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Netflix Loses 800,000 Subscribers After Qwikster Gaffe
bs0d3 writes "Netflix's video subscription service lost 800,000 customers in the third quarter, the single biggest loss in its history. Shares plunged by more than 25 percent in Monday's extended trading. Netflix is predicting that its combined loss of customers and European launch will push it into the red next year where it may stay for all of 2012, according to a letter to its shareholders (PDF)."
I didn't bitch about the price increase. I understood that one at least. With the big studios demanding more and more money for streaming their content, that was inevitable. And I *love* the streaming BTW. I think streaming was their best move in years. It's especially great for TV shows (which would take forever to watch if you had to get them one disc at a time). Where else can you stream the entire run of Battlestar Galactica (in HD, no less) for $8 a month? Louie, The X-files, Family Guy, Firefly, Lexx, BSG--my queue is filled with many days worth of geek greatness. And some of the content on there isn't available in HD in any other format.
But the Quikster thing really left me scratching my head. Now various theories have been floated as to why they did it. My own personal belief is that they were planning to break Quikster off and then sell it (to focus exclusively on streaming). But whatever the case is was a truly bonehead move from the consumer perspective, especially coming so soon after the price increase. The fact that the CEO responded to the issue of customer anger at the announcement press conference by basically saying "Huh, well, we hadn't thought of that" didn't exactly make it look like a well-thought-out move.
I think Netflix needs some new leadership. Keep the streaming, lose the dumbass moves.
SJW: Someone who has run out of real oppression, and has to fake it.
While it was a big mistake, and I agree that someone should be fired, I think what they have been offering and would have continued to offer (even if at a higher price) is *much* less of a ripoff than cable and satellite. I've been very pleased with my family quitting cable T.V. and going with OTA T.V. and streaming Netflix and the major T.V. networks recent show via browser. I don't waste time scanning through the cable guide anymore to watch more T.V. than I should have anyway, and we don't have to deal with DVR issues.
Seriously, Netflix still has an extremely small library of content in Canada. I'd love to get Netflix but they're still missing movies and TV series that are over a decade old, never mind getting the brand-new stuff.
Add to that the fact that all major Canadian ISPs are putting insane monthly caps on their users, some going as low as 30GB, and it's not looking good for Netflix.
Didn’t we have an article here yesterday on disruptive innovation? To ignore quarterly profits and ignore your current customer base and boldly strike out with the best products?
I am mention this not because I liked the Quikster idea – I hated it. But to point out that being innovative is hard. Any big radical plan will stir up the pot.
As to management – All I can say is that they had the good sense to boldly put forward a plan – and then quickly kill it.
Almost seems like some one purposely destroying a company, though for what reason I couldn't say.
Just epic incompetence?
"If any question why we died, Tell them because our fathers lied."
Granted Netflix' stock was probably overvalued (not getting into this argument here), you really have to wonder why their leadership made the decisions they made.
Was it due to contract lockin with movie studios to seperate disc rentals from streaming? Doubtful since they recanted on qwikster. If they were just intended to phase out disk rentals over time, and this was their start of that, clearly someone didn't do their customer market analysis. Or have a sense of how the Internet ~hate machine really works.
Real question I'd like to know is whether any Board members are being ousted. And, if any of them are getting nice fat bonus' for their wonderful work driving a companies worth (not debating that either) to a quarter of what the market pushed it to.
The chaos made me think about the service, and how little value I was getting from it. I would go months without using it, and then maybe watch a couple old Doctor Who eps.
The thing is, a few months ago, Amazon Prime (which I already had) put out the same Doctor Who eps on their service, also free.
So why was I paying for it? It was cheap and convenient...
So they raised the price AND took away options. Of course I cancelled. Had they stayed quiet, I'd probably still be shelling out $8/month for nothing.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
Seriously, you are reporting on stock market events from two days ago. Surely there was a story posted way earlier about these events?
Ok, besides the untimeliness of this posting, I am thinking that 800,000 subscribers are just the number that left entirely. I bet there are a HUGE number that like myself simply switched from both streaming and BluRay/DVD to just one or the other. I bet that has to hurt a bit too... and they won't report those numbers. I bet they would have to if they split the company though. Keeping it all under the Netflix name allows them to obfuscate their numbers a bit...
today is spelling optional day.
with dvd by mail they had infrastructure that takes years to build
with streaming they are just a middleman. they outsource all their IT and other operations to Amazon and Level 3. Netflix is just a bunch of developers and business people to negotiate content deals. there are other streaming players out there and you just have to figure out the right pricing model and content. anyone with some VC funding can start a content streaming company since all you have to do is license it and the studios want as many middlemen as possible to avoid another apple that will dictate terms to them
netflix was smart to put their software on every game console and most blu ray players, but almost everyone can do it going forward as flash prices drop
I would join Netflix, but they don't say how much it will cost! Yes, they say the price of "streaming" and the price of "1 DVD at a time". But where are all the other prices? Like for 2 or 3 or 4 DVDs at a time? They don't post those anywhere on their site. Why are they so secretive? I'm not going to sign up unless they say ALL of the prices up front! Would it really kill them to have a link to a "price list"???
the LA times says http://latimesblogs.latimes.com/money_co/2011/10/consumer-confidential-netflix-shares-plunge-subscribers-food-prices-grocery-bill-meat-grain-halloween-masks-recall-target-fro.html they lost 800,000 ending with 23.8 MILLION subscribers.
so they went from 24.2 to 23.2 million subscribers... and the rate change -huffington post http://www.huffingtonpost.com/2011/07/12/netflix-price-subscription-plan_n_895779.html was from 9.99 to 15.98?
so before, they had 24.2 million at ten bucks a month, now they have 23.2 million at 15.98?
every day http://en.wikipedia.org/wiki/Special:Random
The leadership has been making a lot of bad decisions. Outside of the whole "Quikster" fiasco, the next worst decision they made was to play ball with the entertainment industry when they demanded more money. The Netflix competition right now is nowhere NEAR them. Netflix is literally on 95% of my home internet connected devices. From my Tivo, to my TVs, to my PS3, and 360. Etc. Netflix needs to expand its offerings. If they lose movies, then start adding games. They can also push into the adult movie industry as well. It's absolutely HUGE, and would gain them millions of more subscribers. This CEO really has no idea what the possibilities can be for them. If your current model is making you money, ignore Wall Streets screams for more profits. Look to expand while maintaining, not to simply profit.
I still really like the service, and the last thing I want to do is go back to blockbuster.
Please Netflix, for the love of god, don't fix what isn't broken and don't drive yourselves out of business.
You're missing the fact that many consumers (including everyone I know using Netflix) dropped the DVD service once it became a completely separate plan. So no, Netflix is not getting $15.98 from a large portion of their customer base.
I went to eat some animal crackers and the box said, "Do not eat if seal is broken." I opened the box and sure enough..
I'm still only at 7.99. I dropped the DVD option since I never used it anyway, and I'm pretty sure I'm not alone on that one.
The stories and info posted here are artistic works of fiction and falsehood.
Only fools would take it as fact.
Likely a lot of subscribers downgraded their combined plan and chose streaming or discs only. Say, roughly half of the remaining 23.2 million became 7.99 streaming or disc-only subscribers, that's a ~10% loss in revenue by itself.
The shenanigans you paying customers put up with...
Actually, I wouldn't be surprised if a lot of people did the opposite. After all the streaming plan doesn't include almost all new releases.
In a world so very different from today there was this thing called broadcasting. Access to the content was free, as in turn on TV and watch. These "TV stations" used advertising revenue to build multi-million dollar businesses. In todays world a companies claim they can not stay in the black if they do not charge customers for access to the content AND make money on advertising revenue. It really makes one wonder how those old school broadcasting companies managed to stay afloat.
Having to work for a living is the root of all evil.
What is lost in all of this is that they still have more subscribers than they did at the end of Q1. Also lost is that the whining and crying over the "increase" was because something they were giving away for free suddenly was no longer going to be free. Just another sympton of our entitlement society. What the ultimate mix of streaming/dvd only/both ends up being nobody really knows as it is simply too soon to tell. Will some who are dvd only switch to streaming only? As that service gets better I'm sure some will. Will streamer only switch back to dvds or do both? I think there is a case that a not inconsequential number will do so as streaming still suffers from lack of offerings and items being pulled on what appears to be a random basis. As to profits for the next year... Amazon ran in the red for how long? Netflix has made money and will do so again in the future. If they did not take the steps they are doing today now they would be in a bind later instead of remaining the market leader.
in a few months netflix went from being very profitable, growing earnings and literally printing money to losing money
but i guess on slashdot it's now an excuse to buy the stock
Yes, they lost 800,000 subscribers, but the company revenue increased from $38 million to nearly $63 million. From a shareholder perspective, that's pretty good. However, they can't continue to lose subscribers at this rate.
I dropped the DVD queue when they went for the money grab. The Qwikster thing just left me scratching my head. But I'm not about to drop the streaming unless they try to hike it again.
But discs are dead! I see it proclaimed on every geek site!
What? Only 3% of my queue is available on streaming? Oh. Guess I'll stick with discs for a while.
Because they're still losing subscribers, and even within their remaining subscribers there are many shifting to cheaper plans, so you can't count 100% of those remaining as doing so at the higher combined rate.
Most importantly plans for corporate development are usually made with projections of previous patterns of growth in mind. When the trend goes from positive to 'the most negative ever experienced' it might exceed the tolerance of contingency plans with regard to cashflow. Businesses don't necessary fail because they don't have customers, they fail when their revenue stream doesn't pay their overhead. If Netflix is spending as though they have more people paying higher rates than they actually have, it's a death spiral. They can't cut their overhead without pissing off more people who will leave and further weaken revenue.
I support the Slashcott and will not be reading or commenting from 2/10/14 to 2/17/14. Beta is steaming pile of dog shit
Netflix was always intended to be a streaming service. The main goal of the company was outlined back in 2001; they had planned to have completely shut down the DVD service (having replaced it with streaming) by 2007 but the US missed their internet data rate predictions by a large margin. The technology simply wasn't there.
If you screw your customers over to get an extra buck out of a service that they most certainly can live without, they will.
If you offer a service they want, for a reasonable price, they will use that service. See: the first couple years of your streaming service, and it's massive growth.
This isn't exactly nuclear physics.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
What Netflix SHOULD have done was made deals with advertisers for commercials which would appear both before and after all streams. C'mon, Netflix! All DVD and Blu-Ray discs have 'em. Disney's won't let you skip past 'em. If they had done this properly, they would have had a revenue stream that could offset rising costs for some time. Everything from trailers for current TV shows and movies to Cialis and Mountain Dew. OK, nobody likes these, but they're a way of life. You PAY for all DVD and Blu-Ray discs you buy and you STILL are forced to sit through at least one advertisement, usually many more. This includes most Netflix discs and COULD have included all Netflix streams. Why didn't they give that a try?
Comment removed based on user account deletion
I get that perhaps a lot of people dropped half the service for a 20% (10/8) price cut.
so if a combo at 10$, they had to both stream to me, and mail me discs.
so if they lost 20% of revenue, but ended up only providing half the service?
Damn... I'd still think they'd be net ahead after factoring in cost savings.
either postage savings or bandwidth/hardware requirements.....
every day http://en.wikipedia.org/wiki/Special:Random
They should raise prices to make up for the lost customers.
I'm an American. I love this country and the freedoms that we used to have.
1) Netflix does not own any content.
2) Netflix is one contract away from some other company ( I'd bet on Apple )
delivering content in a way that most consumers are more willing to spend
their money to access. You don't spit in the face of your customers in a public
way and get loyalty afterward, not when the jungle drums have been replaced
by the web and internet forums.
Netflix is toast.
Don't believe me ? Just wait and see.
I respect the fact that they go back on ideas that are bad.
I remember when they were going to take away the ability to manage multiple queues. I used that all the time when I had room mates, and then with my fiancé back when I was getting 3 at a time. They got a lot of feedback and kept the multiple queues.
I am probably going to discontinue my service anyway because of the lack of a Linux desktop client. It has been way too long. I shouldn't have to pay Microsoft or Apple just to watch Netflix.
What did they expect?
No one seems to remember that the user backlash really started with the horrible watch instantly page redesign (replace text with large movie posters, require mouse-over to see what anything is, slow autoscroll on mouseover rather than a push-button advancement, can't read the posters while autoscolling, no more sortable view, etc) and arrogant corporate response. Look back at the blog - there were 5000 extremely negative responses before comments got turned off and the only response was something to the effect that the new page design was really better and the customers didn't know what was good for them. For me, that was the first indication that the people in charge at Netflix 1. didn't know what they were doing (at least when it came to GUI usability) and 2. had a completely tin ear for customer complaints & service. It really primed the pump for subsequent rage following future bone-headed moves.
How's that arrogance of entitlement working out for your netflix? Was the level of customer loss worth almost doubling your prices while showing public disdain for your customers? You've traded some profitability and a high stock price for no profit and a shattered stock price.
Entitlement bad for business, bad for customers and bad for profits.
Um, no. Nothing you said has any truth to it. The only major thing that has changed at NFLX is its stock price. It's back to where it was about March 2010, before the market had an orgasm all over it.
The only concern I have for NFLX is whether or not it can grow. The Quikster idea was a good idea on paper. They need streaming content and the DVD division is making that difficult. The problem is they don't see themselves through their customer's eyes. It's like they have this 'master plan' that they've had from the beginning and don't know how to function if they must deviate from that plan.
Exactly what I've been telling everybody I know who's talked about this with me. The folks they lost are customers completely gone, but there seem to be A LOT of people who have effectively downgraded, myself included. And they're not sharing those numbers. So not only did you lose customers and have your revenue go to zero, another portion (how big is anybody's guess) are paying less on both accounts (my father in law never used streaming so now he's actually saving a couple bucks a month).
The funny thing is, how do you get those customers back? You'd probably have to throw a promo their way to try and lure them back (cause I know a lot of really pissed ex-Netflixters) further slashing your profits.
And I think they're very arrogant. They're perceived response when people started complaining seemed to be "pfft, we know some of you will go but we'll be fine". I'm not so sure y'all will.
I think Netflix should very publicly throw Hastings out on his ear, run a likely expensive "we f'd up and we're sorry" campaign and raise the prices slightly for combo-service (I don't doubt they needed to increase) and offer customers who left and/or downgraded in the last 3 months some significant incentive (one month maybe three of free or reduced cost service, free upgrade to 2 or 3 disc at a time service) to come back. In fact, offer it to all Netflix customers cause they should be thanking they're loyal fans for not leaving them. I doubt they'll do any of that cause their current leadership seems pretty clueless.
-- A computer without COBOL and Fortran is like a piece of chocolate cake without ketchup and mustard
Expands overseas! Raises revenue per subscriber!
For unknown reasons, stock tanks!
Best Slashdot Co
Markets look forward. Netflix was gaining customers and are now losing customers. The new trend is down.
I'd also be curious to see the average monthly revenue per customer pre/post pricing change. It seems that many moved to the cheaper streaming only plan when the change was announced. This means Netflix lost customers and are making less on each customer they have left. Not a good thing.
They weren't giving anything away, it was something that the customers were paying for. Corporations don't just give things away.
I realize that there's a lot of trolls out there that seem to be incapable of accepting that the customers got screwed here. You need the DVD plan if you want access to the entire library, the streaming library is far from complete and even within a particular TV series it's often times going to require a DVD to watch from start to finish.
Consequently, even those of us that wouldn't have minded streaming only have to wonder why we're being asked to pay as much for streaming as for DVDs when we're not getting anywhere near as good of a selection.
Also, the numbers to watch aren't just the subscribers, they're going to be losing money for the next couple quarters according to the forecast, and this will only serve to strengthen competition which is also going to do nothing positive for Netflix's bottom line.
I opted to go the streaming route and I'm exactly in this spot right now (wishing I did the disc thing instead). I sorta was hoping we'd see something change in the months since the announcement with the addition of more content on streaming, etc, but its just not there yet. And unfortunately, I never watched enough discs to justify any of their DVD plans (redbox is much more cost effective for me) so over the last couple weeks I've been giving serious consideration to parting ways with Netflix altogether and looking other alternatives for streaming and movies (including, just doing without).
-- A computer without COBOL and Fortran is like a piece of chocolate cake without ketchup and mustard
I think that it is naive at best to consider Reed Hastings for doing this for 'greed' alone. Now that Netflix had established themselves as a leader in online video distribution and more than just a niche geek thing, he knew he wasn't going to get the cheap deals again from the studios like he might have before. Again, take for example the Dreamworks deal that happened recently. People are complaining about Netflix having good current streaming content (myself included), so they did what they thought would provide more value to the customer and went with this deal. However Dreamworks want 25 million per picture available on Netflix. And you know that other studios are going to want a sweetheart deal like that. This would inevitably mean the good deal that was Netflix was going to have to raise prices to be able to afford content.
Now I, like everyone else, can grumble about the price increase, but I feel that their hands were tied and can accept it. Netflix is trying to improve their product, but they knew that it was going to cost them more. Like any business, one way or another, these costs are passed onto the customer.
it had nothing to do with the Qwikster debacle at all. It had to do with having to deal with the whole 1 movie out of a series made available for streaming and only being able to view the rest of the movies thru renting the DVDs. A lot of the times it happened to be that the first movie was only available via DVD, the second could be streamed and the next was again only available via DVD and so on. The whole behind-the-scenes scheming of the movie industry and their greedy paws in the mix was the final nail in this coffin. And they wonder why some people prefer to pirate instead of using legitimate outlets... isn't greed wonderful?! Completely asinine that I can rent movies all the day long in DVD format but streaming is a crap shoot. Tired of the headache so I got rid of my headache and went back to the old fashioned movie viewing experience; renting DVDs again.
I think Netflix completely ignored the value of DVDs-by-mail in serving as a strategic defense against the media companies. If the media companies decide not to license content for streaming, Netflix is screwed.
On the other hand, should companies refuse to sell DVDs to them, Netflix could purchase them through alternate channels. Redbox rentals was in a similar situation where studios refused to sell to them (correctly identifying them as a threat to DVD sales) -- they circumvented the studio embargo by getting their DVDs from Walmart instead. It's not an ideal situation (Using Walmart was logistically cumbersome, and required waiting until the retail release date), but it allowed them to continue deliver service regardless of what studios said.
Not sure how you figure a 60% increase. By my math 9 bucks for both services before changing to 16 bucks now is over a 77% increase.
I'm an American. I love this country and the freedoms that we used to have.
in a few months netflix went from being very profitable, growing earnings and literally printing money to losing money
but i guess on slashdot it's now an excuse to buy the stock
In a few months, Netflix increased their profit and revenue over last year:
Netflix Inc. (NASDAQ:NFLX) reported third quarter 2011 diluted earnings of $1.16 per share, surpassing the Zacks Consensus Estimate of 96 cents per share and increasing 65.7% from the prior-year quarter. Earnings surpassed management’s guidance range of 72 cents to $1.07.
Total revenue of $821.8 million not only increased 48.6% from the year-ago quarter, but also beat the Zacks Consensus Estimate of $813.0 million. The total revenue was in the higher end of management’s guidance range of $799.5 million to $828.5 million.
From a tech perspective, the obvious thing that leaps out at me is that the broadcast companies had vastly superior delivery tech: radio broadcast. That means they really just had one party (not counting competitors) standing in their way (FCC) and once they got through that, nearly every potential viewer was guaranteed delivery of the ads.
Analogously, Netflix is using pre-radio tech such as letter-writing. Every single new customer has a corresponding increase in cost. Adding a broadcast receiver has no impact on the transmitter's bandwidth needs; adding a singlecast receiver has a linear increase on the transmitter's bandwidth needs.
And since a new customer also increases costs for the ISPs and other peering middlemen too (though at least they theoretically also receive a corresponding increase in revenue), the tech's poor scaling ability stresses everyone and leads to new potentials for shakedowns, whether by the businesses Netflix works with, or through the government. It's a dangerous and unstable situation where success will eventually punish itself.
Broadcast's ability to scale well, just made it so that the more people who used it, the better it worked. Unlike with streaming video, nobody ever worried, "Are too many people watching TV?"
That's a tech perspective. When it comes down to actual dollars going into the broadcast companies and Netflix, I may very well be talking out of my ass. ;-) It's gotta be part of the problem at least, though.
When you take competitors into account, Netflix situation is worse there too. The parties bearing part of the cost of delivery practically are their competitors. It's like if CBS were broadcasting a show, and every time someone watched it, ABC and NBC got a bill in addition to losing a customer. Not that this is the tech's or Netflix's fault, though. We have serious conflict-of-interest problems with ISPs in USA at least.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
It didn't help that the name was impossible to spell correctly: Qwikster? Quikster? Quickster? Qwickster? Even with it spelled correctly in the summary / title people still have spelled wrong in a couple of comments here. This along with the idea of making it more difficult for the customers make it a fairly big gaffe. Glad things are back to normal. Though I really was hoping the video game disc part would have been kept. Hopefully that can come back at some point.
Funny this comes out today, just yesterday I sent an email to their "general jobs" mailbox applying for the position of CEO. Doubtful I'll even get a response, but it was an interesting way to kill 15 minutes.
Your post is a symptom of what's wrong with our society. You're like Sarah Palin when she says people disagreeing with her are trying to take her 1st Amendment rights away. Except in this case you're saying that consumers complaining are taking the free market away from Netflix.
The consumers are complaining because Netflix has increased prices. They are trying to get Netflix to change its ways to be more favorable. This is capitalism, or are you saying that in capitalism the consumer should just pay whatever the company demands and shut up? Are you saying the consumer, in a capitalist utopia, has no right to try and get a company to change? Is it your opinion that wanting more from a company is entitlement thinking? Methinks what you want is corporatism.
In a free market Netflix can charge extra for the service. In a free market consumers can complain about that change in attempt to force the company to make Netflix's terms more acceptable. That's how it works. Take either ability from either side and then you have one side dominating the other. That's not free market. Complaining about paying for streaming isn't entitlement philosophy, it's bargaining.
Well let us look at the numbers:
800K subscribers lost at $10 a month.
The net income for last quarter was 62.46 million.
Since their expenses are mostly not on a customer basis, they will probably be fairly unchanged by subscriber numbers.
For the next quarter income you can figure it like so: 62.46 million - (800K X $10 X 3 months) = 38.46 million.
That (napkin) math shows that their net income was cut by 24 million per quarter. Or about 96 million a year.
That's kind of a big deal.
Netflix weak streaming content is the source of all their problems.
If there was some critical mass of streaming content that overlapped with DVD, (ie, all new releases, 75% of DVDs and growing) then I don't think Netflix would have had any problems with most of what they did.
The price hike would have had the effect of moving all the DVD users to streaming and would have pushed most of them to stop DVD service; users with DVDs who couldn't or didn't want streaming (rural areas, poor internet service, etc) would have dropped streaming.
This would have given Netflix what I think they wanted -- most people moving to the higher margin streaming service and a clear delineation of the customer base between streaming users and DVD users.
At this point, the Qwikster split makes sense. Streaming users for the most part wouldn't care -- they would have done the "smart" thing and dumped DVDs for the cheaper streaming only option. Some DVD users might howl, but it would have been too small of a minority to matter.
They can start closing DVD service centers and cut costs enough to make the system more profitable, because its overall a smaller business, perhaps one that can be sold to a competitor or some hedge fund that could run it for what it is -- a DVD rental shop with the deepest selection ever.
The problem was, streaming isn't viable on its own, IMHO, unless you're an addict of bad action movies and TV shows, some of which are pretty crappy unless you're a die-hard scifi fan.
So the price hike was just a price hike for no real improvement, since you need both systems -- stream what you can, and DVDs for what won't stream. The split with Qwikster was just a sharp stick in the eye that just seemed like another phase of a plan gone seriously awry.
But it was really about the price increase, I think. Netflix is not yet the killer streaming app they think they are. They are merely a good first try. It was way too early to jack up prices.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
Or the other way around. I dropped the streaming service that I hardly ever used and was showing no signs of ever having any Linux compatibility outside of Google's linux.
-- perl -e'print pack"H*","6e656d6f406d38792e6f7267"'
they earned money, that was in the past. they are now predicting they will lose money for all or most of 2012
no one cares about prior earnings, it's the future estimates. wall street prices stocks based on 2 years of future estimates. this year netflix screwed up really bad and this is why the stock is tanking.
they went from growing earnings to predicting losing money
This is something that confuses me. Why do the studios have such a hard-on for charging so much for streaming content? It's not like they're losing money since they don't get any extra money for movies on DVD after the initial sale. Charging $XX million per movie is just nuts.
I have the streaming only plan and it's frustrating as heck when I go through the new movie list and don't recognize any of them. Then I do searches and find almost no content that interests me whatsoever. The only thing they seem to be getting in quantity are TV series.
If they really want to be a leader in providing streaming content then they better get some actual content out there.
Unfortunately the studios have the upper hand here since Netflix NEEDS the content. That's never a good situation for negotiation.
That will be their undoing in the long run.
Because they don't get that they don't get it.
This is a very very common trait especially among uber successful companies all over the world.
If you're a smart man, you should get ready to put some serious money down on their stock.
1. As a previous poster mentioned, the 800K loss meant their user base went down from 24.2->23.2, which is a minor dip, which will trend away after the hype blows over
2. They still posted great returns for the quarter, even with the user base loss
3. They have recently launched in UK, Ireland, and 10+ South American countries, which will greatly expand their user base
4. They are referred to as the 8 hundred pound gorilla in the streaming industry. They are killing their competition, and there is no real, viable alternative that is competing with them. They are the only all-you-can-eat for $8, with a somewhat decent streaming library.
I'll admit they made some stupid moves, and some equally stupid comments, but its a rare time in history that you can pick-up one of the best performing stocks on the market (peak value was $300 just 2 months ago) for $70. They will be in the red for a little while due to the expansion into other markets and their huge content deals that they signed, but that will only make them stronger in the future.
Actually, they anticipated these losses. Ars reported that they expected to lose 1,000,000 people after the change. Assuming they were planning to still be profitable after those losses, losing only 80% of that is actually good news. Well, at least for them...
I cut them off the very day they sent me the increase announcement, I didn't wait 6 weeks or even until the end of my monthly. After the "Americans are too stupid to realize its cheaper in Canada" gaffe, I had my fill of their arrogance.
RIP Netfux
I downgraded my disk plan, but only because the streaming service has become more valuable. They raised the price; I downgraded my service: the next effect is that I'm paying about the same amount and watching pretty much the same amount of content. That works for me.
The Qwikster thing, though, had me completely baffled. If they'd done that, my service would have gotten worse, and I might have canceled one side or the other. Many people, I think, did that preemptively, especially those who were finding Netflix's library less valuable. You can watch content faster than they can make new things worth seeing. They're getting more old content on-line, but even good old movies and TV shows begin to look dated and don't have as much appeal after a decade or so.
The price rise was a good excuse to acknowledge that, and the Qwikster debacle was a good reason to get out early.
Frankly, I think they were selling it at below cost to build market share. They increased the price to move from buying market share to generating profits on the service. So yes, corporation do give things away, they just have ulterior motives for doing this.
Frankly, I have to opposite reaction. Why would I care about DVD rentals? I can't be bothered to wait for a DVD to arrive in the mail or to mail it back. I find the instantly available nature of the streaming better than the slightly better selection for DVD rentals. And the most likely reason they don't stream more of the rental movies is because the studios either demand too much money or have signed idiotic exclusive deals with other distributors. In Canada, for example, the Netflix library is smaller because some of the Studios are so happy to get any money at all that they are willing to give Canadian cable and satellite companies multi-year exclusive deals for little or no extra money.
Fanatically anti-fanatical
Actually you've got it wrong. They went from growing earnings while turning a profit to growing earners even further but not turning a profit for a few months. In both cases they're going to be increasing earnings. They are planning on taking a small and temporarily loss to grow the business.
Whether it works out for them or not is the real question.
Fanatically anti-fanatical
DONE TALKING..
I'm going to hold you to that...
Grammer Nazis - I mod you "troll" unless you actually add something on-topic. Yes, I know I have mispellings in my sig.
No one who mattered cared about the price increase. It was trivial for what was provided. Anyone who did was just angry to begin with.
The revamped ui was, and still is irritating.
Those 2 items combined were just annoyances. The service provided was still far superior to anything else currently available. However, Netflix went one farther and announced the complete split of DVDs from streaming. What? How could they not see that splitting the 2 services totally stripped netflix of one of its core areas of superiority that no competitor could EVER attain? No one else will ever have the disk service that netflix holds. That's their true power. And they willingly went ahead with a plan to gut that.
Streaming is just not there yet. Once it finally does "get" there, cable companies will take the required steps to prevent it from staying there. (hint: Download caps) For everyone who just wants to stream all their content and pay $8/month, I have bad news for you. It won't stay that cheap for much longer. It can't. In another year or 2 when that price jumps to $20 will you still pay? Will you accept the inevitable advertisements? Some will, but many others will just pirate the stuff all the while moaning how they would pay if it were fairly priced.
Originally I planned to cut the streaming side. I just don't use it. I don't have a smart phone, or a tablet, or a paranoid aversion to paying for cable. So the streaming side was only for those odd moments at the PC to kill some time now and then. Plans changed when they announced the Quikster split. That just downright pissed me off. Why should I have to change sites and lose service? That made me re-evaluate the cost of the disk service. $8/month for unlimited disks just suddenly becomes overpriced. Since disks are typically movies, they get watched on the weekend. Meaning no more than 4 per month. Some months went by without watching even one. Redbox just offers superior pricing, if much less convenience and availability.
Ultimately, Netflix was arrogant and pissed off their customers. Quite honestly, splitting streaming into a separate bundle was a mistake. I imagine the vast majority of its customers are mainly interested in only one side. Netflix compounded their arrogance by also giving their customers a way to cut costs and retain whatever service they preferred. This is horrible management.
The bright side: Amazon will probably buy netflix now that its stock price is plummeting.
The letter to the investors went into much more detail, and that's what caused the recent share plunge. A couple things stuck out - churn rate is up, they lost more customers than expected, they expect to continue losing customers into the next quarter, and they spent more than double the amount on streaming content.
From Q3'09 - Q2'11 Netflix added between 500k - 3M customers a quarter, so losing 800k customers in a quarter is a huge change. Especially when costs for new content are climbing.
The $9.99/$15.98 plan is for streaming with 1 DVD at a time. Other plans allowed for more DVD's at a time and blu-ray. The letter mentioned that they had customers who had, but did not use, streaming. These customers dropped down to the cheaper DVD only plan after the price increase.
This is anecdotal, but the Netflix customers I know, including myself, all changed to cheaper plans. In short, they're hurting.
At my house of 3 (7 year old plus Mom and Dad), we love Netflix. I do have some ideas to make it better, but I'll get to those in a minute. Here is what we love:
- The ability to pause or stop a movie/show, and then restart hours, days or even weeks later from the same spot. With Hulu through my Blu-Ray Player, we don't have this, and it is sorely missed.
- Instant Queue concept (Again, not nearly as intuitive on the Blu-Ray with Hulu)
- The ability to choose what we want to watch, on demand.
- The selection of older shows and movies is decent, passable.
- No advertisements
Here is what we don't like:
- Having to use Hulu. Just give me the Hulu shows on Netflix with advertisements. I like Netflix better, i.e. the ability to pause and restart.
- Having to use Redbox. Again, just give me the movies on Netflix. It's OK if we have to pay per movie for this!
Cheers,
Jason
Your!=You're
Netflix should have anticipated the loss of customers due to a price increase and factored that into their negotiations with the content industry. Although Netflix would be screwed without a sufficient variety of content for its DVD and streaming business, they are equally screwed with marketplace rejection of their pricing. Their management team needs to be swapped out.
The trick is to take a page from the RIAA playbook. They overstate the cost of piracy every chance they get. The Netflix strategy would be the doom-and-gloom projections of lost customers (thus reducing the value of the content to Netflix). If anything, Netflix underestimated the severity of the situation. What a bunch of idiots.
It's not easy to threaten to put yourself out of business if a key supplier is unwilling to play ball. But considering their eroding customer base, it's time to renegotiate those contracts and roll back the prices. Or fold up the tent and liquidate. The explanation to the content providers is simple: "We are in danger of going out of business. You can put us under by refusing to sell us product in a manner that is consistent with our pricing model. But it's going to cost you when we stop paying. After you finish off the other flat-rate services like Hulu, that leaves you with Amazon, Apple, and maybe Blockbuster. Lotsa luck negotiating with them after you kill off all of their competitors."
Steve Jobs had it easy with iTunes. Copying your old CDs and piracy were both "zero revenue" models for the music industry. Anything they didn't like about iTunes they quickly learned to tolerate when the alternative was no revenue at all. Netflix doesn't have that choice because video piracy is not that common.
It's obvious the video industry wants to abolish buffet-style pricing at the retail level. They missed out when brick and mortar video rental stores bought individual media and rented them repeatedly. Subscription pricing is perceived as less desirable because they are convinced that whatever the subscription price is, more money could be collected on a pay-as-you-go basis. What they fail to realize is that only about 20% of their content has enough of an audience to attract individual paying viewers. If they want to kill subscription services like Netflix, then 80% of their inventory might as well go in the dumpster.
Several ways to play this, none of which encourage buying (or even holding ) NFLX stock.
1. Europe is going to be risky. Lots to go wrong, individual countries to add their own red tape. Unknown market acceptance. Sell NFLX on the risk.
2. Projected losses next year. Sell NFLX on the anticipated loss.
3. If and when NFLX proves they have a viable operation in Europe and they have somehow avoided the mistakes that led to unsustainable pricing in the US, buy the stock THEN. But what prevents the content industry from initiating another shakedown? Are they going to try again in Asia? South America? Africa?
But there isn't any scenario where it makes no sense to buy the stock NOW. How much confidence should investors have that the management team who made such a mess with Qwikster and the price increases will somehow be better in Europe? The reward for a successful European rollout is about the same as what they would have had in the US had they not screwed it up.
Why don't you just switch to DVD only for a month or two, watch what you missed, then back to streaming only, and use red box where ever it is more convenient? That was a problem with quikster, people would not be able to do that without losing queues.
I just went back to blockbuster, and I think their service IS better. With a store nearby, throttling isn't even an issue. I can rent nearly 2-3x as many movies per week as I could with netflix on a similar plan. I simply watch, return to store, and pick out 3 movies, and leave. Yes, it does require trips to the store (which is fairly close), but you get bluray and game rental. Also, it should be mentioned that blockbuster releases new movies at or near the date of the bluray release, while with netflix you have to wait an extra month or two due to their contracts with studios. All in all, it's a better experience, and I'm watching movies I would have waited months to see on netflix. There aren't any regrets here.
Except they haven't messed up all that much, there are certainly indications that the trouble has been overstated (of course, future missteps can change that). They have lost less than 3% of their last maximum user numbers. They have more users now than they did last year and they have higher revenues, there is no evidence (yet) that they have unsustainable pricing in the U.S.
I wouldn't rate it a "buy" or a "sell" right now, I'd probably say it's a "hold". If they prove popular in Europe they could achieve dominance in that market and see significant profit growth.
The reward for a successful European roll out is market dominance in two of the primary streaming markets (I'm not sure whether the Asian market would be significant due to piracy and language issues). It's worth far more than the relatively minor market share loss ( 4%) in the U.S. If the European roll out works well, they will have the majority of the English language streaming market wrapped up, leaving only Australia.
Fanatically anti-fanatical
Either Netflix had an actual printing press with which they were creating physical dollar bills, or you're one of the legion of retards who thinks "literally" means "hey, here comes some hyperbole!". Which do you suppose it is?
In a free market Netflix can charge extra for the service. In a free market consumers can complain about that change in attempt to force the company to make Netflix's terms more acceptable. That's how it works. Take either ability from either side and then you have one side dominating the other. That's not free market. Complaining about paying for streaming isn't entitlement philosophy, it's bargaining.
In a free market, barriers to entry are low, so if Netflix charges too much, WebMoovees can start up, undercut their prices and take their customers. Unfortunately, we have few truly free markets.
plus there's several million Netflix compatible Video Game Consoles. Seems they have something to market.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
If half of subscribers go from 10 to 8, and the other half go from 10 to 16, its a 15% increase, not a 10% decrease.
The breakeven is when 3/4 of subscribers drop to 8 while 1/4 go to 16. With a decrease of total subscribers of roughly 3%, this amount changes by less than 3.5%.
DarkOx, it's hard to believe your comment is based on any familiarity at all with Netflix's streaming content. I have been a subscriber to Netflix since the beginning. When they first instituted streaming, I eagerly adopted it. It was promoted as "Watch Instantly" which will always be streaming's biggest draw - no waiting for a DVD if you just suddenly have to watch some random film you just read about. Or you need to watch part of it to do some research, etc. And indeed, Netflix USED TO offer a large variety of streaming content. Contrary to your assertion, though, Netflix streaming has never been focused on the top-hit of the year, "Hollywood-A-list" movies. It was always the backlists and Criterion stuff that streaming was great for.
But now, that's mostly gone, because Netflix let most of its streaming licensing agreements expire about a year ago. Google the news and see for yourself. It was widely criticized in the financial press and was cause for criticism that Netflix's stock and prospects were wildly overvalued. Almost nothing is available on Netflix streaming now. It has nothing to do with "my recommendations algorithm" not getting fed. If I put a film title into Netflix's search engine, and it comes up as "DVD only," my recommendations didn't do that. Netflix did. The Criterions - gone. All of the indy houses - gone. Anime - virtually all gone.
The real dick move, and idiot move, was for Netflix NOT to raise its prices sooner. Having choked off by 50% or more the variety of content that subscribers could stream, to in rapid succession (1) make a price rise that was double for many people, and (2) indicate they'd lose their DVDs in the near future if they didn't subscribe to a separate service, made people who already felt very screwed over by the dramatic drop in streaming content even more screwed. If Netflix's CEOs had thought the slightest bit ahead, they would have instituted a series of modest price rises for DVD levels in the years leading up to the rollover date for their licensing agreements with Sony, etc. Then, they could have afforded to keep operating a streaming service that reasonably corresponded in breadth with their DVD service. Moreover, during that time period, Hulu, etc. had not emerged as serious alternatives. But once they'd lost most of the content that made streaming valuable, it felt like a complete buttfuck to get slapped with more-money-for-less-service. No, I didn't quit them entirely, but I dropped down to the lowest level and picked up Hulu Plus. Which still doesn't have a lot of the older, art-house and foreign stuff I want, so I'm stuck waiting for DVDs on those.
No, no, no. This is not a sig.
Why would you say "customers got screwed"? The company raised it's prices. Customers were free to accept the new prices, or leave. It's not like some bizarre cell phone contract where they somehow manage to jack up the price in the middle of the contract or something.
I expect streaming prices to continue to rise as Netflix signs more content deals - the studios are really aiming high here - but eventually Netflix will pass that magic point where higher prices means lower profits, and will be forced to reconsider.
Socialism: a lie told by totalitarians and believed by fools.
Basically if that's the case, then they were dumping and ought to be sued for the related antitrust violations.
As for streaming, the streaming selection sucks, I mean seriously, few releases from the last couple years, selection constantly changing, and what's worse they'll have only certain seasons out of a TV series, the remainder are only provided via DVD.
That's all well and good, but it's really hard for me to believe that it's really costing them that much more to stream movies than it is to send DVDs in the mail. Licensing fees or not.
I just signed up for the blockbuster movie pass through dish and so far i couldnt be happier. for $10 a month i get tv streaming, pc streaming, and 1 dvd/bluray/game by mail. goodbye netflix, you are lining your pockets as am i
They raised the prices by 60% and are providing no additional value. They also opted not to give the customers any indication or evidence that they would be receiving any benefit for the money. There are still competitors out there, but switching isn't always a viable option and in some cases can be pretty inconvenient.
That whole customers are free bullshit doesn't fly when there is no alternative to Netflix's streaming service which is comparable.
Because I don't get rattled at all by petty, superficial first-world problems.
The people who unsubscribed are the same type of people who get huffy at having to wait in line for a hamburger, or who balk at the driver in front of them not speeding through a yellow light.
Chill the fuck out, America.
Basically if that's the case, then they were dumping and ought to be sued for the related antitrust violations.
It's only an antitrust violation if they have market domination and are dumping to undermine competitors. I doubt that anyone could convincingly show that the online streaming market is no longer competitive.
That's all well and good, but it's really hard for me to believe that it's really costing them that much more to stream movies than it is to send DVDs in the mail. Licensing fees or not.
Take for example the Dreamworks deal, that's about $12 million per movie per year. I'm pretty sure that's in addition to whatever they pay for the rights for DVD rentals. That's a premium they're paying to have newer content, but they still need licenses for every show in their library. That in addition to storage, servers and bandwidth. I'm pretty sure it costs more than $2 a month to provide service to either the average streaming customer or the average DVD customer.
Fanatically anti-fanatical
yep.
thepiratebay.org
Doesn't cost my anything, and i get to watch what i want, in what quality i want, after i download it.
Nope, I don't stream. dont' wanna stream. I like download, watch, delete. (or keep if it's something really hard to get).
I have comcast HD cable with the premium channels (I don't pay for it, my neighbor does. I share my internet with him.) and the quality of their HD streams is horrible. Unless I really want to watch something when it's aired, i prefer to download episodes because the quality is at least twice as good.
Seriously, when people move, i can see distortions around them where the codec can't keep up. Granted, I have better eye sight for this stuff then most people, but it's not cool.
But, I get my TV shows before they usually air, commercial free and in better quality then what Comcast HD can deliver. And i don't have to pay for the service.
Now, I don't have a problem downloading copyrighted materials of the internet. My money still gets spent on what I want, I support the business that have stuff I like. But the greed the corporations have been showing in the last few years have only reinforced my belief that what I am doing is not only wrong, it's my duty as a person to not support these practices. Piracy has always been around, and the thing is, it's easier to get stuff now, yes, but at the same time, it's easier for the corporations to get us the stuff, and they don't. They want to throw in DRM and crap that makes it worse then what you can get for free. All in the name to increase a bigger profit then what they are currently getting.
But netflix, they were the video rental stores of the internet age and they stupidly listened to the board of directors instead of their subscribers. And they learned. Thing is, you don't hear any other company saying they picked up netflix's subscribers that left, so chances are, they are just downloading the stuff for free now.
And who drove them to that?
Get with the times Media companies, people are going to get what they want, in the manner they want. If you don't offer it decently, they will go get it for free. People show they don't mind paying for stuff, which is good, but fuck them over too many times, and you just lost that money.
Sorry, stoned and i rambled and i'm just going to submit this because i'm sure there's something good in this post.
Be seeing you...
You're joking, right? Name one streaming competitor that has a catalog as large as Netflix's? Seriously, as bad as Netflix's catalog is, it does dwarf pretty much everybody elses catalog combined if you eliminate duplicates.
The Dreamworks deal wasn't a terribly bright idea if it cost them that much money. There's tons of content out there that they don't have and if they're going to throw that much money down the drain on that small number of movies, then they're going to have to increase the cost of the service by quite a bit more than what they currently have.
Also, the reason they increased the price had nothing to do with licensing fees, they said so themselves, I'm not sure where people got the idea that licensing fees were related.
You're joking, right? Name one streaming competitor that has a catalog as large as Netflix's? Seriously, as bad as Netflix's catalog is, it does dwarf pretty much everybody elses catalog combined if you eliminate duplicates.
Being the best isn't an indication of having achieved domination (at least in the legal sense), the rule of thumb measure is if they can increase prices without loosing customers to competitors.
The Dreamworks deal wasn't a terribly bright idea if it cost them that much money.
Maybe it is, maybe it isn't. I can't say I know either way. I would assume however, that Netflix was looking very carefully at how many people were watching Megamind. The $12 million a year is a small amount spread across 25 million subscribers. I presume that they think the content will increase retention and/or acquisition sufficiently to justify the cost. Don't forget that we're talking about family movies as well, which means they have a significant amount of repeat value for families with children.
Also, the reason they increased the price had nothing to do with licensing fees, they said so themselves, I'm not sure where people got the idea that licensing fees were related.
The licensing fees are an obvious scapegoat, and I don't think Netflix would tell us if they were the cause, it would make the company look weak and might hinder future negotiations. However, I think the reason they gave is fairly reasonable, they needed to isolate the revenue streams so they could appropriately fund both sides of their business.
Fanatically anti-fanatical
It's not bad for Netflix. It's bad for their stock, though.
Stocks, especially non-dividend paying ones, are held on the idea that you can sell them for more tomorrow than you bought them for yesterday. So, it doesn't matter if they're still in good shape...can they grow any further? The assumption therefore is that they won't be getting bigger in the future. And if they're not getting bigger, then it's a hard sell to find some other sucker to buy your share of stock for more....because the only promise for that is that they'll keep growing and some *other* sucker will by your share from you. If the growth chain is broken, the stock is worthless if it doesn't pay dividends.
Netflix was trading on the idea that they would become ubiquitous. Once they took a subscriber hit, the graph changed, and all the analysts got off the train.
Netflix is under no moral obligation that I cna see to provide there service at all, let alone at a price that makes you happy. Sure, it's annoying when a company raises its prices, no doubt, but lets not conflate annoyance with injustice. This is entertainment we're talking about here, after all.
Socialism: a lie told by totalitarians and believed by fools.
And, in spite of your low uid, you still managed to spell "you're" as "your". Geez, calm down, it seems that nowadays we have to protect all the idiots who don't spell right. "oh my, he spelled that wrong, don't bash him or you're an idiot". Please, you get a LIFE!
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