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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.
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."
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
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..
They really should have taken a page from Apple. When the music labels tried to strong-arm iTunes pricing in the early days, Apple just laughed at them and said "No. You'll take what we give you, and you'll like it." They could do this, because the iPod, and thus iTunes, was by far the most wildly popular digital music platform in the world, and they knew they had all the bargaining leverage against the labels that they needed
Netflix is in the same boat. They are far and away the biggest streaming platform around, wildly popular, and almost ubiquitous at this point. At least in North America. Who can compete with them? Blockbuster? Their platform is a joke. Hulu? Nextflix is (was) not much more per month, and Hulu still forces ads on you and has asinine and frustrating device playback restrictions on certain content, mainly because they're run by the media companies. Netflix should have all the muscle needed to force their way around the studios.
What they lack, is a strong personality like Steve Jobs in their leadership, who had no issues playing hardball with anyone, anytime.
They can also push into the adult movie industry as well. It's absolutely HUGE, and would gain them millions of more subscribers.
People... pay... for porn?
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.
Comment removed based on user account deletion
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.
iTunes was able to negotiate price because they were by far the second most popular method of getting music. The most popular by far was copying (not sharing) music for free. People were still going to buy Apple's hardware whether Apple had a music store or not. Netflix doesn't have that luxury. They must have the content or else they will have nothing to sell.
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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.
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.
Agreed about Hulu. They're the closest competitor to Netflix streaming and they make you pay the same pirce as Netflix, but still force *ads* on you. And their library is still not even *close* to Netflix's to boot. They're a joke. Not sure why anyone in their right mind would subscribe to them. About the only thing they have going for them is some NBC and Fox shows' more recent episodes. Whoopty-do.
SJW: Someone who has run out of real oppression, and has to fake it.
No they're not. iTunes Music Store had a power that Netflix lacks, due to the iPod. The iPod had success regardless of the iTMS and yet also encouraged people to use iTMS. As long as Apple mobiles have a large-enough marketshare (and I think that while it will continue to shrink it will effectively never fall below a viable niche) iTMS is guaranteed to be a major player.
Netflex may not have serious competitors, but they can have competitors. There's no real barrier to anyone else setting up a competing business, other than the exclusive contracts Netflix is trying to make with content creators. All your criticisms about Blockbuster, Hulu etc as a user, are things that could be effortless fixed, if those companies ever decided that they would like your money.
Contrast that to iTMS competitors: they may have no disadvantages to users at all (i.e. you wouldn't be able to bitch about them in the same way you'd bitch about Blockbuster or Hulu), and even be superior (IMHO, pretty much every single one of them is; the iTunes client requirement is a deal-killer for iTMS) and iTMS is still going to remain viable.
Apple's verticalness protects them from competition at various levels, without the need for dirty anti-competitive (in the regulation sense) tricks. Netflix does not have that luxury.
The trouble is that as we know from all the bullshit RIAA lawsuits (going after 75 year olds who don't own computers, etc) the media publishing industry is somewhere in 1975 and would like to keep it that way as long as possible. This is an industry famous for fighting every advance in technology that later ends up making that industry craploads of money. Tapes, VCRs, etc, were all fought tooth and nail. Hell, Sony had to get Mr. Rogers to testify for them in court before the VCR was finally acknowledged as legal.
With that model, not playing ball with them at this stage means that they will take that ball and go home, and Netflix will be back to streaming the crap content they were putting out when they first put their streaming online.
They're going to have to walk a fine line for awhile until the entertainment industry gets their head out long enough to realize that streaming content will make them a lot of money.
"I disagree with you" does not equal "flamebait."
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.
Well, every time my wife catches me watching it, I certain pay for it.
SJW: Someone who has run out of real oppression, and has to fake it.
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.
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.
the next worst decision they made was to play ball with the entertainment industry when they demanded more money
What makes you think they just roll over? They don't. If you notice things expiring from instant it's because contracts are ending and not getting renewed at higher rates. One content owner (Starz, maybe?) asked for a 10x increase and Netflix quickly declined. Netflix is negotiating well and walking a fine line.
Developers: We can use your help.
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
What they lack, is a strong personality like Steve Jobs in their leadership, who had no issues playing hardball with anyone, anytime.
Uh...from what I hear, they did play hardball. And Stars said, "ok, bye".
The movie industry saw what happened to the music industry, and their strategy to a really powerful player is to make them less powerful by diminishing their library. Hulu and Youtube are just entering the arena now, but eventually what they want is for you to be completely unable to get everything you want from a single provider for $8. You'll have to pay $8 to netflix in order to stream Warner Brothers movies, pay $8 to hulu to stream things Stars has the rights to, pay $8 to youtube to stream HBO movies, etc, etc...
Basically, they want to turn the streaming service into cable.
Your examples are a bit off. For starters, Apple doesn't own the content they sell. They contract to sell it just as Netflix does. Their businesses are the same in that respect. Netflix is also the most popular streaming company out there but the number of folks who stream is probably still dwarfed by those who use phsical media.
Regarding the hardware, I think you were trying to indicate that Apple has a large hardware prescence (iPod/iPhone/iPad/Mac) that hooks directly into iTunes. That is also true for Netflix as pretty much any new TV comes with a Netflix 'app' when it's internet enabled. This is also true for a large number of media boxes, Disc players (blu-ray,dvd), etc, so in that respect, Netflix is also on common ground with Apple/iTunes. People will still buy these TV's and various players whether or not they had a Netflix app as well since there is a strong market for such media.
You are also indicating that piracy was actually more prevalent than people buying music. I would disagree with that. Althoug any technically skilled person may not bother in buying music, your average Joe/Jane will probably just buy it from a store, be that brick and mortar or online. Stating that the majority of music is stolen via copying is debatable.
I think the area where Netflix is a bit weaker than Apple is in regards to the streaming industry itself. Although they've been around a few years, they don't dominate the distribution of their media the way that Apple does with it's Music model. Althogh Netflix is a major streaming player, people still regularly rent physical disks from Redbox, local stores, online, Amazon, via purchase, etc. The difference being that music has become almost entrely digital these days. I know very few people who buy physical CD's anymore. It's just not worth the hassle.
Had Netflix had more time to mature and the market moved more towards digital distribution for video, then they would have had more leverage.