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Netflix faces angry customers after price increase

Posted in Board Of Intellectual Capital, tagged , , , on July 17, 2011| Leave a Comment »

Article from SFGate.

“For years, Netflix prospered from a love affair with its happy, loyal customers. Now, some of those customers want to break up over plans to raise subscription rates by as much as 60 percent.

“Dear Netflix: After three years, I’m sorry but it’s over,” wrote Adam Lundquist. “It’s been great, but it’s over. It’s not us, it’s you. Enjoy the bankruptcy.”

That was one of more than 8,000 comments posted on the company’s blog before the forum reached maximum capacity.

Currently, subscribers pay $9.99 per month for unlimited access to a library of movies and TV shows that can be viewed instantly over the Internet, plus one DVD at a time sent by mail. Subscribers who want high-definition Blu-ray discs, or two or more DVDs at a time, pay a few dollars more.

Starting Sept. 1, subscribers will be charged $15.98 per month to keep both the streaming and DVD-by-mail features. Or, they can choose one or the other for $7.99. For new subscribers, the rates took effect immediately.

Netflix says the increase is needed to support the DVD-by-mail side of the business while allowing the Los Gatos firm to continue strengthening its streaming video offerings, which are crucial to future growth both in the United States and internationally.

“We went from being an ultra-extremely good value to an extremely good value,” said Steve Swasey, Netflix vice president of corporate communications. “It’s $6 a month. It’s a latte.”

Anger goes viral

That’s not what faithful subscribers wanted to hear, and their anger exploded onto the Internet.

Netflix’s Facebook page had nearly 50,000 comments by Wednesday evening, many from customers who said they had already canceled their accounts and were jumping into the arms of a competitor like Amazon.com, Hulu or Redbox.

“How sad that after years of holding a subscription … and being a walking advertisement for Netflix, that we are stopping the use of your services,” posted Rebecca Kiel-Hollifield. “Greedy, greedy, greedy. Way to show your long-term customers, who helped pave the way for your extreme success with a higher price … Goodbye, Netflix, hello Redbox!”

“I am so ticked off. I have been a loyal member for 10 years, and feel like I was kicked to the curb. I hate wishing bad on anyone, but it would serve them right if they lost 60 percent of their customers to match the price increase,” wrote Robert Michel Lankford.

Many of the comments started as a sort of “Dear John” letter, and indeed, the term “#DearNetflix” became a top trending topic on Twitter.

“Dear Netflix,” wrote Carin Lane. “You were doing so well. I liked you. I even paid you when I wasn’t using your service much. You had it so good. Now you’ve gone and committed corporate suicide. Why? Do you not like me anymore? … I simply don’t understand this. You seemed smart, but this is such a dumb move. Well, I canceled this morning, like you apparently want us all to do. Bye!”

Some created new Facebook pages pushing a mass cancellation of Netflix accounts on Aug. 31, although a similar call against Facebook over privacy problems last year hardly caused a ripple in the social network’s march to 750 million users.

Swasey said Netflix was not surprised by the backlash, but noted the critical comments came from just a fraction of the firm’s 23 million subscribers and are “not representative of the majority.”

It’s not a charity

And not all comments were critical of Netflix. “They are a business, not a charity,” wrote Tyler Loman. “If you can’t afford it then maybe you should re-evaluate if you could even afford the old price.”

Mike Kaltschnee, who for the past seven years has run an independent Netflix news blog called HackingNetflix.com, said the company mishandled the way the price change was announced, letting the blogosphere take control of the story.

The response came because “people have invested a lot of energy in recommending the company,” Kaltschnee said. “I don’t think a lot of people are going to quit.”

Indeed, of the more than 7,500 HackingNetflix readers who responded to a poll, 33.9 percent said they will quit Netflix, but 30.9 percent said they will go for the streaming-only plan; 20.2 will sign up for the combination option; and 10.4 percent favor the DVD-only subscription.

Wall Street investors gave a big thumbs-up. Netflix stock rose $7.46 to close at $298.73 after hitting an intraday high of $304.79 on the Nasdaq Stock Market.

Analyst Tony Wible of Janney Capital Markets said the new subscription rates are fair because the former rates were “irrational.” He said the new rates are needed to make the business more sustainable, especially as Netflix deals with higher streaming licensing fees and other looming costs.

But he said Netflix should have called the change a price increase instead of trying to pass it off as an improvement in service, which it wasn’t. “People are smart enough to see through that,” he said.”

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EBay’s Zong deal heats up mobile-payment battle

Posted in Board Of Intellectual Capital, Business models, Economy, Investments, Market research, mobile 2.0, Mobile Phone Usage, Strategy, tagged , , , , , , , , , , , , , , , , , , , , , , , on July 14, 2011| Leave a Comment »

Article from SFGate.

“EBay Inc.’s purchase of mobile-payment startup Zong Inc. for $240 million is stepping up pressure on companies such as Google Inc. and American Express Co. to make their own acquisitions in the market.

Google has held exploratory discussions with mobile-payment startups, according to two people with knowledge of the meetings. Credit card companies, including American Express and Visa Inc., also are meeting with takeover candidates, though deals may not be imminent, people familiar with the talks said.

More consumers are looking to pay for things like movie tickets, apps and other items with their phones – rather than cards or cash. That’s pitting financial-service providers, which benefit from transactions, against technology companies like Google. Both sides aim to use mergers and acquisitions to shore up their positions, said Richard Crone, who runs Crone Consulting LLC, a firm focused on mobile banking and payments.

“There’re much more M&A and roll-ups to come in this space,” Crone said. “You will see the activity happening before the end of the year.”

The total value of mobile payments will reach $670 billion by 2015, up from $240 billion in 2011, according to Juniper Research. That includes transactions for digital and physical goods, money transfers and payments using near field communication – a wireless technology that lets users tap their phones against a reader to make a purchase.

Mainstream acceptance

Many companies are shopping for startups that help users charge purchases to their phone bills. Within a year, 40 percent of all U.S. mobile subscribers will put items other than ring tones on wireless bills, according to Chetan Sharma, an industry analyst in Issaquah, Wash. That’s up from 30 percent now.

Potential acquisition targets include Boku Inc.; Payfone Inc.; BilltoMobile, which is majority-owned by Danal Co.; and Amdocs Ltd.’s OpenMarket Inc., Sharma said.

Syniverse Technologies Inc., MindMatics AG’s Mopay unit, Bango and Vindicia Inc. could be candidates as well, according to Crone. Acquisition targets will sell for 10 to 20 times their trailing 12-month sales, he said. It’s unclear how that measures up against the Zong deal because eBay didn’t disclose the startup’s revenue when it announced the purchase last week.

Still, some startups may struggle to attract a deep-pocketed suitor or land that kind of premium. And large technology and finance companies may choose to develop the capabilities themselves.

‘Pressure to act’

Representatives from Google, American Express and Visa declined to comment on any potential deals, as did Bango, Boku, Payfone, Syniverse and Vindicia. OpenMarket didn’t respond to requests for comment.

Ingo Lippert, CEO of Palo Alto’s Mopay, said the Zong deal will likely give rise to more acquisitions, though his company is “solely focused” on operations.

“We’ve been forecasting consolidation within the mobile-payments space for some time,” Lippert said in an e-mail. “With Zong’s acquisition, companies testing out solutions within the mobile-payments market will now feel increased pressure to act.”

Investments in payment startups began picking up several months ago. In February, Visa agreed to spend about $190 million, plus performance incentives, to purchase PlaySpan Inc. The company handles purchases of virtual goods in online games and social networks. In April, American Express led a $19 million funding round in Payfone, a developer of a mobile-payment service.

EBay’s buying spree

Last year, eBay acquired Red Laser and Milo, two comparison-shopping applications that allow users to scan product barcodes and read reviews. With Zong, the company will get a bigger foothold for its PayPal payment service on phones, especially in developing countries.

Zong lets people pay for things by putting them on their mobile-phone bills. That’s attractive in emerging markets, where credit card adoption is low.

“The phone is ubiquitous, and credit cards are not,” Rodger Desai, CEO of Payfone, said.

U.S. carriers lets third-party services such as BilltoMobile operate on their networks. Verizon Wireless, for instance, allows charges of as much as $25 a month. BilltoMobile also declined to comment on whether it was a takeover target.

Carrier bills contained $3 billion worth of charges for virtual goods last year, and these charges are rising at 38 percent annually, Crone estimates. Those purchases can include ring tones, dating-site subscriptions and weapons for mobile video games.

Purchases of apps charged to wireless bills reached $5 billion last year and are growing at 68 percent a year, Crone said. Consumers in countries such as South Korea are increasingly charging physical goods to carrier bills as well.

“We are seeing very rapid growth,” said Jim Greenwell, CEO of BilltoMobile.”

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“Terminating/Restructuring Prohibitive Real Estate, License, Payables & Contingent Liabilities” – – – “Maximizing Enterprise Value” through proprietary “Date Certain M&A Process”

Posted in Board Of Intellectual Capital, Gerbsman Partners, Investments, Marketing, tagged , on July 11, 2011| Leave a Comment »

Gerbsman Partners has been involved with numerous national and international equity sponsors, senior/junior lenders, investment banks and equipment lessors in the restructuring or termination of various Balance Sheet issues for their technology, life science, medical device and cleantech portfolio companies. These companies were not necessarily in Crisis, had CASH (in some cases significant CASH) and/or investor groups that were about to provide additional funding. In order stabilize their go forward plan and maximize CASH resources for future growth, there was a specific need to address the Balance Sheet and Contingent Liability issues as soon as possible.

Some of the areas in which Gerbsman Partners has assisted these companies have been in the termination, restructuring and/or reduction of:

  • Prohibitive executory real estate leases, computer and hardware related leases and senior/sub-debt obligations – Gerbsman Partners was the “Innovator” in creating strategies to terminate or restructure prohibitive real estate leases, computer and hardware related leases and senior and sub-debt obligations. To date, Gerbsman Partners has terminated or restructured over $795 million of such obligations. These were a mixture of both public and private companies, and allowed the restructured company to return to a path of financial viability.
  • Accounts/Trade payable obligations – Companies in a crisis, turnaround or restructuring situation typically have accounts and trade payable obligations that become prohibitive for the viability of the company on a go forward basis. Gerbsman Partners has successfully negotiated mutually beneficial restructurings that allowed all parties to maximize enterprise value based on the reality and practicality of the situation.
  • Software and technology related licenses – As per the above, software and technology related licenses need to be restructured/terminated in order for additional capital to be invested in restructured companies. Gerbsman Partners has a significant track record in this area.

Maximizing Enterprise Value – Gerbsman Partners proprietary “Date Certain M&A Process”

Gerbsman Partners developed its proprietary “Date Certain M&A Process” in 2002. Since that time, the process has evolved into a 6-8 week time frame vehicle for maximizing enterprise and asset value for under-performing venture capital and senior lender backed medical device, life science and technology Intellectual Property based companies. To date, Gerbsman Partners has maximized enterprise and asset value for over 68 of these companies. A description of this proven process can be reviewed on the Gerbsman Partners website.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 68 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $795 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Orange County, Europe and Israel. For additional information please visit www.gerbsmanpartners.com or Gerbsman Partners blog.

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Facebook partners with Skype to provide video chat

Posted in Board Of Intellectual Capital, boic, Business models, Community, FaceBook, internet, Market research, Microsoft, Social Networks, Strategy, tagged , , , , , on July 7, 2011| Leave a Comment »

Article from SF Gate.

“Facebook began bringing video calling to the masses Wednesday, partnering with Skype to provide the free chat service to its 750 million members.

Video calling comes to the world’s largest social network as part of a larger overhaul of Facebook’s chat features. The updated service will allow users to create group text chats by adding multiple friends into the same window. The chat window also becomes more prominent, taking up the right side of the screen by default.

Speaking at the company’s Palo Alto headquarters, Facebook CEO Mark Zuckerberg said the updates marked a shift for the company away from simply adding users at an ever-faster clip.

“The driving narrative for the next five years or so is not going to be about wiring up the world, because a lot of the interesting stuff has actually been done,” he said. “It’s about what kind of cool stuff you’re going to be able to build, and what kind of new social apps you’re going to be able to build, now that you have this wiring in place.”

Zuckerberg said the shift was prompted in part by a surging demand for sharing information. Facebook users share twice as much today as they did a year ago, as measured by photos posted, comments written and other items.

Facebook’s announcements come on the heels of Google rolling out a new social offering, Google+, that duplicates many of the sharing functions found in Facebook. Google+ also includes a feature called Hangouts that enables group video chatting.

For starters, the Facebook-Skype partnership will only allow one-on-one chatting. Group video chat could be forthcoming, executives said, although on Skype’s stand-alone product, that feature costs money to use.

Zuckerberg said Google’s new product validated Facebook’s own works, and that in the future social features would become an expected part of every application.

The question is which Internet company will prove better at retaining users. Google has more unique users, but they spend less time on the site than Facebook users do. The more time users spend on a site, the more valuable it is to advertisers.

Susan Etlinger, an analyst at Altimeter Group, said Facebook’s large user base would make its video-calling feature instantly competitive with Google’s and other video chat services.

She said the company’s plans to build new services on top of their platform signaled a newfound maturity for the 7-year-old company.

“What I heard Mark say today is that Facebook is starting to focus more on the social aspect of social networking, whereas in the past they focused more on the networking and engineering,” she said. “It’s a really healthy shift.”

Executives at Skype, which was acquired by Microsoft in May for $8.5 billion, said the acquisition would introduce them to an enormous new audience and sell add-on services to them.

“We think this makes a lot of business sense as well,” Skype CEO Tony Bates said. “We get huge reach. In the future we’re talking about potentially also having Skype paid products available within the Web format that we saw here today, so we’re very excited about it.”

Every month, Skype’s users spend 300 million minutes making video calls, Bates said. At peak times, video represents more than half the company’s traffic. (Skype has 170 million regular users.)

Video chat should be available to everyone within a week, Skype product manager Mike Barnes said. Making calls requires users to download a small Java application through the browser.

At first, users will not be able to link their Facebook and Skype accounts. But that integration is in the works, Barnes said. Users who have microphones but not webcams will be able to make voice-only calls on Facebook, he said.”

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On Twitter (and elsewhere), Instagram Growth Zooms

Posted in Board Of Intellectual Capital, Community, Gerbsman Partners, internet, Market research, Marketing, Social Networks, Strategy, Technology, Web 2.0, tagged , , , , , , , , , on July 6, 2011| Leave a Comment »

Article from GigaOm.

I have some news for Kevin Systrom and Mike Krieger, co-founders of Instagram, a San Francisco-based, photo-oriented, social network: They are the fastest growing photo sharing service on Twitter. I’m not surprised. As you know, many folks take photos and share them via Twitter, thanks to services like Twitpic, Yfrog and even Twitter itself. However, Instagram is slightly different; if you’re an iPhone user, you take a photo, upload to Instagram, then share it on Twitter.

Skylines, a Dutch startup focused on real-time photo search, has been analyzing the Twitter feed and has some unique insights into the market. From May 23 to June 26, 2011, Skylines found Instagram usage has gone up 38 percent: from 538,000 photos shared weekly to 740,000 photos shared each week.

Instagram CEO Systrom had recently observed that only 11 percent of Instagram members were using Twitter and by that metric, Instagram members might be adding about a million photos a day to Instagram. Add those two data points together, and one can extrapolate that Instagram is gathering steam. The service recently passed the five million subscriber mark. This level of engagement is one of the reasons why I believe Instagram has a chance of becoming the mobile social hub.

Skylines also shared some other data for the five-week period analysis.

  • From May 23rd to June 26, 2011, there were 33 million photos shared on Twitter via Twitpic, Yfrog, Instagram and Mobypicture (the four services indexed by Skylines).
  • Twitpic is no slouch. It was responsible for sharing of 3.295 million photos during the week of June 20, making it the largest photo-sharing service.
  • Yfrog was used to share 2.98 million photos during the same week.
  • The growth in the total number of photos shared in the five-week period measured was 17 percent.
  • Only 4 percent of the pictures are geo-tagged, while 15 percent have a hashtag.
  • Not surprisingly, weekends are the most popular days to share photos.

As the data shows, while Twitter might have launched its own photo sharing service via Photobucket, the independent photo-sharing services have not seen any kind of slowdown, though there are some dark clouds looming ahead for the likes of Twitpic and Yfrog.”

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