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SEC Investigates Netflix CEO Reed Hastings Over Facebook Posting

samzenpus posted about 2 years ago | from the watch-what-you-say dept.

Facebook 190

alexander_686 writes "The SEC is investigating Netflix CEO Reed Hastings over one of his Facebook postings. The agency is questioning his July 1 Facebook posting, seen by 200,000 followers, in which he said customers watched 'over 1 billion hours' of videos on Netflix in June. He had previously posted on his company blog that members were viewing 'nearly a billion hours per month.' From the article: '“We think the fact of 1 billion hours of viewing in June was not ‘material’ to investors, and we had blogged a few weeks before that we were serving nearly 1 billion hours per month,” Hastings said in the filing today. “We remain optimistic this can be cleared up quickly through the SEC’s review process.”'"

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Wow, such a minor quibble too. (4, Insightful)

ZorinLynx (31751) | about 2 years ago | (#42211327)

I'm surprised something this innocuous can anger the SEC. Wow, they're a lot stricter than I thought!

Does everything a company or company offer say have to be heavily vetted by a legal team before it can go out?

Re:Wow, such a minor quibble too. (4, Insightful)

Anonymous Coward | about 2 years ago | (#42211389)

Yes.

Re:Wow, such a minor quibble too. (2)

firex726 (1188453) | about 2 years ago | (#42211631)

Which is kind of a shame considering how tired we all are of your standard corporate BS.
It's refreshing to see a company actually say something straight and to the point without any wishy washy qualifiers.

APK's SEX TIPS (-1, Offtopic)

Anonymous Coward | about 2 years ago | (#42211965)

#27 - Cup his shaft in your palm, and place your mouth lengthwise on his penis. Move your head like you’re playing a harmonica as you lick the sides. It’s a totally different feeling.

APK

Re:Wow, such a minor quibble too. (2)

Capt.Albatross (1301561) | about 2 years ago | (#42211453)

Just because they never did anything about the whole 2008 mess, don't think they aren't watching you.

Re:Wow, such a minor quibble too. (0)

Anonymous Coward | about 2 years ago | (#42211663)

Just because they never did anything about the whole 2008 mess, don't think they aren't watching you.

Just as they should remember we haven't forgotten about the whole 2008 mess.

Re:Wow, such a minor quibble too. (0)

Anonymous Coward | about 2 years ago | (#42211999)

Just because they never did anything about the whole 2008 mess, don't think they aren't watching you.

The hell they didn't.

Re:Wow, such a minor quibble too. (0)

Anonymous Coward | about 2 years ago | (#42211485)

I'm surprised that Slashdot is bothering with this. Or has Netflix joined Apple and Microsoft as a target of petty hate and endless nitpicking?
 
Seriously, there's only about 20 stories covered on the front page per day. This is one of them?

Re:Wow, such a minor quibble too. (2, Informative)

Anonymous Coward | about 2 years ago | (#42211587)

It's horrible what netflix has done. They are in bed with Microsoft. The CEO worked for Microsoft, they have avoided GNU/Linux, they support DRM, and much more.

Alternatives:

Google: just go to google and type name of whatever site:eu

There are a dozen entertainment sites with all the movies and tv shows you could possibly want. Significantly more than Netflix.

You can also support DRM-free content @ eztakes.com

Re:Wow, such a minor quibble too. (1)

sarysa (1089739) | about 2 years ago | (#42211869)

eh, doesn't really bother me in this case. Netflix has a reasonable business model and content creators do need to get paid. Of course it has DRM: We're essentially renting. We don't pay $8 per month to Netflix for ownership of anything. We DO pay $1-$30+ for digital downloads that we own, and the DRM on that is fucked up. I still buy dvds (typically used but I keep them, sometimes new) because I can rip those easily.

Let's keep our eyes on the ball, people. I've been a big fan of their streaming video since it came out and I never had issues with it. (And it isn't them writing that tablet vs computer vs tv bullshit which is retarded and unenforcable)

Re:Wow, such a minor quibble too. (4, Insightful)

Sir_Sri (199544) | about 2 years ago | (#42212209)

I'm surprised that Slashdot is bothering with this.

I'm not. It hits on a couple of important areas for slashdot readers. The reach of the SEC into social networking, most especially if they consider this to have been 'material information' given away privately that could lead to insider trading, and because it effects someone at a well known tech company saying something a lot of us could know or talk about. If you were a network admin at netflix and posted on your facebook page that you just served your first billion views month bragging about the professional accomplishment would you be in SEC trouble (and would your employer?).

As TFA points out, disclosing to 200k people should maybe count as a press release (especially if anyone can see the page), but uh... it might not. The law and common sense don't always align and it would be problematic to find out the hard way that this was in someway unlawful. I don't work for any traded companies, but I could envision a situation where someone could disclose to their friends work related successes that count as material investor information, and that could cause trouble. A lot of it.

Re:Wow, such a minor quibble too. (0)

Nethemas the Great (909900) | about 2 years ago | (#42211559)

Only when there is a perceived need for the bureaucrats to justify their jobs/funding.

Re:Wow, such a minor quibble too. (5, Insightful)

AK Marc (707885) | about 2 years ago | (#42211645)

A company can not release material that may affect investors unless that release is public. I guess the SEC is asserting that posting it on facebook, where "friends" get it, but the rest of the public doesn't get it pushed to them, even if it is viewable, is a breach of insider trading rules. His "friends" get valuable insider information before everyone else.

Re:Wow, such a minor quibble too. (0)

loufoque (1400831) | about 2 years ago | (#42211967)

That's misunderstanding how Facebook works.
Any one can wilfully choose to subscribe to his updates, so it's the same as them being public.

Re:Wow, such a minor quibble too. (0)

Anonymous Coward | about 2 years ago | (#42212007)

I am guessing that they didn't give all investors an equal a warning that "hey, we are going to use this Facebook page for information disclosures, you need to subscribe to it." The insider trading rules would be useless if you could make the information "public" by putting it on a random webpage, but only give the URL to certain friends.

Re:Wow, such a minor quibble too. (2)

Sir_Sri (199544) | about 2 years ago | (#42212221)

That's misunderstanding how Facebook works.
Any one can wilfully choose to subscribe to his updates, so it's the same as them being public.

That might be an oversimplification of the law on disclosing information that may materially effect investors though. But yes, the obvious assumption here is that SEC rules have not kept pace with technology.

Re:Wow, such a minor quibble too. (0)

Anonymous Coward | about 2 years ago | (#42212327)

That depends on if he made his post public or not.

Re:Wow, such a minor quibble too. (2)

ganjadude (952775) | about 2 years ago | (#42212213)

so...how does one make something public without releasing it??

Is the facebook profile set to "friends only" (doubt it with 200K views of the post) therefore wouldnt making the post BE making it public?

all im saying is how is releasing something on facebook any different than releasing it in any other medium in this day and age?

Re:Wow, such a minor quibble too. (1)

ganjadude (952775) | about 2 years ago | (#42212203)

I was thinking the same. Whatnext, if he posts that he has a headache he gets investigated for stock manipulation?? you know because people MIGHT think that he is REALLY sick??

Can someone explain why the SEC would even care about something as simple as bragging??

So you bluffed a bit. (0)

Anonymous Coward | about 2 years ago | (#42211345)

A little lie.

No big deal.

who cares? (0)

Anonymous Coward | about 2 years ago | (#42211361)

is everything someone says scrutinized these days with potential repercussions

I ate 4 pizzas at lunch today.
posting as anonymous coward to avoid the potential law suits and investigations

Re:who cares? (4, Funny)

ZorinLynx (31751) | about 2 years ago | (#42211369)

Holy shit man, 4 pizzas? No wonder we are obese as a nation.

Re:who cares? (0)

Anonymous Coward | about 2 years ago | (#42211739)

To be exact, I ate 4 large pizza supremes (hold the veggies)

Re:who cares? (0)

Kenja (541830) | about 2 years ago | (#42211371)

If you where the CEO of a competing pizza company and posted that you ate 4 pizzas at Dominos, then yes it could be actionable and effect stock prices.

Re:who cares? (1)

firex726 (1188453) | about 2 years ago | (#42211649)

Except that's not accurate...
In this case it'd be like him being the CEO of Domino's and saying he ate four of their own pizzas, or that their customers ate 4 billion in June.

Don't just make up some random hypothetical bad situation.

Re:who cares? (0)

Anonymous Coward | about 2 years ago | (#42212175)

Please attempt to understand what you're replying to -before- replying.

Re:who cares? (0)

Anonymous Coward | about 2 years ago | (#42211385)

If you are a publicly listed company, and did not officially announce though proper channels, then yes it matters. Eating 4 pizzas (even the small sized ones) is not healthy at all, I would short your stock if I hear about it.

What? (1)

mosb1000 (710161) | about 2 years ago | (#42211399)

Can someone explain why saying something like this can get you in trouble with the SEC?

Re:What? (1)

cathector (972646) | about 2 years ago | (#42211421)

me too.

is there doubt over the figure ?

Re:What? (5, Informative)

laffer1 (701823) | about 2 years ago | (#42211463)

Because analysts see stuff like this and make assumptions about the number of customers, costs in terms of bandwidth and licensing, etc. that feed into the stock price. If a CEO makes a claim like this, it has all sorts of repercussions on how wall street views the stock and what it's worth.

Think of it this way, if I say AMD processors are awesome it's not a big deal. If the CEO of Dell says it, it might indicate a shift to more AMD units which in turn could affect the ability of Dell to sell X computers as some customers don't like AMD, costs they may face, redesigns of products (new motherboards or whatever), customer perception, etc. Investors read into all sorts of things.

Re:What? (4, Insightful)

Missing.Matter (1845576) | about 2 years ago | (#42211603)

Maybe that's more a problem with analysts extrapolating incredible conclusions from small isolated bits of data... also known as anecdotes. Anyone basing buying decisions on facebook posts deserves to get burned.... SEC doesn't need to get involved here.

Re:What? (5, Insightful)

Anonymous Coward | about 2 years ago | (#42211759)

The SEC isn't trying to protect the analysts who have access to the Facebook page. They're trying to protect the rest of the investors who DON'T have an equal opportunity to look at those bits of data. The SEC doesn't care what conclusions people draw from the information--it's just that everyone gets a chance to make their own decisions about such things. If the analysts draw bad conclusions, they will be punished when their share prices drop.

The real weaknesses in this case would be that the bit of data is not very interesting because a nearly identical bit of data had already been given to the public a few weeks earlier, and that 200,000 people had access to this Facebook page, so it feels more "public" than "private." I would guess that this investigation won't last very long before it's dropped.

Re:What? (0)

Anonymous Coward | about 2 years ago | (#42211915)

And yet the SEC continues to allow the fraud known as HFT. Fuck the SEC and their selective enforcement. Take your money off the casino tables of these thieving scum. It's the only way to guarantee they won't rip you off.

Re:What? (0)

Anonymous Coward | about 2 years ago | (#42212083)

I'm not sure how that's relevant to the post you were replying to, since your disappointment with the SEC's response to HFT does not make it wrong for them to respond to potential violations of the disclosure rule. Regardless, the SEC announced earlier this year that they are concerned about HFT, and want to learn more about it and discuss potential regulations with foreign countries:

http://articles.washingtonpost.com/2012-02-22/business/35445375_1_high-frequency-traders-chairman-mary-l-schapiro-market-manipulation

Re:What? (3, Interesting)

sribe (304414) | about 2 years ago | (#42212073)

They're trying to protect the rest of the investors who DON'T have an equal opportunity to look at those bits of data.

Yep. All the investors who don't have an internet connection, or don't know how to access Facebook, or WHO DON'T FOLLOW NETFLIX CLOSELY ENOUGH TO KNOW THAT THE CEO HAS A FACEBOOK PAGE. Yeah, because those investors need to be protected from, uhm, you know, something or other.

...that 200,000 people had access to this Facebook page, so it feels more "public" than "private."

Yes, I see that we actually agree on this. I just wanted to pile on the mockery of the SEC's asinine position. Meanwhile, the hedge firms and their blogger sock puppets manipulate the shit out of volatile stocks, and firms use HFT to try engage in manipulation that would require 1,000x their capital in actual trades, and the SEC does absolutely nothing. Worthless sacks of shit...

Re:What? (2)

Chuckstar (799005) | about 2 years ago | (#42212185)

So how many Facebook pages do you think investors would have to subscribe to in order to follow every senior executive of every company in their portfolio?

Having said that, the regulation is vague as to whether a Facebook page would fit the bill. Any material information has to be disseminated through a Form 8-K filing or "through another method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public."

Re:What? (3, Insightful)

sribe (304414) | about 2 years ago | (#42212253)

So how many Facebook pages do you think investors would have to subscribe to in order to follow every senior executive of every company in their portfolio?

How many press release services would they have to follow? How many financial news shows would they have to watch? How many financial news web sites would they have to follow, and how closely? How many blogs would they have to read?

The company's obligation is to make sure that the information is available to the public, not that it is noticed by every single member of the public.

Having said that, the regulation is vague as to whether a Facebook page would fit the bill. Any material information has to be disseminated through a Form 8-K filing or "through another method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public."

Yes, and somebody at the SEC is being a shithead about this.

Re:What? (2)

girlintraining (1395911) | about 2 years ago | (#42212349)

Yeah, because those investors need to be protected from, uhm, you know, something or other.

The entire point of the SEC is to ensure a level playing field for investors. Facebook may seem "public", but it isn't because it doesn't provide equal access to everyone. If you can view the information without having to login or provide any identifying information, then it's public. All he had to do was cross-post the same information elsewhere and it would have been fine. The SEC doesn't care what information is given away (well, sorta, but let's not get bogged down on details) as long as it's available to all on an equal basis.

It's not unreasonable for them to say "If you post to Facebook, you have to post it publicly as well." Now, whether or not he gets in trouble is another matter -- it could be that what he was saying didn't really have a business impact, in which case they'll probably slap him on the wrist and say "Don't do that again."

Re:What? (0)

Anonymous Coward | about 2 years ago | (#42211829)

I wish I had an account and some mod points to prop this up, you struck the heart of the issue right at its core.

Re:What? (0)

Anonymous Coward | about 2 years ago | (#42211957)

In Wall Street rumors aren't just rumors. They are premature truths.

Re:What? (1)

Wrath0fb0b (302444) | about 2 years ago | (#42211987)

Maybe that's more a problem with analysts extrapolating incredible conclusions from small isolated bits of data... also known as anecdotes. Anyone basing buying decisions on facebook posts deserves to get burned.... SEC doesn't need to get involved here.

Exactly backwards, it's not about those basing buying decisions on these bits, it's about those that didn't have access to them and are operating as a market disadvantage. The publication requirement is basically say that you can't give anyone a leg up on every one else by giving information to a selective audience, you have to give it to everyone.

A company the size of Netflix can certainly afford to set up a system where the CEO can automatically crosspost to his FB page along with a public blog. That's all the SEC requires (âoenon-exclusionary methodâ) to comply with the selective communication rules.

Re:What? (1)

Anonymous Coward | about 2 years ago | (#42211619)

But why is the CEO not allowed to say that? In a public forum, especially like the company blog, shouldn't the CEO be able to make announcements like that?

Hell CEOs make announcements informally all the time like that, just this week we have Tim Cook saying they are moving Mac factories to the US, and the source listed is "Bloomberg and NBC Interviews", that to me sounds a hell of a lot less public than the go to company blog.

http://www.latimes.com/business/la-fi-apple-manufacturing-20121207,0,2720461.story

Re:What? (3, Insightful)

AK Marc (707885) | about 2 years ago | (#42211673)

He is alllowed to say that.. The issue is, is a "blog" on Facebook (where friends get updates pushed to them, and non friends get lower treatment) a "public forum"?

Re:What? (1)

wierd_w (1375923) | about 2 years ago | (#42211841)

Whatever happened to Caveat Emptor?

As long as the statement isn't something seriously harmful, like "asbesto-brite! The SAFEST, all natural toothpaste on the market, now with even MORE of the microfiber asbestos you know and trust!"

Misleading and dangerous advertising should be a crime, but giving a rounded (within the actual rules of rounding numbers) tally of your userbase or consumption is just plain silly.

It shouldn't be government's job to make sre the day traders don't make stupid trades, and research their "leads" first.

Buying stock is a risk based venture; it should not come with a presumption of gains, nor with implications of full price refunds for investors with buyer's remorse.

When it comes to the stock market, Caveat Emptor should reign supreme. Let the buyer beware.

Re:What? (0)

Anonymous Coward | about 2 years ago | (#42212393)

The buyer cannot beware unless he has access to the information that is relevant to his decision. That's the whole point of disclosure requirements.

Re:What? (1)

Mabhatter (126906) | about 2 years ago | (#42212071)

But they had already stated they were near one billion for several months.... Announcing that this day we went over that number in that week isn't really "material evidence" unless somebody is trying to speculate on the hype. Typically, when a CEO does something like this, they push out a "press release" a few minutes later... But frankly that just feeds the trolls.

This is probably why Apple always starts their press conferences with the "brag reel". Its also why the events are not live streamed... Then they can't be accused of "favoritism" because vapid fanboys and legit investor newspapers officially got told at the same time.

Re:What? (2, Insightful)

msauve (701917) | about 2 years ago | (#42212091)

analysts see stuff like this and make assumptions about the number of customers,

Their problem, he made no claim about the number of customers. First of all, it was already public info that they were almost at 1e9 hours, so saying they hit that level is hardly "material." Secondly, it can easily be explained by existing users simply watching more in June than in May, due to school aged children being home during the day.

Re:What? (5, Informative)

cdrudge (68377) | about 2 years ago | (#42211465)

Regulation Fair Disclosure requires that when a company discloses information to investors, that its able reach all investors at the same time. If an investor was not a fan of Netflix, they would not have the opportunity to receive the information.

This is one of the reasons why companies hold conference calls, issue press releases, etc regarding information pertinent to an investor, so that it's disclosed fairly to everyone.

The question here is his posting on facebook disclosing a fact that would be material to investors? And does him previously posting about it on a public blog count as previous disclosure. IMHO, much ado about nothing.

Re:What? (2)

nabsltd (1313397) | about 2 years ago | (#42211801)

Regulation Fair Disclosure requires that when a company discloses information to investors, that its able reach all investors at the same time. If an investor was not a fan of Netflix, they would not have the opportunity to receive the information.

If an investor didn't read the Netflix blog, they might not have the opportunity to received the information, either. Likewise, if something is published in the Wall Street Journal, if you don't subscribe, you might not get the information.

This is one of the reasons why companies hold conference calls, issue press releases, etc regarding information pertinent to an investor, so that it's disclosed fairly to everyone.

Someone who doesn't listen directly to a conference call, but instead reads a transcript released by the company after the event doesn't have the information as soon as other people, but the SEC doesn't consider that "unfair", even though there are often limitations on who can particpate in those conference calls. There is no barrier that limits someone from "liking" a company on Facebook, so the information is just as "public" as any other release of information. If the SEC doesn't realize this, then they are going to have some serious challenges to the ancient ways they regulate public companies.

Re:What? (1)

l0kl1n (1670272) | about 2 years ago | (#42212463)

Someone who doesn't listen directly to a conference call, but instead reads a transcript released by the company after the event doesn't have the information as soon as other people, but the SEC doesn't consider that "unfair", even though there are often limitations on who can particpate in those conference calls. There is no barrier that limits someone from "liking" a company on Facebook, so the information is just as "public" as any other release of information. If the SEC doesn't realize this, then they are going to have some serious challenges to the ancient ways they regulate public companies.

Ding, ding -- this is a perfect summary of the whole thing. I am not sure if the SEC is just clueless, incompetent and bureaucratically enforcing reg FD or if they are trying to maintain the advantage that professional investors have in the actual implementation of the reg. Either way, the whole thing is bizarre.

Re:What? (2)

TheLink (130905) | about 2 years ago | (#42212311)

Seems way easier for me to follow Netflix or their CEO on Facebook, than for me to be a party to those conference calls, or get those press releases at the exact same time as more "blessed" investors.

Many may hate Facebook, but if you're talking about public fair disclosure, it's definitely a lot more public and fair than conference calls and press releases. Depending on how public the page/posting is, you might see it without even logging in to Facebook or having an account.

If I happen to be online I can probably see the Facebook posting within a minute of it being posted. Whereas I'd be behind by much longer for press releases etc.

Re:What? (1)

Nethemas the Great (909900) | about 2 years ago | (#42211529)

I think the "problem" is that not "everything" was disclosed to "investors." Kind of like a car dealer telling you that a certain car gets 35 M.P.G. but not telling you that it has a 1.5L 4-cylinder engine. That the dealer didn't tell you about the engine may slant your decision regarding the car and its 35 M.P.G. performance. Or for the more vilified version, a car ad describing a "red" interior but not explaining that the color is derived from blood stains of a murder victim. I'm not claiming the SEC rule makes sense. I certainly cannot see how the bureaucrats are adhering to the spirit of the rule. I just see a proud CEO touting an impressive figure outside of the context of an investor prospectus.

Re:What? (1)

Anonymous Coward | about 2 years ago | (#42211549)

Netflix makes money by streaming video on the internet and is a public company. The directors and executives of public companies have information that other don't regarding these public companies, that is called "material non-public information" in securities law. As the CEO, Hastings cannot selectively disclose the MNPI, whenever a company makes information public they need to do it though a press release, public filing, public conference call or another method that the SEC believes gives all investors equal timely access to this information.

This case may be extreme. What they are trying to prevent is the cases a few decades ago where CEOs would leak sales volumes to select analysts and their golf buddies before making this more widely public. For Netflix, the number of streams they have is basically equivalent to their sales volume and the SEC is worried that Twitter is selective disclosure.

Re:What? (1)

firex726 (1188453) | about 2 years ago | (#42211669)

I think they meant to swing it as being news from people will use to base their investment decisions on.

Seems you are not allowed to make straight BS free statements about the factual use of your services by your customers. You have to make sure and layer it in corp BS to the point that only professional analysts can figure out what you're saying.

Why? (2)

The Grim Reefer (1162755) | about 2 years ago | (#42211407)

I'm still baffled why anyone would post anything meaningful about themselves on Facebook. How many kids have gotten themselves busted for posting pictures of stuff they shouldn't be doing. Or adults for that matter. Just how attention starved are people these days? I would have thought the CEO of a fairly large company would be smarter than this. Hell, I would have guessed that someone in that position would have a staff of marketers specifically to do this for them.

Re:Why? (1)

firex726 (1188453) | about 2 years ago | (#42211689)

There is a difference between posting somthing bad/negative/criminal, like underage drinking; and a company wanting to promote some random interesting fact about itself.

Re:Why? (1)

Anonymous Coward | about 2 years ago | (#42211707)

I'm still baffled why anyone would post anything meaningful about themselves on Facebook. How many kids have gotten themselves busted for posting pictures of stuff they shouldn't be doing. Or adults for that matter. Just how attention starved are people these days? I would have thought the CEO of a fairly large company would be smarter than this. Hell, I would have guessed that someone in that position would have a staff of marketers specifically to do this for them.

You're baffled that stupid kids grow up to continue to be stupid adults...who use the web?

You continue to be baffled that said stupidity would never ass lick their way to the CEO spot?

Might I introduce you to a shining fucking example of both. I present to you, Congress.

Re:Why? (0)

Anonymous Coward | about 2 years ago | (#42212517)

I'm still baffled why anyone would post anything meaningful about themselves on Facebook.

Why limit that just to Facebook? I'm baffled that anyone would post their opinions or anything about themselves online. Or even offline! I live in a dorm hall, and you can't believe all the information about people's private lives that's just freely available to everyone else here. I know some of their class schedules, and I even know the types of posters they put on their doors!

200k People! (1)

fred911 (83970) | about 2 years ago | (#42211437)

Sure sounds public to me.

Re:200k People! (0)

Anonymous Coward | about 2 years ago | (#42212103)

That's nearly a billion (log in to see actual number) people excluded. It's not publicly accessible.

It wouldn't matter if you told everybody *except* a group of 200k or 200. That would still represent an unfair advantage to one group of investors.

Re:200k People! (1)

debrain (29228) | about 2 years ago | (#42212273)

Sure sounds public to me.

Me too. However maybe the SEC is trying to make a point? Is it a slippery slope - can we easily and objectively determine when a post to facebook friends not public? 200k people? 20k people? 2k? 200?

While this instance is fairly far out towards "public" on the public-private spectrum, this may be an attempt by the SEC to establish boundaries about what sort of behaviour it considers appropriate for the CEOs of large and publicly traded corporations.

Back of envelope calculations (2)

burningcpu (1234256) | about 2 years ago | (#42211521)

Netflix had 29.4 million online streaming accounts as of September 2012, and with 720 hours in a month, 1E9 hours works out to each subscriber viewing an average 34 hours of online streaming per month. While possible, I think this statement should have led to some raised eyebrows.

Re:Back of envelope calculations (2)

Ambiguous Coward (205751) | about 2 years ago | (#42211657)

Unless the numbers aren't based on actual hours worth of video streamed, but something more crude, such as "use started to stream video that is 2 hours long, that counts as 2 hours." In which case, it's extremely easy to imagine the average user opening the stream for 34 hours worth of video a month. I probably do twice that, myself.

Re:Back of envelope calculations (1)

Ambiguous Coward (205751) | about 2 years ago | (#42211665)

"user started", that is.

Preview? Pfffft.

Re:Back of envelope calculations (1)

Rockoon (1252108) | about 2 years ago | (#42211667)

Thats barely more than 1 hour per day.... I think you are bad at conclusions.

Re:Back of envelope calculations (1)

tompaulco (629533) | about 2 years ago | (#42211865)

Thats barely more than 1 hour per day.... I think you are bad at conclusions.
That depends. Does the average Netflix user watch more than 1 hour of video per day? I suppose it is possible, but I sure don't.

Re:Back of envelope calculations (0)

Anonymous Coward | about 2 years ago | (#42212041)

You don't have kids, do you?

Re:Back of envelope calculations (4, Insightful)

O('_')O_Bush (1162487) | about 2 years ago | (#42211701)

Well, that is per account. My family has four people on one account, making the 1 hr/day average very easy to hit. It might be better to think of it as 30m accounts, 60-120m viewers.

At that point, eyebrow raising possibilities seem to be unsurprising and mundane.

Re:Back of envelope calculations (2)

wolfinator (2570165) | about 2 years ago | (#42211733)

I think those number are quite plausible.

That's only an hour per day per account. Consider that accounts can be tied to multiple devices, and streamed from those devices simultaneously. That means accounts can be shared between more than one user quite effectively. Every household I know of that uses Netflix has a single account tied to multiple devices, with different people watching shows independently.

Additionally, the average American watches 2.8 hours of TV a day [bls.gov] . That means that even if each account represented one average American, if just a third of their TV viewing was via Netflix, the numbers line up.

But, never fear! The SEC will be spending regulatory dollars to discern if these numbers are accurate or not, so we shall soon know for sure!

Re:Back of envelope calculations (3, Insightful)

girlintraining (1395911) | about 2 years ago | (#42211779)

Netflix had 29.4 million online streaming accounts as of September 2012, and with 720 hours in a month, 1E9 hours works out to each subscriber viewing an average 34 hours of online streaming per month.

You seem to be forgeting that each individual account can have multiple devices streaming simultaniously. Only PC-based playback is restricted to single-instance. I don't know if Netflix users watch the same amount of online material as their TV-based counterparts, but we can infer a few things by assuming they do. The average person watches about 51.1 hours [nytimes.com] of TV a month. There are an average of about 2.55 people per household. That comes out to about 130.3 hours watched per household. Assuming 1 Netflix subscription per household, you get 3.8 billion hours of viewing per month.

I don't think 1 billion hours from that number of users is all that difficult to believe. Netflix users aren't substituting time in front of the TV straight across; That it's a supplimental activity is not an unreasonable conclusion. The CEO's numbers are well-within believability.

Re:Back of envelope calculations (1)

Ariven (256118) | about 2 years ago | (#42211815)

purely subjective and anecdotaly, i average 2+ per weekday, more per weekend day. my daughter ranges 1 to 3 a day, my son the same.

i can see 34 per subscriber easily.

Re:Back of envelope calculations (0)

Anonymous Coward | about 2 years ago | (#42211961)

Do we know they are talking about streaming only? They could be factoring in disc rentals.

Re:Back of envelope calculations (1)

MangoCats (2757129) | about 2 years ago | (#42212171)

I streamed 2 hours tonight, and some weekend days Netflix streams for 8+ hours (not necessarily being watched, but like TV in the background...)

34 hours a month average seems, reasonable, given an average between heavy and light users.

They're busy with this... (5, Insightful)

ZeroSerenity (923363) | about 2 years ago | (#42211527)

...and the banks are walking? Seriously. Priorities people!

Re:They're busy with this... (5, Insightful)

future assassin (639396) | about 2 years ago | (#42211623)

Netflix couldn't afford the gold plated hooker and blow trips for the politicians.

Re:They're busy with this... (1)

the eric conspiracy (20178) | about 2 years ago | (#42211875)

No doubt about it. They just signed an exclusive contract with Disney for their film catalog streaming rights.

That must have drained every drop of cash, even the hooker and blow fund for lobbyists.

you are naive (0)

Anonymous Coward | about 2 years ago | (#42211755)

They are acting in precise accordance with their priorities.

Not yours.

And what you think their priorities should be is completely immaterial; they only represent people who matter (i.e. not poor nobodies like you).

Re:They're busy with this... (0)

Anonymous Coward | about 2 years ago | (#42211833)

You may as well get used to it. While clearly immoral, the banks didn't commit any crimes, and you can't make what they did illegal ex post facto.

Re:They're busy with this... (0)

Anonymous Coward | about 2 years ago | (#42211931)

Yes they did. It's called fraud [market-ticker.org] .

Re:They're busy with this... (1)

girlintraining (1395911) | about 2 years ago | (#42211851)

...and the banks are walking? Seriously. Priorities people!

I take the reason for this outrage is that you've never mastered starting breakfast and then getting dressed and brushing your teeth while it cooked. The SEC, being an organization of thousands, is capable of multitasking. Investigations take months, and involve a lot of delays while paperwork is gathered, experts are called to review and document their findings, etc. All of that careful auditing and documentation takes time... and if you rush it, you risk making a mistake that the lawyers can use to get the case thrown out. And when you're dealing with "the banks"(tm), do you suppose maybe they're being extra careful (ie, slow)?

Oh, and your omelette is on fire.

Re:They're busy with this... (0)

Anonymous Coward | about 2 years ago | (#42211867)

This case is about banks...who do you think the investors that trade based on insider information from Facebook pages work for?

There appears to be an agenda here...let me guess: (2, Insightful)

JRHelgeson (576325) | about 2 years ago | (#42211625)

I wonder if the CEO donated to the 'wrong' party this past election. This sounds an awful lot like revenge.

Re:There appears to be an agenda here...let me gue (0)

Anonymous Coward | about 2 years ago | (#42211765)

I wonder if your tin foil hat is a little too tight. This sounds an awful lot like the SEC operating under a law written before the ascendance of Social Media, rendering said law to be rather archaic.

But jumping to conclude malfeasance is a lot less taxing on the brain cells, so Bravo. *golf clap*

Re:There appears to be an agenda here...let me gue (0)

Anonymous Coward | about 2 years ago | (#42211803)

The CEO of Netflix donates hundreds of thousands of dollars to Democrats in California. I doubt if that's the reason for the Obama administration's SEC investigation.

Most prosecutions are nothing more than revenge (0)

Anonymous Coward | about 2 years ago | (#42211943)

Most prosecutions are nothing more than revenge by the majority and/or the elite. Prosecutors are in it for the money and politics. The more successful the (meaning the more convictions) the prosecutor the better there future holds. Guilt of the targeted and morals have nothing to do with it. Anybody who actually has morals would not be aiming to punish. The security of the people is what matters and we don't need to be 100% safe. Being less than 100% is more beneficial as no person within society is perfect. We don't want to lock everybody up who errors from time to time because there would be a net loss even if we were 100% safe. The people who are at risk are the ones for which the majority don't like. Be it the CEOs who steal and commit environmental crimes or the outride child murders.

If there is a group in society whom need protection it is those we have sent to prison or otherwise treat like dogs and force to live under bridges.

Re:There appears to be an agenda here...let me gue (2, Informative)

Anonymous Coward | about 2 years ago | (#42212045)

You don't have to speculate. Political contributions -- at least to groups affiliated with candidates and parties -- are a matter of public record.

As it happens, Reed Hastings donated a lot of money, all of it to Democrats. So, either the Republicans are behind this despite not having control of the White House, or your theory should have been researched a little more carefully.

Re:There appears to be an agenda here...let me gue (0)

Anonymous Coward | about 2 years ago | (#42212123)

What is this, Belize?

Re:There appears to be an agenda here...let me gue (0)

Anonymous Coward | about 2 years ago | (#42212329)

i was thinking the same thing, not necessarily for the election, but revenge for something. it's so petty and spiteful, like revenge.

Re:There appears to be an agenda here...let me gue (0)

Anonymous Coward | about 2 years ago | (#42212385)

People underestimate how much the SEC monitors things you say. I work for a Big 4 in the consulting arm, and you'd be surprised how many regulations there are about what we can say, even on Facebook. In fact, we have to take explicit training on a very regular basis on what we disclose and what we do not.

And it's not even just me who's bound by these regulations: my wife and other people I "closely" interact with (e.g. my parents) are also bound them.

For instance, we have a multi-family home and my parents moved in with us last year as they were getting old. Ever since that happened, I have had to disclose their holdings as well to make sure there isn't any insider trading. The more senior you are, the more restricted your holdings are (managers, directors, and partners/principals are under more scrutiny and tighter regulation than, say, analysts and associates/senior associates).

I am strongly bound by what shares I can buy, sell, etc. My financial advisor has to pre-check every equity or bond that he purchases before he can invest in them. I can't even choose my own insurance provider or mortgage provider. All this, even though I am not even in the audit/accounting/tax line of service. I'm in advisory, but most of what I do is helping customers in my vertical explore new markets, new customer segments, build new products etc. So, that gives me access to not only what *a* client can do but also what the general industry patterns are and what we've done at other similar clients (without a conflict of interest, of course -- no one is willing to share particulars as that would violate our agreement, but we do share the frameworks used, approach, any financial models, industrial research etc).

I mean, do you know that I am not supposed to "check in" to a restaurant near a client site using Facebook? Why? Because someone may then realize that the restaurant is near a client site and associate that with the work we do. You're not even allowed to say, "Big day today!" even if the client is launching something that's pretty awesome, and you've been busting your ass for past 3 months, working 80 hour weeks. Your boss *will* add you on Facebook and follow you on Twitter, because that way they can generally make sure to keep tabs on you. Will they tell you this explicitly? Of course not. They cannot. But it's generally "understood". A colleague of mine said something about how her client is launching something big. HR got wind of it, they said that someone could look up her colleagues on LinkedIn and extrapolate who one of the clients was (based on her LinkedIn connections and where she travels to), and fired her. It took all of 2 days, and she barely left it up for a couple of hours.

Even on Facebook, I have some pretty senior clients as friends. While they can't see all my posts, this strongly limits what I can say about my work, which is great. In the rare occasion that ration is trumped by emotion and I want to say something potentially crazy.

So, where am I going with all this? Well, my point is that no, what the Netflix CEO did was wrong. It doesn't matter who did it, you must understand that if there's one thing people care more about, it's money. And when it comes to money, you can bet your bottom dollar that someone's watching what you say.

Posting anonymously for obvious reasons...

Half of that was me (0)

Anonymous Coward | about 2 years ago | (#42211643)

I could easily see a billion hours. Given that I, and most of those I know, will turn on Netflix just to keep them company when working late.

In the last month I've streamed 7.5 seasons of monk, 2 of x-files, and 3 of psych and 30 Rock and the office, various documentaries, and Indy films and old films.
-Dilmah

This they're investigating? (3, Insightful)

Anonymous Coward | about 2 years ago | (#42211697)

They haven't done anything about a few financial institutions purposefully destroying the world's economy, but a CEO saying his company is doing really well on facebook is a problem.

This isn't the nineteenth century, when it took a month to get the information out. Just because the stock holders are too stupid to follow him a facebook.

Also, we need to make a distinction between investment and simple stock ownership. The only time it's investment is during an IPO. After that, it's pretty much commodity trading hoping to make money off of market instability.

I canceled my Netflix subscription (-1, Offtopic)

Arno Stark (2789795) | about 2 years ago | (#42211743)

because my Playstation 3 was having problems streaming their videos. When I watched a video it would pause countless times and freeze up. Sometimes I got a "maintenance mode error". My parents would visit and my father was dying of a brain tumor and lung cancer and we used the PS3 to show them movies they wanted to watch at our house. Nothing like waiting 6 hours to watch an hour and a half movie or not watching it all the way through. I wonder if they measure time of how long the Netflix client is open, rather than how much information is being sent? When I went to troubleshoot the problem with Netflix they always wanted me to open up Internet Explorer on my PC. I kept telling them that it was on the Playsation 3. I went into the PC and told them I use Firefox, but they insisted I try Internet Explorer. Made sure Silverlight and the right Dotnet was installed, cleared cookies and cache, ran a virus scan no viruses detected. I told them "What about the PS3?" and they told me to watch videos on Internet Explorer instead. Well the TV for my parents was not hooked up to the PC. They refused to fix the PS3 problems and gave me a hard time, so I canceled them. Some of my father's last days on Earth was getting upset over Netflix not being able to play for him.

Re:I canceled my Netflix subscription (0)

Anonymous Coward | about 2 years ago | (#42211819)

Nobody cares and this is not relevant to the article.

Get a PC (1)

tepples (727027) | about 2 years ago | (#42211823)

and they told me to watch videos on Internet Explorer instead. Well the TV for my parents was not hooked up to the PC.

You could always buy a PC and plug it in. It'd be cheaper than starting your cable sub again, unless of course your cable company offers free TV with Internet purchase.

Share those numbers? (1)

tburke261 (981079) | about 2 years ago | (#42211843)

If Reed Hastings knows these stats why don't we? Let's petition Netflix for an hour/month (or something) stat on your account. Expose it as an API call. Interesting value proposition to people, "look how many more hours you watch Netflix than Cable!". Also easy to automate finding those needing to be surgically removed from couches. (Ok, kidding about the last bit, but not anything else)

stock markets (0)

alienzed (732782) | about 2 years ago | (#42212219)

are a little too serious.

More questionable management team judgement (2)

w1nt3rmute (2165804) | about 2 years ago | (#42212229)

This relates to Regulation FD (for "Full Disclosure"). Basically, you can't release information that could be material to investors (i.e. potentially affect their decision to buy/hold/sell your stock) without making it available to all investors. This rule was written because, in the past, companies would have informal conversations with institutional investors and analysts and give them information that would better inform their investing decisions before that information was "publically" released. Any corporate attorney worth their salt would advise the CEO to release this type of information in a Form 8K (an "informational" filing with the SEC) at the same time a statement like this was made. It clearly speaks to demand and, indirectly, sales revenues for the current and future quarters. Most analysis and investors are interested in that type of metric. If the CEO intended this to be a public release, it was pretty bad judgement to do it via Facebook or a blog. Just another WTF? decision from the Netflix management team...

"no comment/contact legal/pr/investor relations" (2)

seifried (12921) | about 2 years ago | (#42212259)

I work for [redacted] which is why I won't say anything about [redacted] or especially anything about the [redacted] incident that [redacted] 17,000 people and caused the entire town of [redacted] to go bald and [redacted] at 3 in the morning.

Which is why anyone with an ounce of sense doesn't talk about their company (especially the higher up you go in the management chain). And especially never put it in writing. Duh.

Wow. somebody at SEC is hoping to get a promotion? (0)

Anonymous Coward | about 2 years ago | (#42212309)

what a crock

No biggie (1)

betterprimate (2679747) | about 2 years ago | (#42212539)

I don't see what everyone's hang-up is with this. It's an easy mistake of semantics, subtle nonetheless.

What needs to first be determined is whether stating publicly they were "serving nearly 1 billion hours per month" a *few weeks* before makes their *privately* announced statement "customers watched 'over 1 billion hours' of videos on Netflix in June" immaterially.

Of course, I think the SEC has better things to do but the investigation is legit.

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