It wasn’t long ago when Netflix users gathered their pitchforks and torches in order to protest the 60% increase in monthly subscription fees. On top of that, Starz announced that they would not be renewing their contract come early 2012 and would be taking a lot of the newer programing with it.
But everything was soon made better in an apology blog post by Netflix CEO Reed Hastings right? Wrong! Hastings fed subscribers a backhanded apology that led into the company’s next poor decision of splitting its streaming service with its DVD-by-mail service and calling the latter Qwikster.
A name that seemed like Hastings made it up as he was writing his blog post, the company was unprepared for the split to the point where they had even failed to acquire the Twitter handle. Instead, the Twitter page belonging to a pot smoking, foul-mouthed, soccer fan was receiving thousand of hits.
With one business decision after another, and seeming like a Business 101 project, an estimated 1 million subscribers had jumped ship. The company that revolutionized how we rent movies was losing it’s touch. Some think that since Netflix started it all, there is no way it can fail.
History proves differently. We can look at the tech industry and see how Atari and SEGA are small players in the industry that they helped create. SEGA did exactly what Netflix is trying to do by releasing a console (Dreamcast) that was internet capable in a time where gamers weren’t ready for that. AOL was the first real service to bring the internet into people’s homes and is no longer a major player in their industry. Just because you started it doesn’t mean you’re immune to competition and Netflix’s arrogance is proving that.
For a company that was on top of the world to the point where Netflix had become a verb (“nah, I don’t want to see it in the theater, I’ll Netflix it instead”), they have nearly lost 65% of their stock value in just 2 months. With today’s announcement that Netflix would be waffling on their decision to split the brand, their stock took even more of a dive after being up in early trading.
Another post by Hastings claimed that they are listening to their customers but before you pat yourself on the back, money is always the most important thing to a company. Experts are stating that the split was part of a bigger plan that would allow Amazon to purchase the streaming side of the business and with so much toxicity around the Netflix brand, they backed out of a potential deal.
Either way, Netflix is not making any friends and customers are not happy with the flip flopping going on over at the corporate offices. Chances are after hitting the $300 range a couple of months ago, Netflix could end the week below $100 a share.
What are your thoughts on the choices Netflix has been making?