’ve changed the game for TV watchers by releasing entire seasons around the world at the same time, we have begun making movies that will premiere on Netflix globally and in some cases, simultaneously in theaters,” Sarandos wrote in a blog post. “It will take us time to build a robust slate of original movies, but we’re hard at work on it with such great stars and directors as Brad Pitt, Ricky Gervais, Judd Apatow, Angelina Jolie, Sofia Coppola and Adam Sandler.”

Meanwhile, Epix films will be available elsewhere. The company signed a deal with Amazon Prime in 2012 and will begin distributing content through Hulu in October.

In another sign that watching TV online has become mainstream, Mariott Hotels has announced it will begin replacing guest room TV sets with Internet-connected sets.

A press release announcing the move emphasizes a relationship with Netflix, noting guests will be able to watch Netflix content on TV sets in their rooms when they travel. However, Marriott isn't providing a Netflix subscription, only a way to watch it.

Smart TVs, connected to the Internet, will replace those that just offer typical cable channels. To watch Netflix, guests must access their own accounts or subscribe.

According to the press release the Internet-connected TVs will have the Netflix app. Presumably there will not be apps for Netflix competitors and no way to view other Internet content.

Changing consumer preferences

“Our collaboration with Netflix responds to changing consumer preferences in the way our guests access and watch content, while recognizing the leading role Netflix is playing in driving this transformation,“ said Matthew Carroll, vice president brand management, Marriott Hotels. “Because consumers are choosing to take their streaming content with them when they travel, Marriott Hotels is making the industry’s first rollout of Netflix a priority.”

While Marriott isn't exactly making everything on the Internet accessible through in-room TVs, it's a big step for any hotel chain. Many hotels, after all, sell premium content to guests. Watching Netflix for free could be stiff competition.

With the agreement, Marriott says it is the first hotel brand authorized to offer guests direct access to their Netflix accounts as part of its guest room entertainment offering. Netflix is currently available at 6 Marriott properties, with 6 more launching this summer.

All hotels by the end of 2016

The hotel plans to expand Internet TVs to 100 of its properties by the end of 2015, and to nearly all of its more than 300 properties in the U.S. by the end of 2016.

Marrriott says Internet TVs have been installed at:

• New York Marriott East Side
• San Jose Marriott
• Princeton Marriott
• Newport Marriott
• Dallas/Fort Worth Marriott Solana
• Bethesda Marriott Suites

The next properties to get Internet TVs are:

• Marriott Marquis Washington, DC
• San Francisco Marriott Marquis
• Atlanta Marriott Marquis
• Dayton Marriott
• San Juan Marriott Resort & Stellaris Casino
• Anaheim Marriott

The company says guests staying multiple days only have to login to their accounts once throughout their stay. When guests checkout, it says all account information is wiped clean from the televisions.

Marriott said a report from Accenture, showing more than half of U.S. consumers watch Internet television, was persuasive in moving it in that direction. In testing at hotels, the number of guests using any of the Internet apps on the guest room televisions was as high as 26%, depending on the property.

You've got to hand it to Redbox. It thinks big. And right now it's thinking of big price increases in the DVDs, Blu-ray Discs and videogames it rents from its familiar big red boxes.

On Dec. 2, the daily price of a DVD rental will go from $1.20 to $1.50 and a Blu-ray Disc will from from $1.50 to $2. In January, daily rental rates for videogames will go from $2 to $3. 

“With new-release movies for $1.50 a day, Redbox remains the best value in new-release home entertainment,” CEO Scott Di Valerio said in a statement. “The pricing adjustments announced today will allow Redbox to continue to offer consumers high quality movies and games while making investments to enhance the customer experience.”

The company said it has conducted extensive market testing over the last few months and is confident the increased revenue will exceed any losses in market share. However, Redbox caters to lower-income customers who can't afford cable or satellite hook-ups, so it's always possible the big red box may hit a big red wall if it gets too aggressive with its pricing. 

Redbox operates vending kiosks at more than 35,000 locations, including gas stations and grocery stores, as well as at some Walgreens, Walmart and McDonald’s locations.

The company says that besides raising prices, it is starting a new "recommendation engine" that will help customers find movies that they're likely to enjoy. It's said to be similar to the algorithms used by Netflix, Amazon and other companies that offer suggestions based on past buying habits. 

There's just one thing that keeps many consumers from giving their cable TV service the heave-ho. And that, of course, is HBO. But that won't be true much longer.

HBO CEO Richard Plepler said today the premium pay-TV channel will launch a standalone, online streaming service next year, aimed at the 10 million people who have broadband but don't subscribe to a cable TV service.

“That is a large and growing opportunity that should no longer be left untapped,” he said, according to The Wall Street Journal. “It is time to remove all barriers to those who want HBO. So, in 2015, we will launch a standalone, over-the-top, HBO service in the United States.”

Plepler was speaking at a Time Warner investor day meeting. He didn't offer any details about pricing.

While this will be good news to many consumers, it's likely to make the day a little more dreary over at Comcast, Charter, Cox, et al. It puts Netflix on notice that it has some serious competition. Amazon has produced a few standalone shows but Netflix has basically had the premium content field to itself until now.

Whatever your personal opinion of the latest brouhaha between Netflix and Verizon (which we'll explain in a moment), there's probably a high correlation between that and your opinion regarding the “net neutrality” debate.

If you support “net neutrality,” the idea that Internet providers (like Verizon) should treat all content equally regardless of its source (like Netflix), chances are you side with Netflix over Verizon in this latest dispute.

But if you oppose the idea of net neutrality — most likely, because you say “Streaming sites like Netflix and YouTube consume the majority of broadband bandwidth, so it's only fair they should pay extra to ensure their content comes through in a timely manner” — then your sympathy likely lies with Verizon.

However, if you counter “It's not Netflix or YouTube using bandwidth — it's their viewers, i.e. Internet customers, who are already paying Verizon or Comcast or whoever for their Internet connections,” then you again likely favor net neutality and sympathize with Netflix, whether you're a subscriber or not.

Jerky movies

Here's what's going on: certain customers have apparently complained of low speeds on their Netflix accounts, because Netflix started sending customers messages blaming those slow speeds on Verizon. Verizon got upset and sent Netflix a very long cease and desist letter demanding it stop blaming the problem on Verizon.

Netflix responded with a very brief letter refusing to comply:

This is about consumers not getting what they paid for from their broadband provider. We are trying to provide more transparency, just like we do with the Netflix ISP Speed Index, and Verizon is trying to shut down that discussion.

We are testing ways to let consumers know how their Netflix experience is being affected by congestion on their broadband provider’s network. At present, we are testing in the U.S. in areas serviced by many broadband providers. This test started in early May and it is ongoing.

Our test continues.

Last February, Netflix agreed to pay extra money to Comcast, to ensure that Netflix customers with Comcast connections would not suffer from slow ones.

And Netflix recently made a similar deal with Verizon, meaning that in theory, Verizon customers who stream Netflix videos should enjoy nice seamless connections.

Whether this recent Netflix vs. Verizon skirmish is in any way related to (or in violation of) such agreements remains to be seen.

You have to admit it -- at $7.99 or so a month for most subscribers, Netflix is a bargain. Don't believe it? Look at your cable bill and compare it to Netflix -- $110 or so versus less than $10. 

Given the disparity, Netflix is thinking it's time to raise the rate a dollar or so, at least for new customers. After all, with 48.4 million subscribers, it has a pretty solid base of subscribers.

Those current subscribers won't see an increase for another year or two, according to Netflix CEO Reed Hastings, who reported higher earnings and subscriber growth for the first quarter. 

Netflix has been holding the line on prices while continuing to spend heavily licensing existing TV and movie fare and producing its own original series, including the smash hits "House of Cards" and "Orange Is the New Black."

Three years ago, the company split its mail and streaming businesses, resulting in a large increase for customers who wanted both, generating serious pushback from consumers. 

Hastings said proceeds from the higher subscription fee will be used to help pay for more original content. 

Opposes Comcast merger

Hastings also announced his opposition to Comcast's proposed merger with Time Warner, saying it would give Comcast the ability to control broadband to a majority of American homes. He said Comcast is "already dominant enough."

Netflix and other content providers have been at war with cable and telecom companies that have sought to extort money from the program providers in exchange for not throttling their access to viewers.

“The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their consumers,” he said in a letter to shareholders.

Ever heard the saying “Don't call us; we'll call you?” In everyday social situations that is an appallingly rude attitude to take. But on the Internet it's basic self-preservation — assuming you change “call” to “contact.”

For example: if you are a Netflix customer, it's perfectly fine if you wish to contact Netflix because you think you're having a problem. But if Netflix contacts you about a problem — don't believe it. Chances are it's not really Netflix, but a sleazy would-be thief impersonating Netflix in the latest attempt at a phishing scam.

Security blogger Jerome Segura of Malwarebytes discovered the latest Netflix-flavored phishing scam, which at heart is the same as any phishing attempt: a would-be hacker poses as a business or financial institution – Netflix, Microsoft, your bank or cell phone company or anyone else – and asks for your account numbers, passwords and other information identity thieves find useful.

Hacker bait

Segura pretended to “fall for” the Netflix phishing scam, with a computer he'd specifically set up to be used as hacker-bait. (Which is another way of saying: do not try this at home, or at work, with your own computer.) The phishers, whose IP address traced back to somewhere in India, took full control of Segura's computer and stole copies of files with names like “Banking2013” -- nothing any legitimate Netflix IT guy would need to see, in other words.

Segura posted screenshot highlights, along with a full seven-minute video of the phishers' trip through his bait-computer files, on Malwarebytes.

But suppose that you, unsuspecting, received the same bait email Segura got, and furthermore suppose you decide to ignore the “Don't call us; we'll call you” rule of Internet scam protection. Or maybe you're just legitimately scared – “Gee, maybe there is something wrong with my Netflix account, and the company really is trying to warn me about it!” What can you do to protect yourself?

Easy: if you want to contact Netflix (or any other company in existence) because you're worried about a possible warning email or phone call or text message allegedly from that company, do your own independent online search for the company's contact information, rather than accept the information offered in the email.

When Segura got that fake Netflix phishing message, for example, it urged him to call a certain 1-800 phone number, allegedly for Netflix's “Member services.” But if you go to Google and search for “Netflix member service number” (without quotation marks), you will discover that, in Netflix corporate terminology, there is no such thing as a “Member service number,” although there is a “Customer service number,” 1-866-579-7172, which is completely different from the number the phishers asked Segura to call.

It was just yesterday that Netflix agreed to pay an undisclosed fee to Comcast to ransom its video streams and now Verizon and AT&T have their hands out.

The big telecom and cable companies have been keeping their fingers on the spigot lately, throttling Netflix as part of a scheme to create a new revenue source.

Carriers have not previously charged content creators for what would once have been called "trunk" traffic, being content merely to charge for last-mile connections. But with Netflix accounting for more than half of overall traffic on the Internet at peak viewing times, the temptation is just too great.

Verizon CEO Lowell McAdam and AT&T spokesman Mark Siegel both say that their companies are talking with Netflix to, as Siegel put it, "establish a more direct connection between our networks," Reuters reported.

Netflix didn't directly confirm that talks but said it talks to major ISPs all the time "to make sure Netflix users get the best possible experience."

A dangerous precedent

It sounds harmless to slap a surcharge on Netflix which is without question one of the biggest if not the biggest user of broadband capacity but it also establishes a precedent for charging content providers based on how much bandwidth they consume.

What does this sound like?

If you said "long distance," you're right. The legacy telephone companies -- Verizon and AT&T -- have nightly dreams in which they magically find a way to reimpose time- and distance-based charges on everyone who uses the Internet.

It's not much of a stretch to say that all content providers should pay for the bandwidth they burn up each day, which would pretty much be the end of the Internet free-for-all, many analysts think.

There's this long-standing theory that the Internet is a miracle of free enterprise, a parallel universe in which the most innovative products and services just naturally rise to the top.

No one likes this theory better than the cable and telecommunications company, since they own the "pipes" through which flow the bits and bites that make up the Internet. For years, they have been enjoyed a steady geyser of cash from home and business customers signing up for "last-mile" Internet access as well as telephone and cable TV service.

Their only frustration has been that they have not been able to get their mitts fully into the pockets of what for lack of a better term are called the "content providers" of the Web -- Google, Netflix, Amazon and so forth. 

In another parallel universe, of course, it works just the opposite. The cable and telephone companies pay the TV stations and cable channels for their programming. After all, the reason people subscribe to cable is so they can watch "Breaking Bad" and other classics of Western civilization, no?

So why wouldn't Verizon and Comcast pay Google and Netflix for putting up all that great content that people are willing to pony up for? After all, without content, who would want a broadband Internet connection?

Hand on the spigot

Ah, but the telecom giants don't see it that way -- and the reason is that they have their hand on the spigot that controls the flow of products. Turn the spigot counterclockwise a few cranks and things start to slow down. Instead of watching "House of Cards" unfold, we watch it freeze while the little "Loading" box grabs the screen. (There is a more vulgar way of expressing what the telecom companies have their hands on but we'll stick with the spigot analogy for now).

The Federal Communications Commission (FCC), to its credit, has been trying to codify the "Net Neutrality" principle, which roughly holds that products flow freely across the Web, with the end user picking up the delivery tab and the producer paying the cost of uploading ("shipping") to the Web. The "peering" -- as it's called -- that goes on in the guts of the Internet, as companies hand off online traffic to one another, has typically not involved payment from one carrier to another.

That's all changing as the telecoms and cable companies see their dreams of becoming content titans dashed on the shores of their ineptitude. So if they can't be Rolex-wearing Hollywood executives, a suitable consolation prize is squeezing content providers and consumers to the maximum extent possible.

Besides reflecting the human propensity for greedy behavior, this reflects the reality of consolidation, exemplified most recently by the proposed Comcast acquisition of Time-Warner Cable.

Netflix pays up

All of which is a long-winded way of saying that it was shotguns across the table for a few minutes as each side tried to stare down the other. But as Comcast twisted the spigot a few more turns, Netflix blinked and agreed to ransom its content.

No one is saying how much Netflix is paying but you can be sure there are several zeroes involved.

It's always possible the FCC will manage to get a handle on all of this and impose some regulations that would retain the free exchange of bits that have made the Internet the hotbed of innovation it has become. But big bucks are involved and lobbyists are out in force, circling the wagons and working to keep the telecom and cable companies living the good life to which they've become oh so accustomed.

You could see this coming. Like a, well, house of cards, the Internet is a complex structure that works surprisingly well, considering how many players are involved in stitching the whole mess together from one millisecond to the next.

There's been this little issue called "net neutrality" that's been around forever but of interest only to the technocentric. It's about to become a lot more interesting to everybody.

Here's why: Irked by the success of Netflix and the amount of traffic it pours onto the net each day, Verizon and other carriers are demanding that Netflix pay them a premiuim for transmitting that traffic. A report in today's Wall Street Journal quotes Netflix as saying its average prime-time speeds dropped by 14% last month, just as the hit series "House of Cards" returned for its second season on Netflix.

Being throttled?

Verizon customers who pay $70 or more for "unlimited" FiOS broadband Internet service are becoming very familiar with the little "loading" graphic that appears much more frequently lately, when the video and audio pause because of network congestion -- or, as conspiracy theorists suggest -- purposeful throttling.

One longtime FiOS customer in the Washington, D.C., area said he had never seen the "loading" graphic on Netflix until this month. 

Why now? One potential explanation is that a federal appeals court ruled last month that the Federal Communications Commission (FCC) does not have the authority to impose net neutrality rules requiring that Verizon and other carriers treat all traffic equally.

The idea behind the Internet when it was founded was that everyone could transmit and receive data on an equal basis, limited only by the speed of their local connection to the Internet. 

Disappointed Dilberts

Telephone and cable companies -- who once imagined that they would be the movie and entertainment titans of the future -- find this irksome and have been arguing that major content distributors like Netflix should pay more for using so much bandwidth.

The content distributors reply that they pay millions of dollars for their Internet connections, while consumers collectively pay millions for their local connections through Verizon and other companies and that the "backbone" costs are the responsibility of the carriers. (This is vastly oversimplified but a more detailed explanation quickly becomes yawn-inducing).

An argument conveniently overlooked by the carriers is that if Netflix suddenly went away, most of its subscribers would likely switch to Hulu, Amazon Prime and other video distributors, generating just as much traffic as currently exists but perhaps spreading it out over more distributors.

While technically, backbone issues aren't covered by net neutrality -- which formally applies only to "last mile" service -- the debate over who pays for heavy video usage is only likely to get worse and seems certain to play a role in the Comcast-Time Warner merger, which would create a broadband collossus with a great deal of power over what consumers are able to see ... and how many "loading" graphics they have to endure in the process. 

It’s a fact of life that a person who reaches a certain age will start feeling strange new urges and desires — specifically, the desire to bore the heck out of younger people via long-winded tales on the theme, “We sure had it rough compared to kids these days.”

This is easy for folks who grew up during truly tough times like the Great Depression or World War Two, but later generations are reduced to complaints like, “When I was your age, if we wanted to watch a movie for the second time we had to wait up to four minutes for the videotape to finish rewinding.”

Luckily, Netflix provided new old-times complaint fodder this week, in a press release titled “Netflix Declares Binge Watching is the New Normal,” a long, detailed and statistics-packed article that boils down to “People who rent an entire season of a TV series they like rarely limit themselves to watching only one episode at a time.” (Note to young people: you don’t appreciate how good you have it. Why, when we were your age, we couldn’t watch previous seasons of TV shows at all unless the reruns went into syndication — and even then, we were lucky if we could see one episode per day.)

"Binge" defined

Anyway, according to the press release (which in turn discussed the results of a survey of TV-viewing habits): “A majority (73%) defined binge watching as watching between 2-6 episodes of the same TV show in one sitting.  And there's no guilt in it.  Nearly three quarters of TV streamers (73%) say they have positive feelings towards binge streaming TV.”

If watching a mere two episodes in a single sitting entails “binge” watching of a show, then it’s no surprise the majority of people with DVDs of TV shows deem themselves “binge” watchers.

In fairness, though, there was more to the press release than standard pro-Netflix advertising. The company spoke with a cultural anthropologist named Grant McCraken, who concluded that, due to changing times and the stresses of daily life, especially in this economy, “I found that binge watching has really taken off due to a perfect storm of better TV, our current economic climate and the digital explosion of the last few years. But this TV watcher is different, the couch potato has awoken. And now that services like Netflix have given consumers control over their TV viewing, they have declared a new way to watch. …. Getting immersed in multiple episodes or even multiple seasons of a show over a few weeks is a new kind of escapism that is especially welcomed today.”

So, surprise: TV viewers with the option to choose what they watch, when they watch it and how many episodes they watch at once turn out to adopt viewing habits very different from TV viewers back in the days when your viewing options were limited to “whatever’s airing on TV right now.”

In today’s changing times you might not have control over the big things in life, like your job, family and finances, but thanks to services like Netflix you do have control over what you watch on TV.

Netflix has a new look -- one it hopes will better lend itself to viewing on TV screens instead of smaller tablet and smartphone screens. 

"Our members collectively watch more than a billion hours of Netflix a month, most of that is on a TV," said Netflix Chief Product Officer Neil Hunt. "This is the biggest change to the Netflix experience on televisions in our history, making it even easier to find something great to watch on Netflix."

The new design was created specifically for the big screen, featuring multiple cinematic images for each title along with a new, snappy description and more personalized detail on why Netflix suggests it, the company said. 

The new format also lists Facebook friends of each subscriber who have already watched each programme, if a subscriber has paired their Netflix account to the social network.

The new TV experience is delivered by a new Netflix software platform that runs efficiently on various devices, from low-powered set top boxes, recent model Smart TVs and Blu-ray players to high-end game consoles. Previously each device had its own Netflix experience, which meant features took longer to roll out across devices. The Netflix website remains unchanged.

"This new software platform will allow us to innovate even faster and continuously improve the Internet television experience for our members across multiple devices," said Hunt.

The new format launches today and will be rolled out to all members globally within two weeks. Devices that will support the new experience include PlayStation 3, PlayStation 4, Xbox 360, Roku 3, newer Smart TVs and recent Blu-ray players. Additional devices, including other Roku boxes, will be added at a later date.

Eating cable's lunch

Netflix, whose share price has more than trebled this year, is fast becoming a major threat to pay-per-view channels and premium cable channels. It already has than 30 million subscribers in the U.S. - surpassing that of HBO's older pay-per-view channel - and 1.5 million in Britain.

Netflix and other streaming video services are in the right place at the right time to grab the loyalty of younger consumers. Millennials -- the 18-to-24 group -- are dropping their TV remote controls at a faster rate than any other demographic, according to new research expected to be released this week by digital ad firm YuMe and the IPG Media Lab, Online Media Daily reports.

The Millennials are making video viewing a more personal experience, preferring tablets and smartphones to large-screen TVs, the study finds; they consume the majority of their video content via smartphone (about 20%); just over 15% via tablet devices; just under 15% via PC; less than 10% via live TV; and less than 7.5% via DVR devices.

Viewers once waited anxiously for the season premier of a much-loved TV series. But subscribers to online video streaming services now wait for an entire season, in one gulp.

Such was the case Sunday when Netflix debuted Season Four of the groundbreaking comedy series, "Arrested Development." The series, cancelled by Fox in 2006, was brought back to life by Netflix, which released the entire season instead of dribbling the episodes out one per week, as network television does.

Netflix had been offering the first three seasons for some time, helping to grow the audience for what is becoming a cult classic. Aside from being a risky venture – producing original content – Netflix chose to revive a series that has been dormant for seven years.

White hot hype

The gamble paid off initially. The return of "Arrested Development" generated white hot hype, including a marathon all day Saturday on the cable channel IFC. However, the reviews of season four of the series – and a sizable chunk of viewers has already viewed the entire season – have been lackluster to say the least.

So much so that it affected Netflix stock this week. Shares were pummeled, losing more than six percent of their value. Market analysts were counting on the return of "Arrested Development" to spur sales of Netflix subscriptions. The company may enjoy a pick-up in business but the Street has decided that is far less certain.

But Netflix appears undeterred. In interviews this week, company CEO Reed Hastings opened the door to produce additional seasons of "Arrested Development," but said it will ultimately be up to the cast.

Whether Netflix brings "Arrested Development" back for an encore or not, it appears to be committed to producing original content, with Hastings telling one interviewer that his company could be the next HBO.

House of Cards

In January, Netflix launched "House of Cards," an original series starring Kevin Spacey and Robin Wright as a Washington, D.C., power couple, doing whatever it takes to get to the top. The series appears to have been both a critical and popular success, though Netflix doesn't release viewership data.

Moving into original content is actually a self-preservation move since Netflix faces more competition for content. In 2011 Starz Entertainment announced it was not renewing the lease on its movie catalog because Netflix didn't charge enough for access to its content.

Now, there are more TV shows than movies on Netflix's streaming service and the new content appears to have found a ready audience, though not all viewers are sold. Linda, of Atlanta, Ga., says the movies she wants to watch are not available for streaming.

Not so good reviews

“In fact, all I can find is 2-3 year-old first run movies and occasional newer movies that must have bombed out in theaters before anyone ever heard of them,” she writes. “Sorry. Not worth it.”

“Netflix is affordable and it has many shows and movies for everyone,” writes Dina, of Brooklyn, N.Y. “However, they neglect some of their categories such as Anime. They need to fairly add new shows in all sections.”

“We are so disappointed with the selection of old movies and TV shows available,” Debra, of Minneapolis, Minn., chimed in. “These are not second run in our view, more like fourth, fifth or worse.”

It's not that Netflix is cheap. The company would surely like to purchase access to more movies. But with Amazon Prime and Hulu Plus becoming bigger competitors, and distributors reluctant to provide content for a service that costs just $8 a month, the content is increasingly hard to come by.

Netflix will pay $9 million to resolve a privacy case that began in 2011. U.S. District Court Judge Edward J. Davila in San Jose, Calif., has granted final approval in the case that charged Netflix with retaining consumers' viewing histories and other personal information.

Plaintiffs Jeff Milan and Peter Comstock filed suit in early 2011 alleging violations of the Video Privacy Protection Act (VPPA), recently amended to allow wider sharing of viewing information. A wave of similar suits followed and the court consolidated the cases. After court-supervised mediation, the parties reached a settlement, which the court has now approved.

Those covered by the settlement include all Netflix subscribers as of the date of the preliminary approval, a group estimated at more than 62 million. Because of the unwieldy size of the class, individual class members will not receive any payment. Named plaintiffs Milan and Comstock will each receive a $30,000 payment and, after payment of court costs, attorney fees, etc., any remaining funds will go to nonprofit orgniazations and programs promoting consumer education and privacy protection.

Minimal recovery

"In light of the minimal monetary recovery" that individual class members would receive, the court agreed that the lump sum payments to further consumer education about privacy issues was an appropriate solution. Details can be found at www.videoprivacyclass.com.

This is what is known as a "cy pres" remedy, a structure that gives class members an indirect benefit rather than a check or other direct direct personal benefit. It is frequently used where proof of individual damage would be difficult. In this case, for example, it was not conclusively shown that any of the viewing histories or other data were distributed to third parties in a way that made individual users identifiable by name.

A similar settlement was used in privacy litigation involving Google Buzz. In that case, it was argued that tens of millions of Gmail users' personal information was wrongly disclosed when Google introduced its now-defunct Buzz social networking service. In that case, the settlement included an $8.5 billion payout to nonprofit groups working to further consumer privacy protection and security.

Besides making the payment, Netflix has agreed to "decouple" viewing histories from customers' identification and payment methods within one year of the settlement.   

Netflix is one of those ideas that has turned out to be so good that everyone else wishes they'd thought of it. Now, Verizon and Redbox are trying to take it one step further, with a new service that offers streaming movies and rental DVDs.

Oh wait, that's what Netflix does.

OK, let's try it again: Verizon and Redbox are offering a new service that offers streaming movies and DVDs you can rent from one of  those 35,000 Redbox vending machines.

But although it is starting out with a lot of vending machines and a lot of network capacity, the new venture -- called Redbox Instant by Verizon (catchy, eh?) -- is kind of short of movies. It only has 4,600 streaming titles, far fewer than Netflix, Amazon and Hulu Plus, the household names in the field.

But never mind that. The company says it's not trying to compete with Netflix, which offers not only movies but also thousands of TV shows old and new, and even a few Netflix-produced original series.

Redbox Instant will only offer movies. Old movies. New movies. Just, you know, movies. Many better titles are only available at the kiosks, which will take a little getting used to. 

It will cost you $8 a month -- which, coincidentally, is what Netflix charges -- to be part of this grand experiment. For that you can stream as many movies as often as you can stand it and also get credits good for four DVD rentals at one of those kiosks. Kick in another buck and you can upgrade to Blu-ray rentals.

Verizon and Coinstar -- Redbox' elegantly-named corporate parent -- are high on the idea anyway.

“When you consider the core elements the parties bring to this venture – our powerful brands; our national rental kiosk footprint; our anytime, anywhere network presence; and our mutual commitment to customer-focused innovation – it’s clear that Verizon and Redbox are a powerful entertainment team,” said Bob Mudge, president of Verizon consumer and mass business markets.

The companies have been working on this for the last year or so and they say it's finally ready for primetime at RedboxInstant.com.

So, would you like to see what your Facebook friends are watching on Netflix? How about letting your FB buddies see what you're watching?

That sounds spooky to a lot of people but it's apparently something Netflix customers have been saying they want, and now it's here. 

Netflix announced today that its U.S. members will be able to connect to Facebook and agree to share favorite TV shows and movies on Netflix. The company will be turning on the feature "over the coming days" and expects that all U.S. members will have access to the social feature by the end of the week.

"There are few better ways to find a movie or TV series you'll love than hearing about it from your friends," said Tom Willerer, vice president of product innovation at Netflix.  "Facebook already makes it easy for our international members to connect with friends over TV shows and movies and we're thrilled to now bring this experience to our U.S. members."

The feature has been available internationally for quite some time but, until recently, it was prohibited in the U.S. by something called the Video Privacy Protection Act, enacted in 1988 to keep prying eyes from finding out what movies consumers rented from Blockbuster and other video rental stores. It was amended by Congess last year after some intensive lobbying by Netflix.

The new Netflix/Facebook integration lets Netflix members see what their friends have watched by adding new "Friends' Favorites" and "Watched by your friends" rows to Netflix. Members also automatically share what they watch only within Netflix and can optionally share what they've watched to Facebook, Netflix said.

"People naturally talk about TV shows and movies and love to share their experiences," said Willerer. "Through the Netflix/Facebook integration we want to let Netflix members express themselves on Facebook and provide a digital version of the proverbial water cooler."

"By default, sharing will only happen on Netflix," Cameron Johnson, director of product innovation at Netflix, wrote in a blog post. "You'll see what titles your friends have watched in a new 'Watched by your friends' row and what they have rated four or five stars in a new 'Friends' Favorites' row. Your friends will also be able to see what you watch."

Johnson provides a step-by-step guide in this video:

Netflix had better watch it. There may not be room in town for both Netflix and Amazon Prime. Prime today got the drop on Netflix as it scored an exclusive deal to distribute a couple of FX shows -- "Justified" and "The Shield" -- online.

Amazon said it has reached a content licensing agreement with Sony Pictures Television to make Amazon Prime the exclusive location to watch FX's "Justified" and "The Shield."

Prime subscribers can watch the shows for free, while other Amazon visitors can purchase and download episodes for $1.99 apiece.

"Justified" is a gritty series bult around the deeds and misdeeds of Raylan Givens, a U.S. Marshal based in the backwater reaches of Kentucky, with Timothy Olyphant of "Deadwood" fame playing the lead.

It's been one of the most watched shows on Amazon Instant Video, where customers can purchase and download episodes for $1.99 each, and will now be available to Prime members at no additional cost, the company said.

In addition, Prime Instant Video will add the inner-city Los Angeles crime drama "The Shield"to its catalog.

“Justified"and "The Shield"are two fan favorites on Amazon,” said Brad Beale, Director of Digital Video Content Acquisition for Amazon. “We’re consistently looking for ways to make Prime even better – and one of the ways we’re doing that is adding shows like these that we know customers love.”

Amazon stole some thunder earlier this month when it acquired exclusive online rights to the PBS hit "Downton Abbey." 

While all eyes were on Matthew speeding home to Downton Abbey, Amazon was locking down the butler's pantry and tying up exclusive streaming rights to the blockbuster British soap opera.

Abbeyphiles may find it hard to accept but, quite soon now, they'll not be able to watch missed episodes, or wallow repeatedly in their favorite scenes, on Netflix or on the show's own website.

Amazon Prime already has Seasons 1 and 2 of the series, which airs on PBS in the United States and will have the just-concluded Season 3 beginning in June.

What's perhaps more significant, is that it will have exclusive rights, meaning that it will be the only legal source for Downton streaming. While the first season is still on Netflix, it won't be for much longer. 

"Later this year, no digital subscription service other than Prime Instant Video will offer any seasons,” Amazon smirked.

The series, which for some reason has enormous appeal to Americans nostalgic for a past they never had, will definitely be around for at least one more season and may even go into a fifth season unless the populace comes to its senses before then.

Mirror image

Netflix has been awash in kudos over the success of its "House of Cards," a smash series that is sort of the mirror image of Downton Abbey. Instead of royals and their servants overcoming their baser instincts as they move regally towards equality, justice, love and what have you, House celebrates the drunken, seedy, corrupt and depraved atmosphere that Americans believe prevails in Washington, D.C.

It's a litte hard to tell which of these is the greater fantasy although those who have lived and worked in present-day Washington will tell you that, while the series may be entertaining, it is -- shall we say -- a bit of a stretch. Since no one we know of spent the early 20th Century in an English manor house, we're not able to gauge their opinion as to which series is the most far-fetched.

For those who have been unaware of Amazon's progress towards digital hegemony, the Downton Abbey coup may blow off their blinders. Amazon has been spending big bucks to acquire recent movie releases and TV series and many consumers would say it already has a more compelling, though smaller, catalog than Netflix.

The truth, however, is that the true film or TV addict needs both, since there is going to be less and less duplication as both players strive to cut exclusive deals for top content. Neither service is expensive but as anyone who has read his credit card statement recently will tell you, little things add up.

Netflix describes its price as $7.99 per month for streaming -- $96 a year, in other words. Amazon's streaming service is mostly free, although some top releases carry an extra charge. Amazon prices it at $79 a year, which sounds like a lot more than $7.99 a month.

Of course, if you're still paying attention, you'll know it's actually $16 less per year. 

Not only that, but the $96 a year for Netflix gets you video steaming. Period. The $79 for Amazon Prime gets you video streaming plus free shipping on most Amazon purchases and other goodies from Amazon's vast array of products and services.

Of course, you can still watch over-the-air TV -- you know, Channel 5 and so forth -- for nothing, other than the constant array of commercials  and fund-raisers. This comes as a shocking revelation sometimes and the occasional adolescent will assure you that watching "free TV" must be illegal. You might want to explain it to them someday when you're not polishing the silver or doing backroom deals with Congressmen.  

OK, so give Netflix credit -- it pioneered DVD movie rentals by mail, then morphed itself into the top video-streaming service, it's adding original content faster than anybody and laying out big bucks to license more content. 

But none of that does much good if the video streaming works poorly or not at all, as seems to be the case for a growing number of consumers.

"I hate that every five minutes or so it stops! I have to reload it at least five times while watching something," said one angry viewer in a ConsumerAffairs post. 

Ffion of Flintshire, UK, has the same gripe: "We are in the middle of watching a film and it freezes and doesn't load. It's not just one film, but lots. It's very annoying and loses the place you are at by skipping parts you haven't watched, or rewinding and replaying parts we have."

The dissatisfaction comes from far and wide, not just from isolated hamlets where one might expect Internet connectivity to be on the slow side. We were reminded of this just the other night when, like everyone else in the Washington, D.C., area, we tried to watch "House of Cards," the original Netflix production that shows the seamier side of D.C. (as opposed to the shiny side).

It began loading normally on our superfast FiOS connection (which normally tests out around 35 Mbps), showing an initial speed of 18.1 Mbps. But a few minutes into the first episode, as Kevin Spacey uttered one of his many asides, the image froze, and stayed frozen for a solid six minutes. This happened repeatedly and, after awhile, began to become tiresome.

Everything else worked

Admittedly, "House of Cards" was quite a hit around the country, not just in D.C., so we initially wrote it off to too many Congressmen sitting with a bourbon bottle in front of the TV that night. In frustration, we flipped over to Amazon Prime and watched "The Lincoln Lawyer" without a blip. Just the way Amazon used to work.

In the next room, CNN was yakking away normally on a second TV, upstairs  Los Angeles' KUSC-FM was playing normally via the Internet and across the room from the faltering screen displaying Netflix, my laptop was working perfectly as I skimmed through the ConsumerAffairs database, looking at hundreds of Netflix gripes -- all this on the same FiOS connection.

Technically, it's no small feat to serve individual video streams to millions of users but that doesn't mean that it's OK for it not to work. Customers are paying for streaming video and it's streaming video they ought to get. If there are problems, Netflix should admit they exist, fix them and, maybe just maybe, offer refunds to those who did not get the service they are paying for. 

There was a time not long ago when Netflix sent me an email each time I watched a streaming video selection, asking me to rate the quality of the transmission. It was always perfect. 

Now that it is seldom perfect, I no longer get the email surveys. Even more baffling, I emailed the Netflix public relations department to ask about the streaming issues and got zero in the way of replies -- not even an acknowledgement of my inquiry. It's kind of typical for big companies to boast about their accomplishments while stiffing anyone who asks about their problems, but that doesn't make it acceptable. 

It's not just pesky consumer reporters who get short shrift, customers say they don't get very far either when they try to report a problem.

"When you try to contact customer service, they simply try to blame the Roku box (which is what we stream on) or they say they are 'working on it,'" said a consumer in Hawaii. "I just had a chat session where I complained about the streaming being frozen, and the lady told me that the issue was cleared up yesterday, so that it must be my Roku."

A few minutes later, the customer service person said she had been "resolving this issue all day," the consumer said.  "Wait a minute, didn't she just tell me that the issues were all cleared up since yesterday? Yeah, so they clearly have geniuses working the chat lines for customer service."

What to do

So what's a consumer to do? Well, although Netflix could make it a bit more obvious, there is a way to report problems with video streaming. 

Log into Netflix and click the "Your Account" button in the upper right. Then under "Your Streaming Plan," click on "See Instant Watching Activity." This will produce a list of your recent viewings, with a "Report Problems" link for each item. 

Whether reporting the problem will accomplish anything is hard to say, but it can't hurt. 

It's also a good idea, once again under "Your Streaming Account," to click the "Manage Video Quality" link and choose the download speed that best matches your Internet connection. Choose "Good" if you have a DSL or other slow-as-mud connection, "Better" or "Best" for cable-quality or FiOS accounts.

Netflix does have a support page that discusses streaming problems, although we found it by accident through a search engine, not through the navigation on the Netflix site. It's at http://support.netflix.com/en/node/230#gsc.tab=0  Some of these tips might help but when other streaming services, like Amazon, work pefectly while Netflix falters, that would seem to rule out most problems on the consumer's end.

But not everyone's having problems. We heard from Lola of Lima, Peru, who said: "Mmm...we just finished watching House of Cards and had very few problems. Loved the series, btw."

I’m a 70s baby.

So that means when it came to television my eyes were glued to shows like “All in the Family,” “Good Times” and one of my all-time favorites, the “Brady Brunch.”  

One of my favorite episodes of the “Brady Bunch” is when the Brady family goes  to Hawaii and some of the characters experience bad luck for wearing a necklace with a small statue of a tiki dangling from it.

The episode is a three-parter and I remember as a kid nearly collapsing in disappointment when I saw those evil white letters spread across the screen that said “To be continued.”

And did I get to see the following episodes the next day or even later on that week?

Nope, just like everyone else I had to wait an entire week to see what would happen to Greg, Peter and Bobby when they went to that spooky burial ground to undo the curse of the tiki.

Being kept in suspense is the one thing that I really disliked about that episode.

No waiting

Well today, consumers can watch TV in an entirely different way and almost gone are the days when viewers have to wait an entire week to catch episodes of their favorite shows.

With services like On-Demand, Hulu, Netflix, Amazon Prime and a bunch of other companies that offer streaming, people have nearly total control of what they watch and when they want to watch it.

How many times have you heard about a groundbreaking new show through the media or through your friends, but felt no sense of urgency to catch the series on the night it airs, because you know that you can watch it anytime you want.

So instead of adjusting your schedule to watch the HBO show “Girls” for example, you decide to stream the entire first season and watch it in one day, which is the way many folks view programs these days, and the trend isn’t likely to reverse itself anytime soon.

To take advantage of this new normal, streaming companies like Netflix have moved into the business of creating their own television shows and offering entire seasons for viewers to watch instead of rolling out episodes one at a time.

Original content

The company released its first original series “House of Cards” this past Friday at midnight, starring Kevin Spacey, and the company is choosing to offer all 13 episodes at once to viewers, which is a huge attempt to not only give many consumers what they want, but also to move Netflix from being just a distribution company to being a hub for original content.

The company says that giving consumers the ability to access entire seasons up front puts Netflix in a better position to compete with those cable networks that are also moving towards making streaming a bigger part of their business.

“Part of our goal is to become like HBO faster than HBO can become Netflix,” said the company’s CEO, Reed Hastings, in a published interview. “Perhaps people saw us in the past as a distributor or aggregator. We want to have an experience that cannot be replicated by our competitors.”

In a seperate interview with Bloomberg, Hastings said he believed that offering entire seasons to consumers right off the bat will be the complete norm in the next couple of years, and he says when people look back; they’ll ultimately recognize that Netflix was responsible for sparking the change.

On the cusp

“We’re on the cusp of something that will change television forever,” he said. “Our view is that over the next couple of years as Internet TV really grows, people will look back and say that this was the turning point.”

Also, to many fans' liking, Netflix will be re-releasing the comedy series “Arrested Development” starring Jason Bateman.

The show was a cult favorite for three years on the Fox Network from 2003 to 2006 and Hastings believes releasing new episodes is just the beginning of consumers choosing streaming companies over cable television.

However some may disagree with Hastings because networks like HBO and Showtime have a lot more muscle in terms of overall reputation and just being in the consciousness of consumers, but Hastings believes eventually Netflix will be able to compete neck and neck with the many cable giants and be able to offer consumers just as much original content.

“Relative to HBO, we’re much deeper on the tech side, and relative to Amazon, were much deeper on the creative side,” he said.

“We’re able to do more and more calculations and big-data statistics so that what we do is represent Netflix more and more as a place where you come for relaxation escape.”

Rerun city

Some might say that creating original content is exactly what’s needed for Netflix, as the company’s image has taken a few hits lately, namely because of its reputation for offering old movie selections in its streaming packages.

“We just upgraded to the Netflix instant streaming service,” she wrote in a ConsumerAffairs posting.

“Went through lots of technical hoops to make it happen (purchased a new Netflix ready Blu-ray player, etc.) We knew there were other ways of doing it.

"We were just trying to make our movie watching experience as easy as possible. We were so disappointed with the selection of old movies and TV shows available! These were not second run in our view, more like 4^th 5^th or worse," she wrote.

So it will be interesting to see how successful Netflix will be at re-strengthening its image among consumers and also how successful it will be in changing the way other companies and networks offer their programming.

Because a person should never have to wait an entire week to watch the conclusion of a multi-part episode, especially a little kid who just wanted to see how the Brady kids made out with the tiki necklace and that darn  ancient curse.

Netflix, which helped seal the doom of your neighborhood video store just a few years ago, now has Amazon nipping at its heels. Will it go the way of Hollywood Video?

Probably not, but industry insiders say the next few months will be very interesting. Wall Street doesn't know which way to turn, as Netflix stock has become volatile of late.

Netflix, which suffered a public relations disaster in 2011 when it split off its streaming and DVD rental services, is still the leader. It has some 27 million customers and has made some nimble moves when encountering adversity.

Shifting strategy

When Starz Entertainment refused to renew its contract with Netflix, the company found itself without access to some of the blockbuster movies its members expected. While there was some initial grumbling Netflix has loaded up on popular television and cable series, such as "Mad Men," "Louie," and "Breaking Bad."

Instead of just watching a movie, viewers found they could sit down and in one very long night watch an entire season of a TV series, commercial-free.

But while Netflix is expanding its movie library with a deal with Paramount's Epix, its emerging rival, Amazon.com, has also secured a deal with Epix for its Amazon Prime service.

What Prime offers

Amazon Prime may eventually prove a major threat to Netflix as it adds content. While Netflix is all about video content, an Amazon Prime membership gives consumers more.

First, members get free two-day shipping when they order products from Amazon -- well, most of the time anyway. They also get instant access to streaming video content from Amazon's video library Third, they can download a large amount of content to their Kindles at no charge.

Where Netflix costs $8 a month, Amazon Prime is $79 a year. Broken down to a monthly rate, however, it's $6.58.

Advantage, Netflix

So why not switch to Amazon Prime? There are still a few issues to consider. Amazon does not have as large a library as Netflix, through recent history has shown things like that can charge very quickly.

You can watch content from both services in a variety of places but Netflix currently has more places where you can watch, including TiVo, Apple TV, iPhone, Nintendo Wii, Android phones and tablets, Nook color tablets, and Windows phones.

Most movies on Netflix now have subtitles while Amazon has yet to take that step. Still, Forbes recently called Amazon Netflix's worst nightmare. It notes that with Netflix losing exclusivity for much of its content, the video streaming landscape could change in a hurry.

Despite the chaos in the business world that may cause, the result for consumers is likely to be more choices and lower prices.

Netflix has been King of the Hill in the DVD and streaming video game but Redbox and Verizon are hoping to muscle their way in with a new partnership expected to be available later this year.

The service called "RedBox Instant by Verizon" will offer more or less the same features as Netflix will, without the home delivery option.

Consumers will be able to select DVDs at the Redbox' kiosks, stream movies directly to home television sets, and also choose to download them.

Customers will be able to choose between 36,800 Redbox kiosks across the U.S., and will also be able to subscribe to Verizon's subscription and video on-demand streaming services.

Industry experts believe the partnership could make a fairly large dent inNetflix' customer base.

Perhaps the two companies teaming up will not only provide an alternative for DVD and game consumers, but also fix some of the service problems that Redbox has created over the years, although if anyone has ever tried to straighten out a customer service problem with Verizon -- and who hasn't? -- it's not exactly an encouraging prospect.

Redbox rants

Redbox' kiosks are pretty straightforward but they still generate their share of grousing from movie-hungry consumers. 

"I rented 3 movies from Redbox and returned them within the allotted timeframe of a one-night rental. I have now been charged for all 3 movies totaling almost $80.000," said Cassandra of Minnesota."

"I contacted Redbox and after going back and forth with them for about a week, they decided they would be kind enough to refund half of the money they charged me. What?! I don't have these movies! I'm going to be calling them to offer one more chance to refund the remaining amount and then I will be heading to the bank to dispute that charge. I will never again be renting from a Redbox," she said.

Other consumers experienced problems with Redbox' DVD's being damaged or even blank.

"I want my money back," wrote Candice of Accokeek Md.

"Two weeks ago, I rented a game from a local Redbox, only to find out when I got home that there was a huge ring around the disc and it wouldn't play at all. I was charged 2 days on a game I couldn't play. Today, I made a reservation for another game at a Redbox, 10 miles out of the way. I got all the way to the Redbox, swiped my card, got 'what I thought was the game', and it’s nothing but a blank DVD-R disc with the barcode pasted around the ring."

Exactly how much Redbox' movies and games will now cost has yet to be announced.

Amazonian rumblings

Earlier this month Amazon said it will be working with Warner Bros. Domestic Television Distribution to offer new programming for its at-home video service.

Just like Netflix and Redbox, Amazon's Prime Instant Videos offers streaming services for those U.S. customers with a paid Amazon Prime or student membership. This of course is separate from the company's instant video division, that allows customers to rent and buy movies from a large selection.

However, Amazon only offers streaming capabilities, so customers aren't able to download. By partnering with Warner Bros., viewers will now have access to shows like "The Voice", "2 Broke Girls" and "The Bachelorette."

Netflix in the lead

With Netflix still being way ahead in the movie rental game, it will take both RedBox Instant by Verizon, and Amazon a long while to catch up. Especially since Netflix is doing everything in its power to strengthen its lead, at great cost to its bottom line. Its profits were off 91% for the second quarter and is forecasting a loss for the fourth quarter.

Just one year since the company's price fiasco, which drew away a large number of customers, Netflix recently announced that its customers watched over 1 billion hours of online video in June of 2012, which shows that while consumers may gripe, they are taking full advantage of Netflix' "all you can watch" pricing policy.

Netflix is in perhaps in that fabled location between a rock and a hard place. It is losing about 1 million DVD customers per quarter while its slow-growing online customers are consuming more and more streaming video. DVD rentals are about five times more profitable than streaming video.

All this and new competitors too? What's Netflix to do? Guess we'll have to wait and see.

Netflix was the company that could seemingly do no wrong, until last July. Then, a series of business missteps alienated customers who were especially unhappy when the company began charging separately for its DVD and streaming services.

These days we hear complaints about the content.

“I can no longer find any of the movies I would like to view using the Netflix search command,” Doug, of San Diego, Calif., wrote in a ConsumerAffairs post.

"It stared a few months ago when there was an update to the 360 home page. I realized afterwards that the Netflix had been significantly downgraded, being most noticeable in the search feature."

More of the same?

Gillian, a Netflix subscriber from Northumberland, UK, is unhappy with the selection, calling it “the same old rubbish.”

“It was the same, nothing I want or not what was advertised,” Gillian wrote. 

Jay, of New Canaan, Conn., said he recently cancelled his DVD account and went to streaming. He says he's disappointed.

“I now notice that more and more of my choices are only available on DVD,” Jay wrote. “This is driving me to purchase from Amazon, and recently Hulu Plus more often than using Netflix.

Shooting Starz

The content on Netflix may, in fact, be changing a bit. Netflix's key content contract with Starz Entertainment expired this week, meaning Starz content is no longer available. But consumers shouldn't blame Netflix for that. Starz announced last year it was refusing to renew the contract because it did not believe Netflix was charging consumers enough money to view the content.

Netflix has indeed changed its emphasis and is becoming primarily a provider of TV shows rather than feature films. Many of the new additions are highly acclaimed series, including Mad Men, Arrested Development and Breaking Bad.

Redbox has DVDs for rent. Verizon has plenty of bandwidth. Put the two companies together and you have a competitor to Netflix, which provides DVD rentals and streaming video on demand.

The two companies are joining forces to form a company that will rent DVDs and stream video, just as Netflix does. Verizon will own 65 percent of the venture while Coinstar, parent of Redbox, will own 35 percent. The announcement came in a conference call Monday by Biob Mudge, president of Verizon consumer and mass business markets.

"Verizon is embracing streaming, a platform that many view as a disruptive force in our industry, as a great opportunity for innovation and leadership," Bob Mudge, president of Verizon consumer and mass business markets, said during the call. "By teaming with Redbox, we deliver the kind of consumer-empowering service that customers expect from companies like ours."

Details under wraps

While putting the announcement out there, Mudge provided little in the way of details, saying the service won't start until mid-2012 and he doesn't want to give competitors any advantage with detailed information.

For example, it's not clear how the venture would be monetized. Redbox currently charges consumers a fee per DVD rented from its network of vending machines at retail locations. Verizon provides video service through Fios, it's fiber optic system.

Netflix charges its members an $8 monthly fee, for either its DVD rentals or its streaming service. Presumably, any joint venture aimed at competing with Netflix would have a similar price structure.

Devil's in the details

While Verizon Fios has access to plentiful video content, it would have to work out separate arrangements with distributors before it could make the programming available on a streaming service. Last year Netflix lost it's contract with Starz Entertainment, which declined to renew its agreement, saying Netflix did not charge consumers enough for the content. The company also supplies content to cable and satellite services, which charge much more than Netflix.

Netflix appears to have recovered much of its mojo after a trouble-plagued second half of 2011. The company announced it was splitting its DVD rental and streaming businesses, in effect raising the price by 60 percent for members who wanted to continue access to both. It also announced it was splitting into two separate companies – one to be called Qwickster – only to walk that back under consumer protest.

As a result, Netflix stock plummeted from $304 a share to $74. The stock is now back to $128.

The days when a couple of Hollywood moguls could lounge around their smoke-filled hang-outs and divvy up the spoils are long gone.

No one smokes anymore, for one thing.  For another, there are so many players crowding into the streaming video market that it's starting to look like Saturday night in the Roman Coliseum.

Netflix is the acknowledged champion of video streaming but now that everyone has realized that, the race is on to unseat it. Competitors want to take over its franchise, while program producers want to sock it with ever-bigger licensing fees.

Verizon is reported to be planning a standalone service that would let customers stream movies and TV shows over the Web.  The new service, as yet unnamed, would be independent of FiOS, Verizon's exisiting broadband service, which has what many reviewers (including this one) think is the best On-Demand selection and superior quality and reliability.  Verizon's recent spectrum purchase gives it a major leg-up in the competition.

HBO Go The anywhere-anytime HBO service is similar in many respects to Netflix although its library is not nearly as big.  On the other hand, it has a huge inventory of top-notch recent HBO movies and shows, something that's notably lacking on Netflix. The Netflix "bin collection," as Hollywood types call it, contains a healthy share of old dogs that weren't exactly greyhounds in their youth.

For its part, Netflix vows that it will start producing its own programs, just as HBO and the other big cable channels do.

Amazon Sure, it's cornered the online market for books, ereaders and assorted home goods but can Amazon really wade into the ring with the big guys? Netflix CEO Reed Hastings doesn't think so. He pooh-poohed Amazon's potential at a recent conference, saying the company doesn't appear willing to spend the $1 or $2 billion a year on programming that will be needed to carve out a huge niche.

A true "friend"

It's hard to get anyone to badmouth Netflix, since it writes such big checks to so many people but protestations of friendship sometimes draw laughs. That's what happened earlier this week when Time Warner chairman and CEO Jeff Bewkes told an investors conference that he considered Netflix "our friend."

"It's true," Bewkes insisted, as laughter rippled through the room.  "We're partners." He insisted that earlier comments comparing Netflix to the Albanian Army were meant in good cheer.

Oh, and don't forget Yahoo.  Or go ahead.  Forget them if you want but the troubled Web portal is trying to ramp up its production of what Internet types call "video content," as opposed to just plain content, which is any mismash of text that contains keywords.  

Yahoo has rented a modest space in Manhattan and is building a studio where it apparently plans to produce news or interview programming.  Who knows where that will go?

So what?

What's all this mean for consumers?  Well, it means that for awhile there'll be lots of big money locking up programming and trying to stuff it into various distribution channels, creating a fluid situation that will, just as surely as concrete hardens, start to consolidate into fewer channels and higher prices.  

The trouble with streaming video, of course, is that it's like sunshine. You have to enjoy it while it's there because it can't be bottled.  

How you spend your time is your business.  As for how you spend your money, it's probably not a good idea to invest in anything that is proprietary -- say, a TV or Blu-ray player that only gets Netflix and a few other Internet channels in addition to the usual cable and over-the-air selection.  Ideally, it's best to stay flexible and become proficient at hooking up your computer or iPad to the big-screen TV.  

Better yet is a Roku box, an economical little gadget that will hook you up to just about any streaming video source out there.  That allows you to buy a simple, stand-alone TV and a lower-priced DVD player.  If the Roku eventually becomes obsolete, you're only out $80 or so.

Netflix started off renting DVDs by mail but recently began offering instant content via live streaming on the Internet. That got the attention of Time Warner, Comcast and other content providers, who suddenly realized Netflix could deliver much the same content they were selling at a fraction of the cost.

At least one of these cable giants has apparently decided to fight fire with fire. Verizon, which provides video content via FiOS, may be poised to launch a new Internet video service that would go head to head with Netflix.

Tony Wible, Director of Entertainment and Digital Media at Janney Montgomery Scott, made the prediction Tuesday in a note to investors. As an analyst at Janney Montgomery Scott, Wible not only follows industry developments at Netflix, but also Time Warner, Disney, Viacom and other large media firms.

A catalyst

If Verizon were to launch such a service, Wible said it would be a catalyst for other media conglomerates to jump on board as well. To date, he notes, no cable or pay-TV provider has tried to market its content outside its original footprint. But it would be a simple matter for these companies to set up subsidiaries that could offer web-delivered content in addition to their other, more expensive services.

A basic cable TV service usually starts around $30 a month and can easily be more than $100 a month when premium channels and services are added. A Netflix subscription, on the other hand, is $8 a month.

Verizon has yet to formally announce a web service and did not comment on Wible's prediction.

If Verizon were to follow through on the new service, the timing might be to its benefit. Netflix stumbled badly over the summer when it split off its DVD-by-mail service from its web streaming access, in what amounts to a 60 percent rate hike.

Unhappy customers

Many customers were angry at the rate hike, and also unloaded on the company for other issues, like DVDs that didn't play and a new web browsing feature.

"Aside from having to deal with this new, completely unfriendly browsing feature, I too, am pretty annoyed with their price hike," Hanna, of Lynnwood, Wash., told ConsumerAffairs.com back in September. "This is your business, Netflix. How hard is it to actually keep things consistent? More importantly, how hard is it to get a little progressive and allow streaming for ALL the movies? One month a DVD is available for live streaming, then the next, it's back on the DVD list. And I can't ever get through their customer service number to complain!"

In October, a ConsumerAffairs.com computerized analysis of about 4 million consumer comments on Facebook, Twitter and assorted blogs found the company's approval rating continuing to plunge - from a 60 percent approval rating down to 14 percent.

Consumers aren't the only ones who have been unhappy lately. Investors have also punished Netflix. Earlier this year Netflix stock hit a high of $304 per share, but today is trading at around $70.

When the going gets tough, the tough ... well, they get going and hire some more "governmental affairs" representatives.  Lobbyists, in other words.

Netflix is the latest rough and tough high-tech firm to realize it needs to lawyer up and get ready for the next rack of shoes to drop on its once-peaceful video-rental business.

Netflix customers haven't taken to the streets to protest the company's new rate structure but that may only be because so many of them are already out occuping Wall Street, Main Street and everything in between.

But consumers are still outraged at Netflix.  A ConsumerAffairs.com computerized analysis of about 4 million consumer comments on Facebook, Twitter and other blogs and social media finds the company's approval rating continuing to plunge -- falling from a 60% positive rating a year ago to a dismal 14% today.

Besides the consumer revolt, Netflix faces the usual raft of 21st Century problems -- broadband regulations, privacy rules, telecom and cable conniving and growing resistance from Hollywood rights holders -- and also a 19th Century headache that could be the hardest to solve, namely the sorry state of the Post Office.

New hires

Helping to pull the wagons into a circle will be two new hires --  Victoria Luxardo Jeffries, most recently of the Federal Trade Commission, and Colin Bortner, late of Monument Policy Group.

Jeffries will be a senior manager of government relations.  And Bortner?  Well, he'll be manager of goverment relations.  

Jeffries comes from the a division of the Federal Trade Commission’s bureau of competition that oversaw merger reviews in the high-tech industry and of video rental services. She will begin at Netflix later this month.

At Monument,  Bortner advised Netflix and other Web firms including Zillow, Travelocity and Microsoft.

“I’m pleased to welcome Victoria and Colin to Netflix’s Washington, D.C., office and look forward to working with them as we expand globally and address important consumer issues within a thriving digital economy,” said Michael Drobac, director of government relations for Netflix, according to Politico.

Riding roughshod

The digital economy is all well and good but it was the U.S. Postal Service that originally brought Netflix to D.C.  It began lobbying in 2005 on just a single issue -- postal rate reform.  The price of a stamp is a big deal when you buy millions of them, after all.

Now that Netflix has all these directors, managers and senior managers of government relations, it is obviously hoping to do a lot more managing of a lot more issues.  

Netflix is still a small presence in Washington, perhaps spending less than $1 million per year on lobbying, although with all the new hires and all that senior government managing, that's likely to change quickly.

If you can believe it, the company didn't even have any lobbyists until late 2010.  Can you imagine?  No lobbyists!  

Drobac was the first hire.  He was formerly a Hill staffer for Sen. Kay Bailey Hutchison (R-Texas).  Drobac has also been a log-roller for Expedia, the IAC/InterActive Corp. and the Online Publishers Association.

Whether all these handlers will be able to help Netflix avoid any future blunders remains to be seen but if the company has any hope of becoming the globe-straddling video-streaming goliath of its founder's dreams, its likely to find the need for more lobbyists, government relations and public affairs operatives grows as fast as its bandwidth cravings, if not faster. 

---

Sentiment analysis powered by NetBase

Netflix has done it again. The recently-announced price hikes that infuriated consumers was followed by the announcement that video streaming was being separated from DVD rental, which infuriated customers some more.

Now, the company says it's changed it's mind about at least one of the changes. In other words, forget about it.

Qwikster's demise

Just last month Netflix announced it was spinning off DVD rentals to a separate company and website to be called Qwikster. At the time, Netflix explained that the two companies would have a better chance to flourish on their own. DVD's would be rented from a separate website, through a separate account for a separate fee.

Last month's announcement was accompanied by an online mea culpa from Netflix CEO Reed Hastings that prompted this Saturday Night Live parody, which almost seems real in light of the latest announcement.

Over the weekend Hastings took to the Internet again, in a brief blog posting announcing the company would not follow through on its recently announced changes.

Netflix for both streaming and DVDs

“It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs,” Hastings said. “This means no change: one website, one account, one password… in other words, no Qwikster.”

The announcement of Qwikster was meant to explain Netflix's change to its membership structure. The consumer grumblings began in July when Netflix announced it was charging separate membership fees for streaming access and DVD rentals. At the time, consumers got both for the $8 a month fee. Despite dropping the Qwikster site, customers will have to still pay for both separately, in what amounts to a 60 percent price increase.

Missteps

The uncharacteristic public relations miscues have come at a bad time for Netflix, which finds itself under growing pressure from its higher priced competitors as well as the emergence of an increasing number on the low end.

Starz Entertainment recently rejected Netflix's $300 million contract renewal offer, stating it was bothered by the fact Netflix was offering access to the content for only $8 a month, while cable and satellite TV companies charged much more.

In the same blog posting announcing the end of Qwikster, Hastings also sought to reassure subscribers that they won't miss the Starz content.

“We’ve recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we’ve added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS,” Hastings said.

Netflix, which earlier this month lost an important content deal with Starz Entertainment, has just signed a deal with DreamWorks Animation to stream its movies online.

In perhaps a sign of the way things are going, DreamWorks' deal with Netflix replaces its content arrangement with HBO. In an interview with the New York Times, DreamWorks CEO Jeffrey Katzenberg called it “a game-changing deal.”

“We are really starting to see a long-term road map of where the industry is headed,” Katzenberg told the Times.

Needed boost

The DreamWorks deal comes at an opportune time for Netflix. Earlier this month Starz Entertainment broke off negotiations to renew its streaming content deal with Netflix. It wasn't so much that Netflix's offer of $300 million wasn't enough, Starz indicated that it was bothered by the fact that Netflix offers unlimited access to its content for $7.99 a month while cable and satellite providers – who are also Starz customers – charge much more.

Last week Netflix announced a two-year non-exclusive licensing agreement with Discovery Communications, which will allow members to instantly watch prior-season series and specials, including an expanded selection of additional seasons of popular series from Discovery, TLC and Animal Planet, as well as Investigation Discovery, Science and Military Channel. Among the highlights are Discovery Channel's Man vs. Wild, TLC's Say Yes to the Dress, and Animal Planet's River Monsters and other titles from Discovery's program library.

"Discovery Communications has always been platform agnostic and committed to satisfying curiosity on all consumer distribution platforms supported by a strong economic model," said Rebecca Glashow, senior vice president, Digital Distribution, Discovery Communications.

Consumer discord

Netflix is in need of a little good news as it copes with some consumer discord over its decision to split off its DVD-by-mail from its streaming service. Previously, consumers got both for $7.99 a month. Now, the services are operated by two separate companies, both of which charge a monthly fee.

A survey by Frank Magid Associates suggests Netflix recent decisions have, indeed, created some challenges. A survey conducted just before the price change announcement shows a large number of consumers with only moderate satisfaction around their Netflix service and lack of satisfaction with the selection of the streaming content.

For example, nine percent of current subscribers say they are going to cancel instead of switching to a new plan. An additional 7% of current subscribers say they will cancel, unrelated to the price change.

Improvement needed

"A major reason that many consumers are not happy with their Netflix service is due to the quality of the content selection in the streaming service," said Mike Vorhaus, President of Magid Advisors, a unit of Frank N. Magid Associates. "Netflix will need to improve the breadth and timeliness of their streaming content to re-build major consumer momentum."

Who stands to benefit from any Netflix erosion? According to Vorhaus, it's Redbox, the company that operates DVD vending machines outside high-traffic retail locations. According to the survey, almost 60 percent of Netflix subscribers also used Redbox.

Netflix offers subscribers instant access to movies and TV shows through online streaming, which is quickly replacing DVDs-by-mail, the company's original service.  

But a lot of the streaming selections are old, third-rate ... or both.  Much of the newer, better content comes  from Starz Entertainment. Now Starz has announced it is ending its affiliation with Netflix at the end of February.

The two companies had been in contract renewal negotiations late last month, but Starz, LLC, President and Chief Executive Officer, Chris Albrecht says those talks are over.

“When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform,” Albrecht said.

It's not clear that the talks broke down over Netflix' offer. The video rental company had offered a reported $300 million to renew the agreement. Rather, Starz apparently broke off over the talks over the relatively small amount of money Netflix charges consumers for its service.

Too much value for consumers?

“This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content,” Albrecht said. “With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business."

Netflix charges consumers a flat $7.99 a month for unlimited streaming of its video content. That is well below the price charged by cable and satellite TV providers, who are also Starz customers.

The loss off the Starz contract leaves Netflix with a gaping hole in its streaming content, but the company doesn't appear to be worried.

“We’ll take the money that we were going to spend on Starz and spend it on other content,” Netflix spokesman Steve Swasey told AdWeek.

There have been suggestions that Netflix might begin producing original content, much like HBO and other prime-tier cable channels.

Redbox, the DVD rental kiosk company, says it's preparing to challenge Netflix in the streaming video arena. Redbox subscribers will pay a single monthly fee to get access to movies, both as streaming video and on DVDs through kiosks.

Netflix took the early lead in the online streaming business and now has more than 20 million subscribers who get DVDs by mail and movies and TV shows via streaming Internet video.

Amazon.com also offers movies and TV shows but charges a per-show price, although there are reports that Amazon will soon off streaming video through a partnership with a so-far undisclosed company, possibly Redbox.

Consumers are steadily shifting away from pay-per-view videos in favor of subscription plans, just as they previously began shifting away from DVDs when Internet streaming became reliable and inexpensive.

The biggest problem all of the new competitors have is getting their hands on the product. Movie studios and the television networks and syndicators are reluctant to let new releases go to streaming video before they're confident they've milked DVD sales for all they're worth.

When Netflix finally announced the winners of its three-year, $1 million contest last fall, the buzz was so great that the company wasted no time in announcing a sequel.

That contest gave consumers all over the world the chance to compete to improve the company's movie-recommendation algorithm. Contestants were given access to members' movie ratings and charged with the task of figuring out a way to more accurately suggest movies that those same users would enjoy. The contest, which ran from October 2006 to September 2009, drew 41,000 teams from 186 countries, and rewarded the winning team -- BellKor's Pragmatic Chaos -- with a $1 million check.

Given the benefit for Netflix -- Reed Hastings, the company's CEO, called the contest a big winner for the company and noted that he was getting Ph.D.s for a dollar an hour -- it only made sense that the company immediately announced a Round 2 of sorts.

But the sequel was abruptly called off even before a jackpot was announced, after a lawsuit and an FTC investigation raised concerns that the company was endangering consumers' privacy. Those inquiries grew out of a report by researchers at the University of Texas which found that the data used in the contest was actually traceable to specific consumers.

Although Netflix apparently believed the information -- which in many cases included users' subscriber numbers, ZIP codes, gender, and ages -- was anonymized, the report proved that concealing the source of such data can prove more difficult than expected.

Users' sexuality threatened

The consumer suit against Netflix highlighted the extreme consequences that can potentially result from a breach of consumer privacy. The plaintiff, identified as Jane Doe in court papers, is a closeted lesbian who is a member of a community in which that fact is not a matter of general, public knowledge, including at her children's schools.

According to the suit, Doe periodically ordered movies from the website's Gay & Lesbian section, and also searched for and rented specific titles of movies that would be considered to be 'gay-themed.' The suit chided Netflix for putting Doe's rental history at risk, and noted that such data may also reveal a member's personal struggles with issues such as domestic violence, adultery, alcoholism, or substance abuse.

Doe's suit claimed that Netflix's actions constituted the largest voluntary privacy breach to date, and said that confidential information was given away to the world freely, and with fanfare.

Netflix is hardly the first company to be humbled by online privacy issues. The proposed settlement of a lawsuit involving Google Books has been tripped up in part because of concerns that it could endanger consumer privacy. Last September, Facebook shut down Beacon, a feature that told users' friends about their activity on other sites. Privacy concerns will only grow as online services become more prevalent.

Netflix, meanwhile, has vowed to find more secure ways to improve its recommendation system.

With both the FTC and the plaintiffs' lawyers, we've had very productive discussions centered on our commitment to protecting our members' privacy, Netflix CPO Neil Hunt wrote on the company's blog. We will continue to explore ways to collaborate with the research community and improve our recommendations system so we can constantly improve the movie recommendations we make for you. So stay tuned.

As Wal-Mart sneaks quietly out of the online movie business, Netflix, the video rental company that pioneered renting movies by mail, now wants to bypass the U.S. Postal Service and send those videos directly to your TV, in high-definition, using an Internet connection.

Netflix and TV set manufacturer LG Electronics, announced a joint project to develop a set-top box for consumers to stream movies and other programming from the Internet to HDTVs -- bypassing the need to use a personal computer. The companies say they hope to roll out the new technology in the second half of 2008.

Wal-Mart quietly closed its movie-download service Dec. 21. Hardly anyone noticed, illustrating the retail giant's failure to make much of a dent in the business. In 2005, Wal-Mart gave up on trying to run a DVD rental service similar to that offered by Netflix.

Netflix said the technology collaboration supports its core strategy of offering a multi-dimensional, or "hybrid," service that gives its more than 7 million members a variety of ways to receive movies and TV series for one monthly fee.

The company did not specify how much it would charge for the service.

Netflix subscribers currently have the ability to watch movies online, but must do so on their computer monitor.

With the availability of the networked LG product planned for later this year, Netflix said its subscribers will be able to watch movies streamed from the Netflix Web site on their large-screen home theater HDTVs as well.

Currently, mail subscribers may choose from among more than 90,000 titles delivered on DVD. The online service currently offers more than 6,000 titles, the company said.

"Internet to the TV is a huge opportunity," said Netflix Founder, Chairman and CEO Reed Hastings.

Fade to black

Wal-Mart had launched its online movie business in February 2007, offering about 3,000 films and TV episodes. Its downloads were not usable on standard DVD players or on iPods, which analysts said hurt sales.

In its little-noticed Web site notice announcing the abandonment of the service, Wal-Mart said customers who had already bought movies would be able to continue watching them.

AOL also abandoned its online movie service recently. That leaves Apple's iTunes and Amazon.com to compete with the new Netflix offering.