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Reuters
Will CEO Reed Hastings be able to restore confidence in his company?
Netflix has sent its most recent venture — a plan to split its streaming and DVD-by-mail offerings into two separate businesses — to the cutting room floor.
CEO Reed Hastings said on the company's blog that the planned split was dead, but the bad reviews the move earned can't be erased so easily. Netflix first antagonized customers in July when it announced a 60 percent price increase to its hybrid DVD-and-streaming subscription. The planned split, which would entail renaming the DVD business Qwikster and require hybrid-plan users to keep two separate accounts, immediately got two thumbs down from customers when it was announced just a few weeks ago.
Netflix stock, which was in the $300 range in July, dropped by nearly $200.
In the annals of corporate blunders, it's not quite New Coke, but Netflix picked a bad time to stumble. Competition from rivals as diverse as Dish Networks and Amazon is growing, and every disenchanted customer is a potential defector.
The banking sector offers a particularly chilling cautionary tale for Netflix: It's a lot more of a headache to move a checking account than it is to cancel a movie subscription, yet consumers are willing to dismantle the foundation of their personal finances in response to unpopular fees.
The company's about-face may be rewarded by investors — Netflix stock advanced about 3 percent when the announcement was made, but it has since fallen — but it also forces executives to prove themselves in a field they once dominated.
"It's no doubt reassuring that people can change their minds and get back on track," says Will Richmond, president and founder of market research firm Broadband Directions LLC. "At the same time … it takes a little bit of the shine off the Netflix invincibility," he says.
What about customers? Most of them will come back, says David Miller, managing director with investment firm Caris & Company. "I'd be wiling to bet churn went to 7 to 8 percent. They've got a lot of work to do to get those people to come back," he says.
But wooing back its subscriber base will take time. "It could be three to six months, and in the meantime there's a lot more competition," Miller says. "You can't fix that in one quarter."
Despite the griping from customers about the price changes over the summer, that alone wouldn't have led to mass cancellations, says Robert Passikoff, founder and CEO of branding and research company Brand Keys. Prior to the price change, Netflix had a 99 percent satisfaction rating in Brand Keys surveys that measured the company met customer expectations. Following the price increase, that dipped slightly to 96 percent, but it dropped down to 87 percent after the company rolled out Qwikster and its split lineup.
"When they split the company, they did it in such a way that nobody understood precisely how it was going to work, and that confusion led to a degradation in terms of the brand," Passikoff says.
Netflix had loyal customers who were willing to swallow the price increase because they had a well-liked service that offered value even at a markup, but shaking up the foundation of that service torpedoed the value customers perceived.
By way of comparison, Passikoff points to Starbucks' much-maligned push for efficiency in the mid 2000s: The coffee chain phased out time-consuming elements of its operations like complicated espresso machines and fresh-ground beans. Customers hated it, a fact acknowledged by company head Howard Schultz in a leaked 2007 memo.
Despite this admission, investors continued to hammer the stock for another couple of years, and Starbucks learned the hard way — as Netflix is likely to — that restoring customer confidence in your brand during an economic slump is an uphill endeavor.
In spite of the economic and competitive challenges facing Netflix, Caris & Company's Miller is bullish about its long-term ability to attract and retain subscribers.
"At the end of the day, though, the selection is still the best on Netflix," he says. Most streaming subscribers are there for the TV shows, and thanks to its partnerships with networks like Fox, this is an area where Netflix excels. "There's no one that matches this kind of selection," he says.
Bowing to an outcry from its customers, Netflix is dropping a plan to spin off its DVD service into a new company called Qwikster. NBC's Brian Williams reports.
Leave a Comment:
Netflix can solve their problems with one action, a mass effort to put most of their DVD library into streaming form. Looked today at what is in the new release section to find the usual batch of never heard of titles, or made for TV flops. The only major thing I recognize is Meet Joe Black from 1998... in new releases. Get some contracts together, get some more updated and higher end streaming content. Unfortunately Netflix blunders have now hurt that possibility because studios know they are in trouble and will make them pay even more in any new contract.
Did you get the mail from the CEO? He made it clear that the options were the streaming, or the diskswith " their vast inventory of titles". In other words they never plan on putting most of the stuff they have into streaming. Disappointing to say the least.
DS1701: Pretty much exactly what I came here to say. I canceled my DVD plan when Netflix announced the price hike, but I would pay for streaming what I used to pay for DVD+streaming, if they had at least most of the titles available for streaming that they have on DVD. The streaming selection may be the best there is, but it's still pretty lame. I know that's largely the studios' fault, terrified as they are of digital delivery, but money fixes everything, and I would gladly pay more.
>Netflix can solve their problems with one action, a mass effort to put most of their DVD library into streaming form.
Why would anyone ever buy a DVD or Blu-Ray again if they could get it all instantly for less than ten bucks a month?
If they want to claim a vast array of DVD selection, they'd better make sure I quit finding movies on google that I can't order through Netflix.
As for the streaming, if they don't get Starz back on board, our service will end in Feb 2012.
I wonder if these big businesses will ever really learn that no one is too big to fail, and someone will always take their place if they irritate an already irritable costumer base? Prices go up for service, of course, but this was not only extreme, it was unexplained, and came amid word that service would contract, not expand. I bet the guy who brought this particular bottle of scotch to the CEO is looking for a new job.
Netflix can't stream its vast inventory because of licensing fees, etc. They can't afford it. There's so many options for streaming/watching movies now that cancelling a longstanding Netflix subscription is quite painless.
Like most film lovers, I acknowledge that Netflix has the best overall inventory of film based on time, genre, and locality. But in order to access it, you must do mail order...period.
What most people don't understand (meaning they don't bother to find facts before they start bitching) is that Netflix can not LEGALLY stream anything. They have to PAY a third party for the right to stream videos and can only provide the content that they are allowed to. They had a major deal with Starz and were paying 30 million a year to stream Starz content. Then Starz treid to bump the price by 660% to 200 mil/year PLUS they wanted Netflix to charge MORE than 8 bucks a month for streaming. Netflix refused to bump their price past $8 so Starz bailed.
It's their sucess that has caused the studios to want a bigger piece of the pie which is directly responsible for their "blunders".
And this is why streaming will never replace a physical media like a DVD or Blu Ray disc. The available selections on streaming simply cannot compete with the vast array available on disc, not without the company paying more in licensing fees which will then outprice the service for customers.
A true film buff would never settle for just a live stream of a movie anyway. Really movie fans collect and display their favorite movies, and enjoy bonus features and commentaries and behind the scenes stuff, none of which is available via streaming at all. As long as their are movie buffs and film nerds, there will always be a market for a physical product.
Not that I am pleased with the pricing increases, and I would sorely love to have a better selection of streaming titles, one must keep in mind why the streaming selection is in the state its currently in: Netflix has zero real leverage against studios regarding contract pricing. It was easier when netflix was smaller and streaming wasn't as popular, but now movie studios smell big bucks, and wanna take a big wet bite out of Netflix because of it. Dish and Amazon have better leverage, because of the fact that they provide other services that could hurt the studios(Dish with the PPV VOD service, and Amazon with their huge customer base to buy the products from the studios). What does Netflix have?
Netflix could easily go on the ropes. This is a company whose real capital value diminishes daily (that is, when it buys a DVD the value of that DVD heads immediately6 toward zero.) That means that its real value is floating down somewhere way below the market cap. That have lost a third of their market cap. If the market should start fishing for their bottom, then the stock could easily drop below $30. All sorts of financials would trip in around $50. And even a slight hiccup in their liquidity or cash flow could put them immediately into bankruptcy because they MUST buy new movies to continue in business.
Personally, I was fed up with Netflix after the class action lawsuit fiasco. I knew at this point that this was one of those companies who think they would be perfect if they could only get rid of those stupid customers. Once the class action thing played out, it became easy to consider that Netflix was just another greedy corporation that would soon start killing itself.
I dropped back to 2 DVDs at a time from 4 DVDs at a time. And no streaming. I am hard-of-hearing and Netflix streaming does not support captions --- not really ready for prime time. Also streaming is going to go through some serious growing pains. All the carriers figure that charging per megabyte of streaming is the way to huge profits. Even more so for smartphone carriers. So just at the time when carriers are considering what to do, Netflix unwisely decides it is the right time to float a major initiative in streaming movies. Gimme a break. What stupid 24-year-old MBA came up with that jewel?
I will just keep Netflix until a good deal from Blockbuster comes along. DishNetwork is already partnering with Blockbuster on some deals, so I can expect something even better along that line pretty soon. It would be a good strategy for DishNetwork to buy and then later adsorb Blockbuster and let it do a mail-in and streaming function and eat Netflix's lunch.
Umm a few minor corrections, #1, Dish owns Blockbuster, Dish was the highest bidder during Blockbuster's bankruptcy proceedings. #2, if you have dish network, you have the option of adding blockbuster movie pass. Nice, but not quite ready for primetime itself(that and dish needs to spend more money on better software for their tuners, since they also own Echostar, the company that makes Dish's tuners). #3 The streaming only bit may have been Netflix's attempt to create leverage against the movie studios in order to better negotiate contracts for streaming content. An effort that blew up in their faces on a big scale. On a side note, Netflix is starting to roll out closed captioning, having gotten over the technological hurdles, and now it is a matter of implimenting it across there 100,000+ library of videos.
bye-bye netflix- who is next- I have canceled my subscription, and am searching for someone to offer titles I would be interested in streaming. Netflix seems to be affraid to make a decision and stick with it.To me it seems like BRETT FARVE should be their spokesperson!!
Businesses that think the consumers today will not dump them over price hikes are as dumb as dumb can get the consumers can't afford it anymore and there are just to many companies that will step in and take that upset consumers money, maybe these idiots did not hear the INCOME for the MIDDLE class and POOR has gone DOWN and that's the largest part of the PIE, so when they try any more hikes they had better consider a lot of the Luxury's like NETFLIK can be discarded, today people are more worried and concerned about the important things LIKE FOOD and HOUSING ....... I can't wait for this to happen to the cable companie, now this is another greedy bunch ...
wskid - no one else really comes close to netflix's streaming library (especially at 8 bucks a month) so the only real, viable alternative is torrenting stuff.
I have Netflix, Hulu Plus and Amazon Prime (which I got for the free shipping, but free flicks? I'll take that thanks). They each have the strengths (well, amazon is still pretty weak), and together they're not even half the cost of cable.
I am not excusing the arrogance of a rate hike in this economy for a non-essential service like Netflix, but it is not that simple. They must license those films from the studios and it is difficult to transfer the disc content to streaming content because of the needed contracts; It is a legal rights issue. They used it as a lame excuse to hike rates even though they had a record profit 2010. These companies are now slaves to shareholders who shove their investments to outperform variance year over year. They'll need to find a different way because this customer is never coming back. I honestly don;t miss it. I kept the discs way too long anyhow and was not getting the true value of the deal by my own lifestyle, so it's no longer really relevant
"Despite the griping from customers about the price changes over the summer, that alone wouldn't have led to mass cancellations"
Ummm Yes it was.
Streaming will absolutely replace physical media. Blu-Ray is the last evolution in physical media. The studios will eventually get behind a delivery method that funnels the profits into their own pockets, Netflix wasn't it.
"New Coke" sucked, it was even worse than Pepsi. Netflix can say what they want, they are the ones who alienated the public, not the reverse. Again, when you try to gold plate a turd, you're still selling a turd.
Well written article Martha, how much did Netflix pay you?
C'mon folks! This is all about greed! First they up the fees 60%, then they had to quick (or maybe "qwik") come up with a justification for the ridiculous increase, so they hatched the hair-brained scheme to split the company. I seriously doubt they even thought about that until the fallout started from the fee increase and they needed to try to justify it. Which they did not and still have not.
Let's face it - these guys are idiots and unless they backpedal on the fees, a few years from now very few people will even remember Netflix.
BinNH - don't you mean hare-brained?
Q From Alison: I was reading a Lewis Lapham article in which he used the term hairbrained. I’d always assumed it was harebrained. Which is it, and how did it come about?
A It would be easy to say the right answer is harebrained, because that’s the first form recorded and the reference is pretty clearly to the apparently stupidly senseless behaviour of hares in the mating season (in this, they’re not so different from humans, I note sourly from long observation, but don’t let me side-track myself). Approach the term through mad March hares and you will get the idea.
So it’s equally easy to say that hairbrained is wrong. But even a quick look at the historical evidence stops one. The first example in the Oxford English Dictionary is dated 1548, and that has hare. But the second is from 1581, and that has hair. The editor who compiled the OED entry seems to have deliberately alternated examples in the two forms, since there’s roughly one of each cited from every century since.
The reason for this, at least in early years, was that hair was at the time another way of spelling hare. This spelling was preserved in Scotland into the eighteenth century. As a result, it’s hard to tell when people began to mistakenly write hairbrained instead of harebrained, in the belief that it referred to somebody who had a brain made of hair, or perhaps the size of a hair. When Sir Walter Scott used it in The Monastery in 1820 (“If hairbrained courage, and an outrageous spirit of gallantry, can make good his pretensions to the high lineage he claims, these qualities have never been denied him”), he was probably perpetuating the Scots spelling rather than committing a folk etymology.
I think hair brained is right. The hair grows in instead of out, throttling the brain.
I've never seen "hairbrained" in any professionally written and edited piece; it's always "harebrained." Per all I've ever seen, "hare" is right, "hair" is wrong (and FWIW, my Firefox spellcheck agrees).
/love the smell of threadjack in the morning
Yes, I meant hare-brained and I do know the difference. I was either typing too fast or got had by my auto-correct.
Luke - did you not understand what Bin meant? Were you so confused by the error that you had to double check?
Personally I think the 660% increase Starz was asking for so Netflix could continue to stream their content was more than enough justification for a 60% increase in price. Of course I do have this annoying habit of finding facts BEFORE I start bitching about something.
Alright spelling nerds. We get the point.
http://dictionary.reference.com/browse/hairbrained
Either or. Take your pick on the spelling...
are we now at elementary school. Someone complaining of spelling and typos on comments section. Some people surely have too much time on their hands. Smile, life is short.
@Backcountry164, ummm, facts? really? The current mulit-year Starz/Netflix contract is still in place. It is set to expire in 2012. It is the 2012 contract negotiation where Starz is increasing the fees by a very large amount. So the question is, why has Netflix bumped its rates up to account for an increase with Starz rates, when in fact THAT CONTRACT hasn't even been inked? Why have rates increased before the contract has even been put in place?
Furthermore, if the Starz/Netflix contract never gets inked, according to your 'facts', shouldn't we see the Netflix rate increase disappear? That will not happen.
Here is a 'fact' for you dated Sept 2, 2011:
"Netflix learned today that it may lose a significant source of its content when Starz Entertainment announced it would not renew its distribution deal with the popular streaming service for next year."
So tell me BackCountry, when will Netflix start paying this magical %660 rate increase from Starz?
"Most streaming subscribers are there for the TV shows..." I don't think so. I WAS there for the off the beaten-track and out-of-print movies that are hard to find. When they decided to jack the price up 60% I left. I won't be going back at that rate, or anything approaching it. Alas, poor Netflix, we knew ye well...
I am also not there just for TV. Yes, they do have most Trek series now (hooraaay!), Dr. Who and Sports Night (finally!!), but most of what I stream is movies. Third-rate movies with cheap licenses, granted, 'cause that's largely what's there, but that's why I'm willing to be wooed by the first competitor with a better selection.
I agree.
Now I wish they would wrestle DS9 away from Amazon, because their player SUCKS.
Check again, they unlocked DS9 recently, so all the Trek tv shows are there. I just pick-and-choose the story-arc episodes and skip the "fillers". As long as they keep Trek, Bones, and South Park, and the handful of decent films they offer, I'm good--though I wish they'd stream Babylon 5 again...
If you only want the streaming then your price would have gone DOWN by 20%. Aside from that it is still, by FAR, the cheapest option and the ONLY option for "off the beaten track" movies.
It's still the best selection and price out there, I'm always confused by people who quit the service, then go on to say they only used one or the other. If that's true your price either decreased or stayed the same. Also, seriously, a 6 dollar difference for dvds and streaming combined is make or break?
Netflix pulled a Blockbuster, now there's two irreverent companies that I won't bother giving a second look.
Capt Tripps - I've heard people say they only used one or the other while PAYING for both. The price increase just woke them up to the fact that they really weren't making use of all they were paying for, so they decided this was a good time to cut out the bit they hadn't really been using. At the increased cost it just wasn't worth keeping.
That actually makes sense, it's the people who cut out what they were actually using that I do not get.
They pretty much lost me at the fee increase. I kept the streaming because my daughter begged me to, but the selection on streaming is on par with what I can pick up at the video section of the nearest Goodwill store.
Oh yeah, I wanted to tell the powers that be at Netflix - now is not the time to be nickel and diming your customers so you can make a bigger buck. We are already being nipped to death.
I left because of the fee increase and will not go back!
I cut my subscription from 4 DVD's at a time down to 2. We have a few more episodes of Torchwood Season 4 to watch and then I cancel the streaming portion. They've lost Starz anyway starting in February 2012 so there goes the streaming business. They already lost Sony films on streaming. When you can see and listen to Blu-ray disks, why waste time with low-rez, jerky vid and low quality sound? If the DishTV deal turns out to be viable I will probably cut NetFlix all together.
I have Starz as part of my cable tv package and rarely find anything good (or good enough to watch again) to watch on it, so no big loss for me...
If the board of directors is at all independent (yeah, I know, they all are...allegedly), the CEO needs to be shown the door. In the span of four months, he has managed to anger pretty much every customer in one way or another. While I realize that the board probably could care less abut that, they should care that the company has lost 67% of its market capitalization value in that time. But, my guess is, his bonus might only be a million dollars this year, instead of the usual two or three million.
I know, how in the world can they keep this guy on as CEO when he somehow alienated one of the largest and most loyal consumer bases seen in recent times and devalued the company so quickly and so vastly? Corporate America has gotten so off kilter, not only has CEO's pay packages gotten exponentially higher, but even if they were to force him out, I'm sure his golden parachute would just as expensive as keeping him on.
When the power goes to some people's heads, it's really astounding. This CEO has a lot in common with Douglas MacArthur in '51. And the people, and the president respectively, gave him the boot to the backside they so richly deserved.
Just wanted to point out one littel fact. The CEO of Netflix is the guy who turned a novel idea into a multi billion dollar company in just 15 years. What you fail (epically) to realize is that now that Netflix is worth so much everyone wants a bigger piece of the pie. Did none of you hear that Starz tried to bump their contract with Netflix by 660% AND require that Netflix charge more than $8 a month for streaming? The idea that this is just some greedy guy trying to make even more money is asinine.
Backcountry:
The thing that amazes a lot of us, especially me, is that he was running a tight, profitable, highly successful company and that in the matter of months he made one poor choice after another and that under his watch the company went from trading at the $250'ish range to now around $100 a share and that he turned off a lot of brand loyalty. Now, if you look at my other post a little further down I do talk about how the price hike was a needed thing, due to the studios , but that it was handled extremely poorly a further example of the failing of this CEO.
As for my comment on CEO's pay, we are seeing that Wall Street is not being run by the free market, which in theory should correct it's self and punish those that make lousy decisions that result in a company doing poorly. Instead we see time and time again, where large bonuses and payouts are being given to CEOs with companies that are under performing, or as we all remember, those that ran companies that failed and had to be bailed out.
The point is, a bad quarter after a decade of solid growth is not grounds for getting rid of a guy, unless you are completely clueless. His track record speaks for itself, but nobodies perfect, I imagine he got some very bad advice, coupled with a little arrogance bred by success, and majorly @!$%#ed up. You don't kick him out the door tho, you don't replace the guy who built your company with some unknown quantity in the middle of a mini-crisis.
Well, I'm not sure I would classify such a large drop in stock price and the lose of such brand loyalty as mini, but I can understand the old saying of "you don't change horses midstream," though my concern is this is not a man learning from his mistakes, so what tends to come to my mind is more along the lines of "getting off a sinking ship" or even "cutting loses." What I will completely agree with you is that his success did breed that arrogance which is getting under a lot of people's skin. As for the CEO's fate, I guess time will tell which proverb should of been followed.
"When they split the company, they did it in such a way that nobody understood precisely how it was going to work, and that confusion led to a degradation in terms of the brand"
Ummmm... no.
I understood exactly how it was going to work. What annoyed me was the "So sorry about the price increases. We know they are unpopular. In response to enormous backlash, we are keeping the price increases AND making you pay two different companies! Isn't that wonderful?!? Aren't you glad we apologized and explained?"
They need to get rid of Hastings as he is the problem. My Kitty could do a better job than him right now simply because she wouldn't do anything. Hastings is death by a thousand cuts as he is driving away more and more loyal customers.
Tact doesn't seem to be in this guys vocabulary.
Mitchell
I agree. Every email I get from Netflix makes me angrier. Had they gone to the trouble and communicated properly the FIRST time that they were raising rates and why then I would have kept the DVD plan, which I really wasn't using that much. But the emails, along with insults to my intelligence, just kept on coming. I do like the streaming, but if I get called confused or stupid, cheap or greedy one more time I'll cancel that, too.
Just another example of an internet company that fails to see the reality of the cost of content and the control maintained by the big media conglomerates. Did anyone expect that any internet streaming company could maintain such a low price for content given the ridiculous amounts of money they are demanding for their product?
Also consider that ISPs like Comcast own some of the content carried over their networks to their internet service customers. Netflix is getting pinched from both the content creators and the network providers simultaneously. They had no choice but to raise prices. Even then some companies like Starz wouldn't sign deals. That is what happens when all the big media companies get into bed with the ISPs and the cable/satellite television services.
Netflix doesn't fit in with big media's grand plans. The sooner they realize that, the better off they will be. Time for them to get out of the streaming business.
Maybe so, but only if someone else can be more competitive in the streaming business. Streaming is so superior to other delivery methods, I will hang onto it until I have absolutely no alternative. Already, it seems so 2005 to try and predict, 2-3 days out, what I'll be in the mood for and have time to watch tonight. I make my coffee the hard way, but for movies? Give me instant.
Amazon? You listening?
There's a number of people who are complaining about netflix's prices; I wonder what they are going to say when netflix gets driven out of the business and their competitors are able to jack up prices even further?
I agree Colo, I have never watched a tv show while streaming unless it was a documentary concerning National Geographic or something similar. The streaming selection sucks but I will stay for now to see how the selection improves or I'll leave too. I was also a subscriber of both the DVD and streaming service prior to this whole fiasco.
Why not? Their TV selection is pretty extensive, both old and new, and they tend to have a varying selection of new release films. I really don't get how anyone could say there's nothing to watch.
Capt Tripps, some people are only interested in new(er) releases, and those are difficult to impossible to find streamed on Netflix, so for those users there is indeed nothing to watch when streaming. Like you, I enjoy the TV stuff, so I stuck with the streaming and got rid of the DVD plan.
You have shown your true colors...live with the blunder
The trouble here was that we all knew that a price hike was going to happen, because of the massive increases in cost to buy streaming rights, but instead of being honest and upfront about this, the CEO claimed some nonsense that the price increase was because it 'better reflected their business model and consumer demand' (I'm paraphrasing a couple of interviews he gave). Though instead of treating his customers will an ounce of respect, the CEO time and time again insulted his very loyal customers, I mean did you read his latest email, the undertone was so patronizing...even more so then his other ones.
I have a feeling this downfall will be discussed and dissected in many business classes for years to come. Steve Jobs got fired for far less transgressions then what this guy has gotten away with, so will see how much rope the shareholders are going to allow, before he either hangs himself or the company...though seeing how the value of the company has nosedived, I don't know how much further it can sink, only time can tell.
i actually joined netflix AFTER the split. I never cared about the snail mail service. If I REALLY want to see something current, redbox works fine for me. I'm wearing out netflix on all those old series I never got all the way through long ago. Just finished Red Dwarf. That alone is worth a month's subscription. Snail mail is so 20th century. Also found enough free web TV channels that I cancelled cable. Saving lots. Not missing much.
I agree. Also, if the USPS reduces service to 4-5 days-a-week, the turnaround time for DVDs is going to make the average cost around $2.50-per-disc (more as holidays start getting in the way in November/December). Redbox is a buck. Granted it's mostly recent releases, but what it comes down to is how much it's worth to watch something for the fourth time or just buy the thing.
Peter Finch, in the role of Howard Beale in the 1975 movie Network said it best: "We're in the boredom-killing business!" (btw: Network is available on Netflix streaming!)
I for one have tried never to advocate the firing of any employee, unless that employee has done something detrimental to the reputation or profitability of that company. Who's running this company, The Keystone Cops?
So the Qwakster (uh, that's the CEO guy!) killed the Qwikster!
I can't wait for the next huge blunder! At the rate they've been going, it should be here in the next couple weeks!
Anyone need a few million red envelopes with "Qwikster" printed on them? Get 'em now, cheap!
I will never come back ! Bye Netflix !!!
I left as soon as the price increase was announced. It wasn't so much the $$ (I considered dropping to 1 DVD, which would have saved me some $$ each month), but it was the general "we are going to do this and maybe we will chase off some customers, so what, we got 23,000,000 of them." I figured with that mindset, my money obviously wasn't important to Netflix, nor was having me as a customer. Which is fine. I'll take my $18.99 and spend it on Redbox or OnDemand movies.
Then, watching the train wreck that followed the price increase, made me realize these guys are so out of touch with their customers reality (kind of like the people who say we are headed for a second recession... when did that first one end??). Reminded me of a great quote: "Don't p!ss down my back and tell me it's raining." The "apology," then "Qwuikster (or whatever)," then the death of "Quickster;" how can these guys be so dumb?
They will not get me back as a customer. Netflix, and its CEO, is like the rest of the BS on Wall Street... Profit, profit, profit, and customers are secondary to that. If raising prices will lose customers, but increase revenue and profits, they do not care about you until something like this happens.
I'll go back to Netflix when that Reed Hastings POS is ousted by the board.
ugh...this is another example of media over hype if i ever saw one. When Netflix announced the price hike the CEO estimated they they would lose about 1 million subscribers (it was right here on MSNBC). When the price hike was announced Netflix lost a total of 600,000 subscribers. Before the price hike Netflix had almost 26million subscribers. so basically they lost about 2.4% of their subscribers. does that really deserve all this hooplah? u know what's funny, since the price hike they've added 3500plus episodes, all of Dreamworks catalog, new Sony/Paramount/WB/20th Century Fox movies. and netflix stock price dropped??? woohoo!!! all PROFESSIONAL INVESTORS are snapping up the stock like it's the cure for cancer. The people who are more forward thinking than some of the posters here already KNOW that Netflix is the new future (investors like Soros, Buffet...)
I think this "fiasco" has quite nicely shown that most consumers really are not as smart as they think they are. The vast majority of defectors will be back because (1) no other service now or in the foreseeable future can match Netflix's offerings or delivery methods that are so well integrated into other devices (think I Pad, XBox, PS3, Windows Mobile, Android, Iphones, etc), (2) Netflix has the contracts with the content providers, (3) Netflix has agreements with hardware manufacturers (Samsung, Vizio, Microsoft, etc). People who keep referencing Amazon, Blockbuster, et al seem to be grasping at straws. Do they really in their heart of hearts believe that these are equal and/or better competitors? come on now...
Hmmm... them investors are really snatching it up! It open at 127.56 today!! Looks like as of 4:00pm it has rocketed up... errr down to 111.62. Somebody is grasping here alright.
It's great that Netflix has all of these delivery methods and hardware agreements, but the issue you're not taking into account is that they don't own any content.
The success of Netflix has been their undoing. The content providers, who license to Netflix the rights to stream their property, want a piece of that pie and know they own all of the leverage.
Hearing what they say and seeing what the do, I find it hard to believe the Nutfux management were ever capable of building a company to the point they did. They are an utterly incompetent group of people. The bad PR wasn't because Quikster was a bad idea (though it was). It was because Nutfux came out and said, "Yeah we know we came up with a bad idea, but to continue down that road we are going to keep on with it and separate DVDs from streaming." NOOOOOOOOOO it was literally the worst corporate sob story email I have ever gotten.
Go back to combined plans and reduce the rate fees, that is how you get customers back.
"...Most streaming subscribers are there for the TV shows..."
"Most" does NOT include me. I never wanted streaming of ANYthing, let alone TV shows. I became a Netflix customer for MOVIES and DVD's. Not streaming video.
I bailed on Netflix after being a member since just after its debut, when I bailed on BlockBuster for its shenanigans. Netflix will have to BEG me with incentives worth my while to re-subscribe.
Or I will never go back.
If you don't stream, why'd you leave? The price for DVDs only dropped...
The split should have been perfect for you, as you don't have to pay for something you didn't want.
Jerry Yang and Reed Hastings should jointly form an internet CEO school named YaBomb!