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Netflix Is Done. The Company Just Killed Itself.

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  • Netflix Is Done. The Company Just Killed Itself.

    In an effort to get away from some stupid people in GD, let's talk about Netflix.

    http://www.mercurynews.com/business/...nclick_check=1

    I still remember my first Netflix (NFLX) DVD. In December 2001, a red envelope arrived in the mail containing "The Sopranos: Season 1." Such a small thing, and yet it changed the way our family watched TV and movies forever.
    I became a Netflix evangelist to the point of annoying my friends with my endless praise for the service. One friend said he was avoiding Netflix because it sounded like fans of the DVD business had joined a cult.
    He's been a Netflix customer for several years now.
    For a company to stir such passion is a rare and precious thing. It made Netflix one of Silicon Valley's most successful companies over the past decade. It is that passion which the company has managed to squash almost overnight with the decision to split the DVD business into a new subsidiary called, "Qwikster," and keep its streaming video service with Netflix.
    In a late Sunday night blog post, CEO Reed Hastings attempted to explain that the move was necessary to help Netflix avoid becoming a victim of "disruption," the classic pitfall when a company clings too hard to one business model as technology is changing. But in trying to avoid one mistake, the company made an even bigger one.
    Not only is it crushing the highly emotional ties people like me have for Netflix, it is creating a more
    confusing and complex set of choices. Perhaps worst of all, it is making me and millions of others realize that the new Netflix streaming service, the one the company is betting its future on, is not just bad, but getting worse.
    "When you really take a step back and think about Netflix six months ago, it was all about a simple message and a great brand," said Tony Wible, a research analyst at Janney Montgomery Scott. "Since then, they've asked consumers to pay more for less, while making their lives more complicated. For a consumer technology company, that's not a good combination."
    Hasting's post came in response to the backlash the company got from an announcement several weeks ago that it was creating two separate subscription plans, one for the DVD business and the streaming business, and dramatically increasing prices.
    Last week, Netflix revealed that customers were much angrier than expected, and that the company was going to miss its subscriber targets for this quarter.
    In response, Hastings apologized in his post and tried to explain the reasons behind the move.
    It turns out the new pricing plans were the first step toward formally separating the DVD business into a new subsidiary with the already widely ridiculed name, "Qwikster." Hastings said by separating the two businesses Netflix would be able to focus on innovating and competing on the streaming side.
    "For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming," Hastings wrote. "Most companies that are great at something -- like AOL dialup or Borders bookstores -- do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business."
    The first problem for me, the consumer, is that I now will have to maintain two accounts at two Web sites with two bills.
    The second problem is more fundamental: The streaming service isn't great. The choice is terrible, and it appears to be getting worse. The company claims its catalog is growing, yet if you look at the list of top 100 DVDs rented by Netflix customers, only six are available for streaming. And the company's deal with Starz, which provides a large library of streaming content, will end in a few months.
    When streaming seemed like a freebie thrown in with DVD rentals, these flaws didn't matter as much. But in charging separately for streaming, they company is essentially highlighting its vast shortcomings, making it impossible for me to justify the $7.99 monthly cost.
    By continuing to get DVDs, on the other hand, I can save the cost of paying for HBO or even several trips to theaters to see blockbuster movies.
    I understand the issue Netflix faces, the need to pivot its business model and change with the competitive landscape. Just because the company had to do something, however, doesn't mean that this is the right thing. Other companies that have famously made dramatic pivots such as Intel (INTC) and Apple (AAPL) didn't place their legacy business in separate buckets and nudge them out the door. The loyalty and emotional relationship with the consumer is just too delicate to survive such radical surgery.
    It doesn't bring me any great joy to say this. I still don't think Hastings understands what a catastrophic this mistake is. But it may do what countless competitors over the years have tried and failed to do: Kill Netflix.
    The streaming service was never good in the first place. But millions of people, including myself, did not complain since it was a free service included with the DVD's. What the heck was Netflix thinking when it decided to separate its inferior streaming service from it's signature DVD service?

    HUGE strategic error on their part. On top of that, they decide to re-brand the DVD service as Qwikster, which requires customers to hold 2 different accounts if they want streaming + DVD rentals!

    I canceled my streaming service last month, and plan on cancelling my DVD service here in the coming months. I think Netflix is done. They went from gigantic company 1 year ago, to losing 53% market value from July 2011- September 2011. Disastrous.

    Let's face it: Netflix just killed itself.
    Last edited by getlynched47; 09-19-2011, 04:34 PM.


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  • #2
    Never even really used it... if ever.

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    • #3
      Used to love it when it first came out. I sort of lost interest when the streaming started (and sucked) and I kept losing the damn DVDs

      I do love me some RedBox though.

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      • #4
        That sucks. I mooched off my parents account and used the streaming service non stop on my 360. Maybe if this means they'll ratchet up their streaming service hardcore then it'll be worth it, but it'll have to happen fast.

        I guess I'll stick to Red Box.

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        • #5
          It looks like Blockbuster might rise from the ashes and reclaim it's top spot in the movie rental business...

          Sad, I loved Netflix as of a few months ago, before they changed the pricing and separated the streaming and the DVDs.
          Lifetime Broncos/Cowboys fan.
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          • #6
            Originally posted by Hoserman117 View Post
            That sucks. I mooched off my parents account and used the streaming service non stop on my 360. Maybe if this means they'll ratchet up their streaming service hardcore then it'll be worth it, but it'll have to happen fast.

            I guess I'll stick to Red Box.
            I don't see how they'll ratchet up their streaming service. I read that companies are well aware of Netflix digging its own grave, so they're reluctant to sign contracts with Netflix to get their stuff streamed by them.

            Originally posted by DoomTrooper View Post
            It looks like Blockbuster might rise from the ashes and reclaim it's top spot in the movie rental business...

            Sad, I loved Netflix as of a few months ago, before they changed the pricing and separated the streaming and the DVDs.
            Blockbuster streaming is being rebooted by Dish Network.

            http://www.forbes.com/sites/greatspe...ter-streaming/

            Dish Network will introduce Blockbuster’s streaming movie service next month according to a Bloomberg report. Interestingly, this move coincides with Netflix’s price increases and comes after Starz’s recent decision to not renew its content deal with Netflix.


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            • #7
              It's not done... i think it was a bold move on their part that may pay off...

              Video Games and Movies all in one spot??? I'm in.... (if i were into either one)

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              • #8
                Originally posted by 12and4 View Post
                It's not done... i think it was a bold move on their part that may pay off...

                Video Games and Movies all in one spot??? I'm in.... (if i were into either one)
                No, it's definitely a stupid move. I just completed a corporate audit of Netflix (thanks to my Business Policy & Strategy class), and everything looks terrible for Netflix.

                Losing 53% market value in a span of 2 months is unheard of.

                Additionally, there's no way Qwikster can compete with GameFly, PSN DLC and XBox Live DLC.

                And the Netflix streaming service will suffer as well because of Starz ending their partnership.

                http://news.businessweek.com/article...Q0JPPE9INA19B3

                Netflix faces rising costs and other headwinds in licensing streaming content. Starz, part John Malone's Liberty Media Corp. empire, said this month it won't renew a contract ending in February that gave Netflix rights to newer movies from Sony Corp. and Walt Disney Co.
                If you can't have Sony Corp. and Walt Disney Co. movies available for stream, you might as well curl up into the fetal position and say uncle, because Blockbuster stream will annihilate Netflix stream thanks to it's licensing agreements already in place with various movie production companies.


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                • #9
                  I never got into the DVD rentals in the first place and am only paying for Netflix because of the streaming.

                  There's other ways I can get new released movies in the first place.

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                  • #10
                    Originally posted by 12and4 View Post
                    It's not done... i think it was a bold move on their part that may pay off...

                    Video Games and Movies all in one spot??? I'm in.... (if i were into either one)
                    I agree, it's a smart idea. A plan to rent games and stream movies, would be nice for people into watching movies on their gaming console and not spending $60 for a new game.

                    Originally posted by Hoserman117 View Post
                    That sucks. I mooched off my parents account and used the streaming service non stop on my 360. Maybe if this means they'll ratchet up their streaming service hardcore then it'll be worth it, but it'll have to happen fast.

                    I guess I'll stick to Red Box.
                    Same here I use it for my xbox, and I mooch it off my moms.
                    I will say that the streaming is crappy, and they add TV shows nobody watch and movies nobody wants to see.

                    When they add a new movie, it's only on there for a month and it's after you already saw it.


                    Netflix lost money because they made the biggest mistake they could make.

                    What got them where they are today was the low price for movie rentals and streaming, then they up the price. Nobody cared, then they up the price again to $16.
                    That caused 1million out of 25 million to leave, that's what they are regretting.
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                    • #11
                      Originally posted by getlynched47 View Post
                      No, it's definitely a stupid move. I just completed a corporate audit of Netflix (thanks to my Business Policy & Strategy class), and everything looks terrible for Netflix.

                      Losing 53% market value in a span of 2 months is unheard of.

                      Additionally, there's no way Qwikster can compete with GameFly, PSN DLC and XBox Live DLC.

                      And the Netflix streaming service will suffer as well because of Starz ending their partnership.

                      http://news.businessweek.com/article...Q0JPPE9INA19B3



                      If you can't have Sony Corp. and Walt Disney Co. movies available for stream, you might as well curl up into the fetal position and say uncle, because Blockbuster stream will annihilate Netflix stream thanks to it's licensing agreements already in place with various movie production companies.
                      Most new TV's nowadays come equipped with Netflix.


                      They definitely aren't doing good right now but I don't see it filing for bankruptcy or anything of that nature... i see it just goin steady for a while before it fades out due to technology.


                      but im sure your 2 page essay says otherwise!



                      <3

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                      • #12
                        We only watched about 1 or 2 DVDs per month plus a few TV shows via streaming. That was fine at the previous price.

                        Now, we'd have to choose one because we're not paying for both. And we might just choose none because we don't think either is worth getting without the other.

                        If Netflix had been smart, they would have bumped the price maybe a buck or two and had a few complaints. Then wait a year or two a do another moderate bump. Essentially doubling the price in one fell swoop was utterly stupid on their part.
                        "You can't take the sky from me..."
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                        • #13
                          Originally posted by 12and4 View Post
                          Most new TV's nowadays come equipped with Netflix.


                          They definitely aren't doing good right now but I don't see it filing for bankruptcy or anything of that nature... i see it just goin steady for a while before it fades out due to technology.


                          but im sure your 2 page essay says otherwise!



                          <3
                          25 pages. High school is long gone.

                          Most TV's nowadays come equipped with Netflix software, which is easily uninstalled by a software update from the manufacturer (assuming it's an internet TV).

                          I don't know contractual agreements between TV manufacturers and Netflix, but if their agreement was voided, Netflix would be erased from those televisions within months.

                          Netflix will hit rock-bottom sooner than you think. It's streaming service will be inferior to what Dish/Blockbuster will roll out and Qwikster can't compete with RedBox and GameFly.
                          Last edited by getlynched47; 09-19-2011, 05:25 PM.


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                          FA Targets: DT Jason Jones, DT Pat Simms, S Reggie Smith, LB Dan Connor



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                          • #14
                            I've been a Netflix user for a year or so. I think I've only ever watched two DVDs that I received in the mail. That was the part of the service I used least. When they upped the price a few months ago, of course I was upset like everyone else. But I honestly don't mind the streaming service. They don't have an extensive new release category but you can always find something to watch. And if you can't find something to watch, maybe Netflix isn't the service for you and then by all means, cancel that stuff.

                            The way they handled stuff really hurt their reputation and I know plenty of people who cancelled but I think they will survive as a company. I don't know about Qwikster though, I wasn't even using the DVD part of my subscription and don't plan on using it.

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                            • #15
                              Oh and the Netflix app on my droid makes it completely worth it to pay the price for streaming.

                              Unlimited internet + Huge Droid X screen + Netflix = Awesome

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