Month: January 2010

Netflix and Warner Bros.

Posted on by tarus

I’ve blogged in the past about my issues with Netflix, and I definitely have a love/hate relationship with them, but at the moment I am pretty happy as a Netflix customer. While I’m still not very satisfied with their customer service, they are making the right moves in other areas.

One is that streaming is now available on the PS3. I have heard that, in order not to break an agreement with Microsoft and the Xbox, there could not be a downloadable app, but they sent me a disk which allows me to stream from the PS3 to my television, which is only slightly annoying (I have to insert the disk versus just turning on the machine).

So I read with amusement that Warner Bros. Home Entertainment negotiated a 28 day delay before new releases would be available on the Netflix service, in exchange for more favorable terms and more content to be available via streaming.

I think this is a great deal for Netflix and a pretty stupid move on the part of Warner Bros. Their reasoning is that the availability of renting a DVD the day it is released cuts in to DVD sales. I’d love to see the numbers after this change, but my guess is that they will stay pretty flat.

My reasoning in simple. If someone loves a movie enough to buy it, that buying decision is made without regard to if it can be rented. Either they get it close to the day it is released since they like it so much, or they get it as a gift at some later point in time. In my own informal poll, people tend to buy movies they’ve already seen, and thus those that are sold in the first few weeks of release are sold to people who have already seen the movie in the theatre. This is unaffected by the availability of the title on Netflix.

I just don’t see someone going “Jeez, I can either wait four weeks to see ‘Final Destination 3D‘ for free as part of my Netflix subscription or drop $15+ to buy it from Amazon – ooh, hit that one-click” especially when a monthly Netflix subscription costs about the same if not less.

But this is a great deal for Netflix, especially if they get better access to the Warner Bros. back catalog for streaming. I don’t think anyone will argue that in ten years (if not sooner) almost all video will be delivered via streaming, and so seeing Netflix positioning itself as the best streaming service is a smart move.

I think there are parallels here with open source. You have a legacy company like Warner Bros. trying to understand a new distribution model in much the same way you have commercial software companies trying to come to grips with open source. Netflix, on the other hand, is similar to OpenNMS as a company that “gets it” and is laying the groundwork to become a dominant player.

The biggest thing we struggle with is trying to break people out of the mold that good software must be purchased. People have the expectation that software comes in shrink-wrapped boxes with a DVD and a license key, and anything else is just wrong. In much the same way, Warner Bros. thinks that having early access to the physical media is important to a consumer’s buying decision.

Now the streaming service provided by Netflix does not compare with, say, the quality of a Blu-ray disk, but are you willing to bet against it getting close in the near future? In much the same way, OpenNMS is not a complete replacement for suites like OpenView or Tivoli today, but with large improvements year over year it will be. My guess is that companies that understand open source today will be the dominant players in the software markets of tomorrow.

Thoughts on the New Year

Posted on by tarus

Okay, I have a lot of stuff I’d like to post but the problem will be finding the time, so instead of meticulously crafting a post in my usual manner (grin) this one will be more “stream of consciousness”.

Last year started off horribly for the business side of things. It was so bad that I had to cancel our annual developer’s conference, Dev-Jam. It is a huge regret, since come March things went crazy and we posted three record quarters in a row, but it was the decision to make at the time.

When we had our first Dev-Jam it was kind of a lark, but I didn’t realize how important that yearly gathering of people was to the project. We’ve inked in the week of July 25th, 2010, back at the University of Minnesota, to make sure we don’t miss out again.

Other than that, 2009 was a great year. We hired Jason Aras (an OGP member) as a full time employee and Seth Leger, one of the original OpenNMS coders, came to work for us on a contract basis (and we hope he’ll join us full time in 2010).

On the development side we got a lot of interesting custom development business and delved more fully into the whole “agile” development process. It has enabled us to work more efficiently (especially as distributed as we are) and produce even more robust code. The last week in December we switched to git to streamline further our development process.

We enter 2010 in the best shape of our corporate lives, and I am confident it will be a solid year for the OpenNMS project as well. Seeing all of this talk about Sun/Oracle/MySQL and copyright assignment makes me glad that we are bootstrapped and make money the old fashioned way (by spending less than we earn) versus having to make concessions to our open source philosophy.

On the down side, it is frustrating not to be able to implement some of our ideas as quickly as I would like, but our organic growth means that the pace of development is getting faster and faster. This results in higher revenues, and since we plow all that back into the company it just feeds the growth of the project.

All the experts say that this business model is flawed and that we’re not a “real” company or at a minimum we are some sort of “lifestyle company“, but you know what? I don’t care. And as long as we can stick to our mission statement of “Help customers, have fun, make money” I don’t have to. (grin)

But if I had to lay out a goal for 2010 it would be to make it easier for people to get involved, and to get those involved more involved. I think calling 2010 “The Year of Community” is a little cheesy, but that is where my heart lies. We have a new stable release coming out, our first book (in German) and an iPhone app all in the first half of the year, but I think that would pale in my mind to getting the community back on track, and I hope that Dev-Jam goes a long way toward getting that done.

Happy New Year everyone.