Netflix pwned, "strategy" backfires

Homeslice · 09-15-2011, 04:15 PM

BRIAN STELTER, On Thursday September 15, 2011, 10:01 am EDT
In wake of new prices that force some customers to pay more, greater numbers of people are canceling their Netflix subscriptions than the company expected.

The company on Thursday morning revised downward, incrementally, its subscriber estimates for the quarter of the year that ends in two weeks. It did not change its financial guidance for the quarter. Still, its stock dropped almost 15 percent in heavy trading when the market opened Thursday.

The revision reflects the negative reaction to Netflix's decision, announced in July, to separate its DVD-by-mail service from its faster-growing Internet streaming service. Before, DVD-by-mail was a $2 add-on for some streaming subscribers; now, each service now costs $8.

Some subscribers were upset by what was effectively a price hike, and a subset of them have cancelled their Netflix accounts.

In July, the company said it expected that it would end the third quarter with 22 million subscribers to the streaming service, 12 million of whom would also opt for the DVD-by-mail service. It expected back then that 3 million would opt only for the DVD service.

Now, it's expecting that just 2.2 million will opt only for DVDs, a drop of 800,000.

Netflix also anticipates a slight drop in streaming subscribers, to 21.8 million, a difference of 200,000 from the earlier estimate. It still expects 12 million of those streaming subscribers to also pay for DVD-by-mail, helping it to generate more revenue overall.

"Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice," the company wrote in a letter to shareholders on Thursday.

Earlier this summer, Netflix's chief executive, Reed Hastings, said he recognized that "we have to face those subscribers who are upset by the price hike this quarter."

He said then that the price change would benefit Netflix in the fourth quarter and beyond, and that the company intended to spend the increased revenue on its streaming service, partly on research and development. "As our subscriber base continues to grow, we're able to spend more on improving that service, both on the R.& D. side and on the content availability side," he said.

Particle Man · 09-15-2011, 04:18 PM

Hey, this looks familliar. Oh yeah:

http://www.twowheelfix.com/showpost....3&postcount=60

Homeslice · 09-15-2011, 04:24 PM

Quote:

Originally Posted by Particle Man

Hey, this looks familliar. Oh yeah:

http://www.twowheelfix.com/showpost....3&postcount=60

Whoops.

Great policy here of not allowing people to delete their own threads. Now this thread will continue to sit, wasting space.

101lifts2 · 09-16-2011, 12:00 AM

As our government butt fucks us up the ass with taxes, America is worried about a 6 buck increase for movie usage. Nice.

Particle Man · 09-16-2011, 09:17 AM

Quote:

Originally Posted by 101lifts2

As our government butt fucks over with taxes up the ass, America is worried about a 6 buck increase for movie usage. Nice.

Shhh - I'm trying to hear my movie

fujimoh · 09-16-2011, 03:02 PM

Quote:

Originally Posted by 101lifts2

As our government butt fucks over with taxes up the ass, America is worried about a 6 buck increase for movie usage. Nice.

we need the 6 bucks 'cause the gov't will soon be claiming it. You can drop money to Nexflix, but the gov't confiscates money at the point of a gun and the clang of a jail cell door

derf · 09-19-2011, 10:10 AM

http://blog.netflix.com/2011/09/expl...flections.html

They announced that they are gonna stop shipping DVD's all together. BUT then they are creating a second company called quickster that ships DVDs to you. So now instead of one company whose service I'm not planning on using any more there are two companies whose service I dont plan on using any more, and why would anyone want two separate bills anyway.

This just seems dumb to me, now I have two sets of bills, two queues, two rating systems, two websites, two separate accounts to manage. The most frustrating thing about netflix was to get a DVD in the mail only to realize that it was available streaming in the first place.

Homeslice · 09-19-2011, 10:49 AM

Mad gheyness

Trip · 09-19-2011, 10:54 AM

all aboard the fail boat, this will just piss off more customers. They are digging themselves a nice deep hole.

derf · 09-19-2011, 11:07 AM

Quote:

Originally Posted by Trip

all aboard the fail boat, this will just piss off more customers. They are digging themselves a nice deep hole.

I understand that from a business perspective this works, its a great idea, split two businesses with separate products (streaming vs dvd), show they are separate companies by creating separate websites. But from a customers perspective this is just downright dumb.

Unless....

This means they can start to negotiate two contracts for content, and get better pricing for their streaming services (which they are trying to secure as their core content).

Or.... (my guess)

They are trying to completely kill off their high overhead DVD services all together without hurting their streaming business too much. I can see sometime next year a press release (soon after another press release from nextflix announcing that all titles available for DVD will be available streaming) from quickster saying 'due to lack of interest and low sales figure we are ceasing operations'. This way they can file for bankrupcy and netflix wont be held liable

09-15-2011, 04:15 PM	#1
Homeslice Elitist Join Date: Nov 2008 Location: SF Bay Area Moto: Gix 750 Posts: 11,351	Netflix pwned, "strategy" backfires BRIAN STELTER, On Thursday September 15, 2011, 10:01 am EDT In wake of new prices that force some customers to pay more, greater numbers of people are canceling their Netflix subscriptions than the company expected. The company on Thursday morning revised downward, incrementally, its subscriber estimates for the quarter of the year that ends in two weeks. It did not change its financial guidance for the quarter. Still, its stock dropped almost 15 percent in heavy trading when the market opened Thursday. The revision reflects the negative reaction to Netflix's decision, announced in July, to separate its DVD-by-mail service from its faster-growing Internet streaming service. Before, DVD-by-mail was a $2 add-on for some streaming subscribers; now, each service now costs $8. Some subscribers were upset by what was effectively a price hike, and a subset of them have cancelled their Netflix accounts. In July, the company said it expected that it would end the third quarter with 22 million subscribers to the streaming service, 12 million of whom would also opt for the DVD-by-mail service. It expected back then that 3 million would opt only for the DVD service. Now, it's expecting that just 2.2 million will opt only for DVDs, a drop of 800,000. Netflix also anticipates a slight drop in streaming subscribers, to 21.8 million, a difference of 200,000 from the earlier estimate. It still expects 12 million of those streaming subscribers to also pay for DVD-by-mail, helping it to generate more revenue overall. "Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice," the company wrote in a letter to shareholders on Thursday. Earlier this summer, Netflix's chief executive, Reed Hastings, said he recognized that "we have to face those subscribers who are upset by the price hike this quarter." He said then that the price change would benefit Netflix in the fourth quarter and beyond, and that the company intended to spend the increased revenue on its streaming service, partly on research and development. "As our subscriber base continues to grow, we're able to spend more on improving that service, both on the R.& D. side and on the content availability side," he said.

09-15-2011, 04:18 PM	#2
Particle Man Custom User Title Join Date: Nov 2008 Location: Central NY Moto: 2003 SV650S Posts: 14,959	Hey, this looks familliar. Oh yeah: http://www.twowheelfix.com/showpost....3&postcount=60 __________________ I'm not "fat." I'm "Enlarged to show texture." Handle every stressful situation like a DOG: If you can't eat it or hump it, pi$$ on it & walk away.

09-16-2011, 12:00 AM	#4
101lifts2 WSB Champion Join Date: Nov 2008 Location: Anaheim, CA Moto: 2009 Kawi ZX6R Posts: 5,570	As our government butt fucks us up the ass with taxes, America is worried about a 6 buck increase for movie usage. Nice. __________________ Train Hard Ron Paul - 2012 Mark of Excellence GM Last edited by 101lifts2; 09-17-2011 at 02:34 AM..

09-19-2011, 10:10 AM	#7
derf token jewboy Join Date: Nov 2008 Moto: CBR 900, KLR ugly ass duckling, Gas Man Posts: 10,799	http://blog.netflix.com/2011/09/expl...flections.html They announced that they are gonna stop shipping DVD's all together. BUT then they are creating a second company called quickster that ships DVDs to you. So now instead of one company whose service I'm not planning on using any more there are two companies whose service I dont plan on using any more, and why would anyone want two separate bills anyway. This just seems dumb to me, now I have two sets of bills, two queues, two rating systems, two websites, two separate accounts to manage. The most frustrating thing about netflix was to get a DVD in the mail only to realize that it was available streaming in the first place. __________________ Last edited by derf; 09-19-2011 at 10:16 AM..

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09-19-2011, 10:49 AM	#8
Homeslice Elitist Join Date: Nov 2008 Location: SF Bay Area Moto: Gix 750 Posts: 11,351	Mad gheyness

09-19-2011, 10:54 AM	#9
Trip Hold mah beer! Join Date: Feb 2008 Location: 80 Miles South of Moto Heaven Moto: 08 R1200GS Posts: 23,268	all aboard the fail boat, this will just piss off more customers. They are digging themselves a nice deep hole.