Can Netflix Bounce Back from Failure?

Posted by on October 25, 2011 at 5:07 pm

Last night after I heard the news that Netflix actually lost 800,000 subscribers compared to it’s original 600,000 estimate I immediately checked out the stock value. It was trading after hours at about $86/share. Today when I checked the stock I felt like I was being stabbed in the gut and I don’t even own stock in the company. It dropped 35% from the day before’s closing bell; $119/share to $77/share, $6 billion value to $4 billion. At it’s peak it was $298/share about $18 billion value, that’s just crazy to me.

What happened to Netflix in the first place? In July Netflix announced price changes that wouldn’t go into effect until September. These price changes made it so people paying $9.99/month that got unlimited streaming and one DVD out now would have to either pay almost $6/month more or could go down to a $1 cheaper play and get only streaming or only one DVD at a time by mail. People were furious to say the least.

This isn’t worth it. For one, the reason why I keep the dvd/streaming is because there are times when I can’t get a certain movie streaming and it’s only available on dvd. Have all the titles streaming and I’ll call this a good move. This is only good for Netflix to raise their bottom line, has nothing to do with the value of the customer.

We get it, movie studios and TV studios are the one to blame because they are raising the prices on you? What I don’t get is that Netflix is the biggest and doesn’t have that much competition, why don’t they throw their weight around? Wouldn’t the studios back down for fear of losing the money Netflix pays them?

Before that Sony titles were pulled from streaming because of conflicts with Starz. Then Starz announced it won’t be renewing their deal with Netflix. To me these really hurt, I swear every time I watch a movie it’s from Starz. Can it get any worse? Yes.

Qwikster was announced, the spin-off service where you would go to get DVD and game rentals. What, why? Netflix wanted that name for their online streaming service. Oh man 27,000 comments on their blog post with a lot of really detailed post here is an excerpt:

…I understand – you guys are setting up the DVD business to sell to someone else so that you can focus on where you see the future (streaming) and that studios are pressing you for a $/customer/month type of reimbursement. But you guys are handling this so piss poor awful it is pushing your best customers to drop your service…

And just like that Qwikster was no more.

How can they recover from this without going back to the old prices (because that will never happen)? Reed Hastings doesn’t have to go but he needs to shut and stay out of the news while they do the stuff below because his name is tainted right now.

Go out and get everything under the sun for streaming, as many latest movies they can, all the oldest movies, get more TV shows available the day after air and promote so people know it exist and make it easier to find. Bring mobile queue management back. Give a free month to new customers so they can try out the new you. Oh and about streaming restrictions, let the same IP stream as much as they want from multiple devices at the same time.

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