Netflix pwned, "strategy" backfires

[Homeslice]

BRIAN STELTER, On Thursday September 15, 2011, 10:01 am EDT
In wake of new prices that force some customers to pay more, greater numbers of people are canceling their Netflix subscriptions than the company expected.

The company on Thursday morning revised downward, incrementally, its subscriber estimates for the quarter of the year that ends in two weeks. It did not change its financial guidance for the quarter. Still, its stock dropped almost 15 percent in heavy trading when the market opened Thursday. :zowned:

The revision reflects the negative reaction to Netflix's decision, announced in July, to separate its DVD-by-mail service from its faster-growing Internet streaming service. Before, DVD-by-mail was a $2 add-on for some streaming subscribers; now, each service now costs $8.

Some subscribers were upset by what was effectively a price hike, and a subset of them have cancelled their Netflix accounts.

In July, the company said it expected that it would end the third quarter with 22 million subscribers to the streaming service, 12 million of whom would also opt for the DVD-by-mail service. It expected back then that 3 million would opt only for the DVD service.

Now, it's expecting that just 2.2 million will opt only for DVDs, a drop of 800,000. :zowned:

Netflix also anticipates a slight drop in streaming subscribers, to 21.8 million, a difference of 200,000 from the earlier estimate. It still expects 12 million of those streaming subscribers to also pay for DVD-by-mail, helping it to generate more revenue overall.

"Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice," the company wrote in a letter to shareholders on Thursday.

Earlier this summer, Netflix's chief executive, Reed Hastings, said he recognized that "we have to face those subscribers who are upset by the price hike this quarter."

He said then that the price change would benefit Netflix in the fourth quarter and beyond, and that the company intended to spend the increased revenue on its streaming service, partly on research and development. "As our subscriber base continues to grow, we're able to spend more on improving that service, both on the R.& D. side and on the content availability side," he said.

[Particle Man]

Hey, this looks familliar. Oh yeah:

http://www.twowheelfix.com/showpost.php?p=490143&postcount=60

[Homeslice]

Hey, this looks familliar. Oh yeah:

http://www.twowheelfix.com/showpost.php?p=490143&postcount=60

Whoops.

Great policy here of not allowing people to delete their own threads. Now this thread will continue to sit, wasting space. redflip

[101lifts2]

As our government butt fucks us up the ass with taxes, America is worried about a 6 buck increase for movie usage. Nice.

[Particle Man]

As our government butt fucks over with taxes up the ass, America is worried about a 6 buck increase for movie usage. Nice.

Shhh - I'm trying to hear my movie

[fujimoh]

As our government butt fucks over with taxes up the ass, America is worried about a 6 buck increase for movie usage. Nice.

we need the 6 bucks 'cause the gov't will soon be claiming it. You can drop money to Nexflix, but the gov't confiscates money at the point of a gun and the clang of a jail cell door

[derf]

http://blog.netflix.com/2011/09/explanation-and-some-reflections.html

They announced that they are gonna stop shipping DVD's all together. BUT then they are creating a second company called quickster that ships DVDs to you. So now instead of one company whose service I'm not planning on using any more there are two companies whose service I dont plan on using any more, and why would anyone want two separate bills anyway.

This just seems dumb to me, now I have two sets of bills, two queues, two rating systems, two websites, two separate accounts to manage. The most frustrating thing about netflix was to get a DVD in the mail only to realize that it was available streaming in the first place.

[Homeslice]

Mad gheyness

[Trip]

all aboard the fail boat, this will just piss off more customers. They are digging themselves a nice deep hole.

[pauldun170]

What are these "DVD" things?
I do not know of such nonsense.
If I want to watch a movie, I turn on the media center and movies magically appear.

[derf]

all aboard the fail boat, this will just piss off more customers. They are digging themselves a nice deep hole.

I understand that from a business perspective this works, its a great idea, split two businesses with separate products (streaming vs dvd), show they are separate companies by creating separate websites. But from a customers perspective this is just downright dumb.

Unless....

This means they can start to negotiate two contracts for content, and get better pricing for their streaming services (which they are trying to secure as their core content).

Or.... (my guess)

They are trying to completely kill off their high overhead DVD services all together without hurting their streaming business too much. I can see sometime next year a press release (soon after another press release from nextflix announcing that all titles available for DVD will be available streaming) from quickster saying 'due to lack of interest and low sales figure we are ceasing operations'. This way they can file for bankrupcy and netflix wont be held liable

[Trip]

They are trying to completely kill off their high overhead DVD services all together without hurting their streaming business too much. I can see sometime next year a press release (soon after another press release from nextflix announcing that all titles available for DVD will be available streaming) from quickster saying 'due to lack of interest and low sales figure we are ceasing operations'. This way they can file for bankrupcy and netflix wont be held liable


This is what I see it as, but unless they get licensing fees sorted out for streaming. They are going to get butt fucked from both sides.

[derf]

This is what I see it as, but unless they get licensing fees sorted out for streaming. They are going to get butt fucked from both sides.

And I believe that two companies give them a leg up to do that

[derf]

Further proof I dont think quickster is in it for the long haul...


If they were trying to hang around for a while they would have by the time it was announced created a PR group to handle any media, and one of the first things they would have done is to get their twitter account straight.

Please take into the account of quickster, a young adolescent who is a connoisseur of bitches and canibus.

https://twitter.com/#!/Qwikster

[Corey]

I read something yesterday that they're going to be announcing a huge bump in their streaming titles soon, and that Qwikster will be adding video games to the mix for an extra fee about the same as adding blu rays to your plan. If they can deliver on both, they may get me back on a DVD plan as well.

[101lifts2]

I like the lower rate for just streaming....

[Sixxxxer]

I like the lower rate for just streaming....


What lower rate? they both cost the same

[derf]

http://s3.amazonaws.com/theoatmeal-img/comics/netflix/header.png
http://s3.amazonaws.com/theoatmeal-img/comics/netflix/1.png
http://s3.amazonaws.com/theoatmeal-img/comics/netflix/2.png
http://s3.amazonaws.com/theoatmeal-img/comics/netflix/3.png

[Particle Man]

http://s3.amazonaws.com/theoatmeal-img/comics/netflix/header.png
http://s3.amazonaws.com/theoatmeal-img/comics/netflix/1.png
http://s3.amazonaws.com/theoatmeal-img/comics/netflix/2.png
http://s3.amazonaws.com/theoatmeal-img/comics/netflix/3.png

:lmao: awesome

[Homeslice]

lol at today's claim that they're going to add 'substantial' content

And now they want to get heavy into gaming......Sorry but the fixed costs would be a lot higher, and the shelf life shorter.

[EpyonXero]

Good article about Nexflix's long term strategy.
http://www.engadget.com/2011/09/19/editorial-reed-hastings-netflix-spinoff-isnt-about-dvd-succes/

[Corey]

http://www.latimes.com/entertainment/news/la-fi-cover-dvd-future-20110925-1,0,2373127.story

It doesn't matter what alternatives you use, the movie industry is about to ramp up their efforts to drive all of them into the ground.

[EpyonXero]

I refuse to "rent" a digital movie that costs the same as buying a BluRay. Making people wait years before they can see a movie on a flat fee streaming service is just going to increase piracy.

[Particle Man]

Good article about Nexflix's long term strategy.
http://www.engadget.com/2011/09/19/editorial-reed-hastings-netflix-spinoff-isnt-about-dvd-succes/

*backpedal, backpedal, backpedal...*

http://finance.yahoo.com/news/Netflix-Abandons-Plan-to-Rent-nytimes-4287150265.html?x=0&.v=1

[Trip]

just saw this too

[Homeslice]

Qwikster was a stupid name anyway

[HurricaneHeather]

Qwikster was a stupid name anyway

Yeah...that was the problem. :lol:

[t-homo]

I'm thinking about cancelling netflix at least until they start adding new movies to streaming, or at least movies I have heard of.

[Apoc]

lol at today's claim that they're going to add 'substantial' content

And now they want to get heavy into gaming......Sorry but the fixed costs would be a lot higher, and the shelf life shorter.



Gamefly is doing damn well with gaming...

[HurricaneHeather]

One of the movies I've watched on Instant before is now DVD only. Not happy.

[Particle Man]

One of the movies I've watched on Instant before is now DVD only. Not happy.

Netfux is all sorts of full of fail now

[Tmall]

At first they were all, "We're gonna do this, and then this and then this. And you're going to like and pay for it!"

Then they were like, "Whoops, we didn't realize how quickly people would drop our second rate luxury service since they already have a means to watch whatever the hell they want without paying a cent for it"..

[Particle Man]

At first they were all, "We're gonna do this, and then this and then this. And you're going to like and pay for it!"

Then they were like, "Whoops, we didn't realize how quickly people would drop our second rate luxury service since they already have a means to watch whatever the hell they want without paying a cent for it"..

And then we're all like "Too late, effers!"

[anthonyk]

One of the movies I've watched on Instant before is now DVD only. Not happy.

They've been doing that for a while, but I'm guessing it's gonna get more widespread as licenses run out. :td:

[Tmall]

what pissed me off most was that deadman on campus would only play in french!

[Particle Man]

http://finance.yahoo.com/news/Netflix-loses-800000-US-apf-198318757.html?x=0

The downward spiral continues.

[Amber Lamps]

http://finance.yahoo.com/news/Netflix-loses-800000-US-apf-198318757.html?x=0

The downward spiral continues.

Ahhh who really cares? I gave up on the disks through the mail thing a long time ago... I use Netflix and VuDu for movies AND I actually just got Blockbuster for free from Dish so...:idk: The thing with BB is that you can get movies through the mail and take them to the store and exchange them so it cuts down on the lag time. With NF's 1 at a time, you're lucky to score 3 movies a week. This way, I can get up to 4 or even 5 if I feel like driving.

[Particle Man]

Ahhh who really cares? I gave up on the disks through the mail thing a long time ago... I use Netflix and VuDu for movies AND I actually just got Blockbuster for free from Dish so...:idk: The thing with BB is that you can get movies through the mail and take them to the store and exchange them so it cuts down on the lag time. With NF's 1 at a time, you're lucky to score 3 movies a week. This way, I can get up to 4 or even 5 if I feel like driving.

At this point, it has nothing to do with DVD's versus streaming, etc. Now it's just an interesting case study in how a company can get too large for its britches. Often times, the folks in the C-Suite forget that there are these people out in the world called "customers" who still can make or break a business even after almost a decade of success.

Those customers have even more sway when there are other choices out there (again, something too easily forgotten). This is just an example of how razor thin the border is between gaining and losing market share.

[Adeptus_Minor]

Now it's just an interesting case study in how a company can get too large for its britches. Often times, the folks in the C-Suite forget that there are these people out in the world called "customers" who still can make or break a business even after almost a decade of success.


Indeed.
I saw the headline this morning and was wondering if they had to order out for crow :curb: or if they already had plenty in the pantry when they decided to announce their new strategy. :lol:

[anthonyk]

http://finance.yahoo.com/news/Netflix-loses-800000-US-apf-198318757.html?x=0

The downward spiral continues.

From the article:

"The result: Netflix expects to post losses next year when it starts selling its steaming service in Britain and Ireland."

That's an unfortunate typo. :lol:

[Particle Man]

From the article:

"The result: Netflix expects to post losses next year when it starts selling its steaming service in Britain and Ireland."

That's an unfortunate typo. :lol:
Hahaha I totally missed that. Freud would be proud :lol: