Saturday, June 13, 2009

Netflix Finally Addresses Online Captioning Issues

In mid-May 2009, I reported that CEO Reed Hastings had confirmed that Netflix would not take an active approach to captioning its online content. The online community reacted immediately to CEO Hasting's comments. As of today, the Facebook group, "Netflix Watch-Instantly Needs Closed Captions!" had 983 members--most of whom joined after my review of Netflix's annual meeting was published. According to some reports, Netflix recently received thousands of inquiries regarding captioning online content.

Netflix finally issued a statement regarding captions yesterday. Click here to see it. The gist of the statement was that captioning would be supported on a specific Microsoft media player in about one year:

Captioning is in our development plans but is about a year away...I would expect to deliver subtitles or captions to Silverlight clients sometime in 2010.

One reader, Chris, wasn't buying Netflix's explanation:

I am not personally affected by Netflix's lack of subtitles but from reading multiple deaf consumer's complaints about Netflix's lack of support of Closed Captions I can sympathize with their point of view. from a technological standpoint I would say that Netflix has totally failed. I've been able to view DivX movies with subtitles for at least 7+ years. And it in no way required bringing the text into the the video. In fact all it required was a simple time-stamped .txt file that took up maybe 10-20 KB (that is 0.001% the size of a normal Netflix movie). There should be ZERO reason why Netflui/Silverlight can't support the use of .SRT. files and be able to EASILY support CC in multiple languages. Quite frankly I think Netflix has really disappointed a non-significant size of its customer base and is hiding behind non-existent "technological difficulties" as an excuse.

Personally, I view Netflix's response with cautious optimism. After receiving thousands of inquiries about online captioning, Netflix now understands that its cavalier approach to the issue was unacceptable. Also, by publicly declaring that online captioning will be available in some format in "about a year," Netflix has committed itself to a particular date. If it fails to provide online captioning by July 2010, its reputation and perhaps share price will suffer.

To be continued...

Update on June 15, 2009: I forgot to add that celebrity Marlee Matlin gave her support to online captioning via Twitter:

[from her friend] I called Netflix and talked 2 one of corporate offices Over 8000 letters & phone calls about #caption this month! YES!!

Update on July 10, 2009: I recently tried to enjoy Gran Torino, but it didn't have TV captions or DVD subtitles. I called customer service, and she sent me another DVD after assuring me the DVD had captions. (NFLX lists Gran Torino as a closed captioned film.) The second DVD also didn't have captions.

I noticed the DVD cover was gray. It turns out that gray-colored DVDs are made specifically for Netflix and may be different from other publicly-sold DVDs. In this case, it appears the studio, Warner Brothers, didn't provide Netflix with a captioned DVD. No one had apparently figured this out. Netflix and its contract lawyers should ensure that all of its specially-issued DVDs have captions. Why would any studio want to prevent hearing impaired people from enjoying their product?

Update on April 18, 2010: Netflix has finally captioned some online videos, but only 100 so far. More here. Looking at hulu.com's options, which have included captioning and now transcripts, I am still disappointed with NFLX.

Daily Show on Socialism

I don't watch much TV, but I love the Daily Show clips online. Here is one on socialism:

http://www.thedailyshow.com/video/index.jhtml?videoId=225126&title=the-stockholm-syndrome-pt.-2

I couldn't hear much of it, and it doesn't have captions, but I still cracked up. As media shifts from the television and radio to the internet, the pace of captioning isn't keeping up at all. The lack of captioning bars most online media from hearing-impaired persons and many senior citizens as well.

Friday, June 12, 2009

Iran's Elections

Today, Iranian voters are having a very American moment--they have an opportunity to vote for change. Iranians may choose between a reformer (Hossein Mousavi) and a sitting president (Mahmoud Ahmadinejad) who got elected by promising reform. (It seems like every election, the candidate promising the most reform wins.) The time is ripe for another change.

First, Mahmoud Ahmadinejad has grossly mismanaged Iran's economy. When oil prices were high, he had an opportunity to increase currency reserves and did not do so; in fact, Iran has suffered double-digit inflation and continues to import oil because of high domestic use (a fact conveniently left out by all who accuse Iran of developing nuclear power solely to develop a weapon).

Second, President Ahmadinejad has already had his chance to fix the economy and to bring Iranians more prosperity. But the way the country has increased selective prosperity is by printing money and engaging in banking maneuvers that would boggle even Zimbabwe's central bankers. Yes, teachers make more money now. Yes, the abject poor are suffering less now. But anyone can take over a state and print money and give it away to the poor (note to Paul "More Stimulus" Krugman: hope you're reading this). The test of one's competency is whether s/he can combat the tide of inflation and lift all boats.

Third, this election is a very easy choice for Iranian voters--do they want to reaffirm the man who is a living affront to so many groups, or do they want to choose a candidate with less baggage? Even if Hossein Mousavi doesn't turn out to be perfect, right now, there's no question that he's better for the country's image than Ahmadinejad. Most analysts, including Western analysts, believe that Mousavi is the better choice. If it turns out that the Iranian voters were wrong about Mousavi--just as they were wrong about Ahmadinejad--then at least they were in good company.

Interview with Mousavi: http://www.time.com/time/world/article/0,8599,1904343,00.html

General stories on the election: http://news.yahoo.com/s/ap/20090612/ap_on_re_mi_ea/ml_iran_election

http://news.yahoo.com/s/ap/ml_iran_election

http://thelede.blogs.nytimes.com/2009/06/13/landslide-or-fraud-the-debate-online-over-irans-election-results/

Pension Q&A

From the WSJ, what happens to your pension if your company declares bankruptcy?

http://finance.yahoo.com/focus-retirement/article/107142/Pension-Benefits-Are-Protected-in-a-Bankruptcy

Thursday, June 11, 2009

Peet's Annual Shareholder Meeting (2009)



Peet's Coffee & Tea Inc. (PEET) held its annual shareholder meeting at an Emeryville hotel on May 20, 2009. The small hotel conference room was filled to capacity. Peet’s offered shareholders Peet's drip coffee, juices, fruit, pastries, and yogurt. Shareholders also received a reuseable Peet’s bag containing coffee beans and a box of tea.

Peet’s shareholder meetings are fun to attend for several reasons. First, although Peet’s is a publicly-traded company, it doesn’t act like most major corporations. Its meetings are less formal, and Peet’s executives seem more receptive to questions and comments than other companies. Second, Peet’s talks about what it is doing to find and develop coffee beans, which usually results in interesting stories involving international travel. Third, it is hard to walk out of a meeting unhappy when Peet’s provides good food, great coffee, and several complimentary items.

CEO and President Patrick J. O’Dea started the meeting with a brief slideshow presentation. He explained that recent economic events have caused American consumers to experience a 30% evaporation of wealth. He mentioned several retailers that had filed for bankruptcy (Circuit City, Levitz, Sharper Image, Linens ’n Things, and Mervyn’s) and indicated these retailers may have expanded too quickly. He talked about an “embarrassment of riches” and how consumers were avoiding conspicuous consumption. Despite these troubling events, however, Peet’s managed to grow sales by 14%.

Peet’s continues to use ERP (enterprise resource planning) to attack inefficiencies and cut costs. CEO O’Dea mentioned that executives had agreed to a management salary freeze for 2009, while increasing salaries for hourly workers. Peet’s commitment to its rank-and-file employees may explain why almost every Peet’s employee I’ve met has provided great customer service. (My local store, run by Store Manager Ian Batra, is particularly good at going the extra mile to make customers happy.)

Peet’s continues to expand by using targeted advertising, such as direct mail and email. Peet’s most recent advertising efforts involve a partnership with San Francisco’s de Young Museum. Peet's also has a promotion that provides a free medium iced drink after you buy five iced drinks. (Make sure you get the card--the promotion ends on August 31, 2009.)

CEO O'Dea explained that Peet’s has multiple channels to sell its products, including retail stores; home delivery; food services; office; and grocery stores. Peet’s coffee is currently sold in over 3,500 grocery stores. While Starbucks relied heavily on expanding its own stores to grow sales, Peet’s grew at a more measured pace and has focused more on grocery store alliances to sell its coffee beans. Peet’s strategy has paid off. Opening fewer stores and selling coffee beans through already-established grocery stores has allowed Peet’s to shift overhead onto third parties and lower its operating costs.

CEO O’Dea then turned the meeting over to coffee buyer Doug Welsh. I am a big fan of Mr. Welsh. Mr. Welsh naturally exudes sincerity and diligence, which is particularly helpful when dealing with international operations and finding reliable business partners. Mr. Welsh talked about how Peet’s finds its coffee beans and what it is doing to maintain quality and sustainability. He showed some pictures (unfortunately, only a few) of himself and buyer Shirin Moayyad in Africa tasting coffee. He explained how he judges coffee beans, using a five point scale:

5 is Peet’s Quality.
4 is Other high grade speciality.
3 is Good quality.
2 is Problematic but saleable.
1 is Defective.

He also explained how Peet’s helps communities create better living conditions. For example, in his never-ending quest for the best coffee beans, Mr. Welsh visited some places where “backyard growers” were smashing coffee beans on rocks, a highly inefficient process. (Mr. Welsh said these people were literally “between a rock and a hard place.”) After Peet’s became involved, it showed the residents how to buy and use various micro-mills to improve coffee production and quality. After residents establish a cooperative and pool money to purchase a micro-mill, production and profits increase. With increased profits, small villages are then able to provide basic health care to their residents and improve their quality of life. (Say what you want about globalization, but I love it for precisely this reason–when it’s done right, everyone benefits.)

Mr. Welsh made some other comments before turning the meeting back to CEO O’Dea. Mr. Welsh indicated he was looking forward to the “New Africa” blend. He said that for logistical reasons, Latin America exports more coffee beans than Eastern Africa. He said that Peet’s tends to pay more than the Fair Trade Certified guaranteed minimum living wage. (Lest you think Peet’s executives are purely altruistic, Mr. Welsh reminded everyone that the ultimate goal was to get the best coffee beans: “Any dime we spend to make the world a better place is your dime. We’re very conscious of that.”)

Mr. O’Dea then opened the meeting to questions. Before I go into the Q&A, I want to make one comment. Peet’s didn’t have a portable microphone. As a result, many questions were difficult to hear. Peet’s might want to bring a portable microphone to its annual meetings to make questions easier to understand. While the CEO repeated most of the questions, it would be better to hear questions directly from the person asking them.

The first question was about free Wi-Fi. CEO O’Dea said that Peet’s offered free Wi-Fi in most of its stores to attract customers.

A shareholder asked about options, referring specifically to page 11 of the proxy statement. The shareholder complained that Peet’s had shortened the vesting time period for certain options from seven years to four years. This change appeared to diminish the link between long term share performance and executive compensation, he said. CEO O’Dea disagreed and later mentioned that 75% of his individual net worth was linked to Peet’s stock.

A shareholder asked whether Peet’s would expand operations in airports and other outlet-type facilities (e.g., BART stations). CEO O’Dea said that Peet’s is always searching for good locations. Later, in response to a related question, CEO O’Dea said that Peet’s had no plans to enter the franchising business but had 70 licensed stores. (A “licensed” store is a store that Peet’s does not own but allows the operator to use the Peet’s brand name and products. Persons serving coffee in those non-Peet’s-owned outlets participate in a Peet’s training program.)

A shareholder asked about what Peet’s was doing to improve brand recognition and sales growth on the East Coast. CEO O’Dea talked about targeted advertising.

Someone asked how many stores Peet’s planned on opening in 2009. (I apologize, but my notes are not definitive on the response, so I cannot provide an answer. In case you are interested, my notes indicate, “10 stores (reduced #) – open in ‘09. 58 –> 200 stores.”)

Someone asked about a Consumer Reports taste test that rated "Eight O’Clock" coffee as the best-tasting coffee. Mr. Welsh said that the survey was flawed for several reasons, which drew some laughter. Mr. Welsh opined that the persons who participated in the taste test probably grew up tasting less strong coffee.

Someone asked whether Peet’s would enter the chocolate business. CEO O’Dea said no, but a partnership might be possible.

Someone asked about diversity, pointing out that the Board wasn’t diverse. CEO O’Dea said that diversity was a continuing process and an important factor. He said that Peet’s had done well in a UC Davis leadership survey when compared to other corporations. He also said that half of the executive team reporting to him were female.

Someone asked what Peet’s did to choose the best tea. A Peet’s employee said that he had inherited many good relationships with tea suppliers. CEO O’Dea said that Peet’s was now selling cold tea in select grocery stores. (I’ve tried these teas–my favorite is the Snow Leopard Tea with Honey.)

A shareholder mentioned that Peet’s was very helpful when it came to composting and that Peet's gave away expired beans for composting.

Someone asked how Peet’s finds high quality coffee. Mr. Welsh said that too-rapid growth leads to reduced standards (a little dig at a certain Seattle-based competitor), and Peet’s slower growth allowed it to focus more on finding high-quality coffee beans.

A shareholder asked if any Peet’s stores had not done as well as expected. CEO O’Dea mentioned that Peet’s had closed the Westminster store due to its poor location/visibility.

I asked Peet’s to publish more information, perhaps on Facebook, about Doug Welsh’s and Shirin Moayyad’s travels. I said I really enjoyed seeing the pictures from the coffee buyers’ international trips, and I regretted that Peet’s only showed a few of them at its meeting. I said Peet’s ought to consider publishing a “coffee table” book with pictures from different countries and, with permission, the people its buyers meet and work with.

I also asked a question about food sales in Peet’s retail stores. It turns out that Peet’s makes 60% of its retail store profits from drinks and 40% from food sales. If I heard the CEO right, the margins Peet’s gets on its food items must be incredible. (Try the vegan chocolate chip cookie–it’s delicious.)

A few tips for Peet’s customers:

1. If you are staying inside the store, order a large drink in a “for here” cup. The “for here” glass cup seems larger than the “to-go” cup. You get more coffee and you also help the environment.

2. It costs Peet’s about 7 cents for a hot coffee “to-go” cup, but about 15 cents for a cold coffee “to-go” cup. As a shareholder, you should buy a Peet’s tumbler, because you get a discount each time you use it, and Peet’s also saves money. Of course, you also help the environment by reducing waste.

3. When ordering a frozen drink (e.g., a frappe), order it “extra bold.” If you don’t order it “extra bold,” your drink won’t have espresso–just regular coffee. [Update: it's actually double-strength coffee, but as I said, no espresso.]

I look forward to attending next year’s meeting and hearing more about Mr. Welsh’s travels. In the meantime, I will be buying lots of Peet's coffee. Although the economy isn't doing very well, and I will earn much less money this year, I cannot bear to give up my one luxury--a Peet's cappuccino.

Note: the pictures above are of myself, Doug Welsh, and Shirin Moayyad, and the food trays after the meeting was over.

Note: a review of Peet's 2008 meeting is here.

Disclosure: I own an insignificant number of Peet’s (PEET) shares.

Wednesday, June 10, 2009