If 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.