netflix-stock-dropsIf you use Netflix then you know that they have split their service into two different products. They have unlimited online streaming for $7.99 a month and if you want to get physical copies of the DVD you would have to pay another $7.99. If you have a Bluray and want HD version, add $2.00 more. The subscribers reaction was not good. Netflix received a lot of bad press and subscriber complaints about this when they rolled out this new plan last July.

As a result the $300.00 stock value prior has now diminished to $169.00 a share with a loss of subscribers that could reach over 1 million in the last quarter. Netflix stock on Thursday took another 19% bath. If you ever thought of raising your prices 60% in your own business, maybe look real hard at the Netflix model and take a second think on it.

More bad news for Netflix. Starz, which accounts for a lot of the content I watch consisting of hundreds of new and classic movie titles, has decided to pass on the 300 million dollar deal in fears of what the online streaming impact is doing to cable subscribers. Can’t really blame Netflix here other than just plain being successful because the 300 million dollar offer was 10 times higher than their current licensing terms. Think Netflix isn’t making any money?

Blockbuster ended up in an Epic Fail because of not seeing the Netflix model and adapting quickly to the model, now will Netflix be a victim of it’s own success and poor decision making regarding subscriber price gouging? I asked Simmons to add it to our stock ticker on our sidebar, let’s see how things roll for Netflix.

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10 COMMENTS

  1. Yeah I’ve been thinking about dropping the DVD part of my plan.. I really don’t use it. Depending on what happens with Starz as well, I may have to drop Netflix altogether.. I’m hoping they’ll work a deal and be able to keep Starz on there..

  2. @kristofer brozio: I got to get threaded comments, this sucks. Anyway, Netflix is scheduled to loose Starz February 2012.

    I never use the DVD’s either. I have been steaming a ton as background noise at work through the Dell Streak.

  3. It wasn’t price gouging, not in the slightest.

    They simply wanted each of the divisions — Streaming and Mail — to be independently self-sustaining.

    The 2-dollar add-on for DVDs by mail wasn’t enough to cover the postage.

    Netflix’s biggest issue wasn’t a “subscriber revolt,” it’s that it was so insanely successful that the studios are going to break their bank. Netflix can’t continue without good programming, and the studios are about to sock it to them.

    That’s why investors are right to downgrade it.

  4. I’ve tried it, and was very unimpressed by their selection so i never bothered to pay for it.
    I already have cable, that’s good enough.

  5. Geesh I guess I am one of the few that uses the DVDs more than the streaming. I only have one out at a time but I try to watch at least one a week. I thought about dropping the streaming but we just had a kid (17 days old now) and don’t have cable so I will be depending on the streaming to provide kid shows for her. Besides from what I hear kids like to watch the same things over and over when they are little so if the selection is low it doesn’t really matter.

  6. […] its own PR error (coincidentally enough, the acknowledgment comes in the week following a 19% drop in its stock price). And what do we get for standing by as loyal customers, despite the negativity surrounding the […]

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