I’ve written about this so much that I have tried to deal with recent events on Twitter only. But there are now stories on stories on stories, so I figured I should state my opinion as clearly (and concisely) as possible.

NETFLIX & DREAMWORKS ANIMATION – Nothing really new going on here, though I am shocked that the New York Times has become so enamored of Netflix that they run virtual press releases without asking any of the hard questions that have become clear in recent months. There is nothing significant here. Netflix is playing over retail. No one else is. They can’t afford retail for STARZ Disney & Sony deals. So not happening. DWA is a smart attempt to plug that dike. But 24 movies will not change the game.

Few people believe that the deal is really $30m per movie. But there is a real chance that the deal is $60 million a year, which would represent 2 new movies each year as well as the 24 film library (not all of which is immediately available, btw). The price is high for Netflix, but would be the rare exclusive in their library. The vast majority of other deals are non-exclusive.

While the New York Times positions this as a comeback, it is much more of a desperation play. But it does confirm, yet again, what I have been saying, which is that Netflix’s biggest problem right now is not pricing, but content perception. They have gone from the perception (however false) that they are the Everything Everywhere company to being the Lots Of Stuff, But A Bit Like Cruising Through 300 Cable Channels And Not Really Wanting To Watch Anything company.

This deal should cut the stock price of Netflix and raise the stock price of DWA, which is being overpaid. Also, the issue of when films start streaming on Netflix is, it seems quite likely, well after the DVD window. So paranoia about this cutting into DWA’s DVD business is probably unfounded.

NETFLIX & INDIES – indieWIRE is running its second piece on Netflix abandoning the indies in the last couple of weeks.

Again, it has nothing to do with wanting the indies or not wanting the indies. Netflix has spent itself into some serious trouble and they are hoping that international expansion will save them. But even the relatively inexpensive buys, streaming and hard DVDs, like Criterion Collection, are money that Netflix cannot afford to spend right now. They need to overpay for DWA by not having Criterion anymore.

The sad part, for small distributors, is that they ask so little of Netflix that having it pulled away is really painful in some cases. The margins are very narrow in that business and losing 5% of revenue means something real to these companies.

Anthony Kaufman has it wrong when he mentions “the long tail” because this IS a function of the long tail, not a cleaving off of it. The long tail expands, conceptually, to broaden access, which it has done. But it also narrows the financial value of each specific item on the tail… which it is now doing.

The fantasy of The Long Tail was that it would be a Communistic ideal… that everyone would be able to live modestly as things averaged out. This was always ridiculous when it came to films because the cost of production is not easily scalable. In other words, films that are happy to be selling Netflix under 100 copies are okay… but the longer part of the tail, between that and Mid-Indie level and above, were happy to have something, but not paying the bills with what they were getting from Netflix. The problems in the sell-thru DVD business have been taking their toll for a while. The dream was that Netflix streaming would raise the bar and be another revenue producer. But instead, their ambition to be in the thicker part of the tale is not only failing to come true, but these films are being squeezed even further into the thinner part of the tail.

No matter how good your indie film is, the perception of its value on Netflix is based on marketing, the same as a theatrical opening is. A great unknown doc is “more filler” to most Netflix customers.

The longtail still exists for indies. If you want to stream for free, there are plenty of places to go. But the fantasy of the long tail for film, which was always pie in the sky, is no longer gaining believers. It’s hit the wall. And as with so many other things – and think Anthony was saying this as well – when times are tough, the wins go to the biggest profile, least needy partners.

This all goes back to the piece I wrote last week… someone needs to get some big bucks in their deep pockets and start the commune of the indie players’ fantasies. There is a business model that can work… it just requires a lack of raw greed on everyone’s part. If there are 10 different places streaming indies with differing proclivities, it will remain an untenable market. The niche needs a target. And I still think that SnagFilms and Ted Leonsis’ deep pockets would be the best way to go. They’ve spent a good amount of money and this would be an even bigger investment, but I truly believe that they could get a base of subscribers of over 5 million within the first two years after making themselves the place to go with your small, quality films, giving them greater cache with the higher profile indies. Think of the platform just for domestic screening on foreign films that haven’t been over here.

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