Published: Friday, Sept. 16 2011 8:00 a.m. MDT
'Despite the guidance revision, we remain convinced that the splitting of our
services was the right long-term strategic choice.' - Article A 19%
stock drop in light of a 60% rate increase shows this is not the case. This shows the vast disconnect between business... and the
I killed my subscription when I got my e-mail announcing the change. I can't
understand why they would do it thinking it was a good way to increase revenues.
Maybe they can't continue to be profitible under the old subscription tier and
that's fine. I thought the way you could stream unlimited movies from any
computer, even my iPhone or my Wii, for about $10 a month seemed a little too
good to be true anyway. Turns out it was, I guess.
It sill beats the price of cable. Streaming Netflix and Hulu Plus for $16.00 a
month is a steal compared to cable prices. If you want to stream HD Movies then
sign up for Vudu. Still beats cable out by a long shot.
If Netflix had 24.6 million subscribers at the end of June under the old pricing
structure then an increase of 60% in subscription fees and only a loss of 0.6
million subscribers between July, August and September would still be an
impressive increase in revenue. If the avg. subscription at the end of June was
$10 then Netflix would see an increase of revenue from 246 million a month to
384 million per month. That's pretty dang good. But of course that revenue
increase was already built into the stock price before Netflix' announcement
today and since the stock market always looks to future growth potential, any
downgrade in projections is going to cause a kneejerk reaction in market
trading. I'm sure stockholders are worried about the ability to reatin, let
alone grow, its subscriber base and increase revenues but the fact that Netflix
will only lose 0.6 million subsribers in three months after making their
unprecendented, and what I thought to be a ridiculous, increase in pricing
probably bodes will for them in the future.
The problem is that there is a very small # of opportunities to purchase content
for streaming. Even if Netflix is willing to pay much more than they have in the
past, the studios are simply not willing to sell it to them.Netflix
jumped the gun big time - they needed to secure the content rights FIRST and
then determine if the split subscription was viable.In the past
year, we've used the streaming to find mainly past TV shows. The streaming
offerings are spotty - you go online and check the new releases and 99% of
options are low class, straight to home video movies. You could tolerate the
weak streaming when you also got the discs by mail, but without them being
bundled, nobody will find the streaming worthwhile (especially when the Disney
TV shows are pulled after the Starz deal expires).
It wouldn't be a problem to split the service IF the streaming had all the
movies. Instead its pretty sparse pickin's after a while.
This is not a "vast disconnect between business... and the average
person"... This all started after an announcement that many content
providers were going to charge Netflix more to stream their content. Since when has finding a profitable business model been a disconnect... Seems
like people are just mad... to the point of personal offense at this. It's just
bizarre how angry many people got about this. If a service doesn't
work for you. don't use it... People don't need to cry about it...
'Since when has finding a profitable business model been a disconnect...' -
Mikey B | 9:42 a.m. Sept. 16, 2011 Reply fact: *'Mitt
Romney as job creator clashes with Bain record of job cuts' - By Lisa Lerer,
Bloomberg News - Published by DSNews - 07/20/11 'Employees who lost
jobs at Bain-controlled companies more than a decade ago say they still hold
Romney responsible."I would not vote for him for anything," said
Phyllis Detro, 68, who lost her job...' It is true, if you don't
like it, don't use it. AND, everyone has the freedom to 'cry about
it.' Insulting people using their free speech is in poor taste.
Re: Last StandI was about to share the same points. Only 1 of 40
subscribers canceled their membership, while 39 of 40 are paying up to 60% more.
It is unknown how many downgraded their plan to streaming-only, but ultimately
Netflix stands to make a bundle. Once their quarterly profit numbers are
announced, the stock will rebound.
Their big mistake came in under pricing the commodity in the first place,
presumably done to attract a very fast customer base increase. $10 for one dvd
at a time and unlimited streaming was not supportable, ever, so an adjustment
was needed...but it came at a time when they'll lose a few of those early
customers. However, the $7.99 streaming is still a great deal, but
their increase for a DVD made it not compete with redbox. I dropped the dvd
option and can rent locally whenever I want to; I'll certainly not rent 8 movies
a month from redbox so I'm still saving by going that route.
To "giantfan | 9:09 a.m." you seem to have missed the articles where
Netflix explained the jump in prices. Basically what happed was that the TV
studios wanted to charge more for what they made avaiable to Netflix. Since
Netfix's costs were going up, they had to charge more for their service.Unfortunately there isn't another services that has as much streaming
content available as Netflix.
Re: CheeseFriesI'm not privy to all the details and maybe Netflix
has released the statistics but the loss of 0.6 million subscribers is a net
result, as in total number of new subscribers minus those that they lost during
the period. Let's suppose they lost 5%, or 1.2 million, of their subscribers
because of the price increase. That means they gained .6 million new
subscribers. Since their original forecast was for 25 million subscribers by the
end of September, or an overall net increase of .4 million, then they either
underestimated the number of subscribers that would cancel, and/or the number of
new subscribers they'd be able to attract. If Netflix is comfortable that the
negative effect the new pricing would have on current subscribers is over, then
they can expect to see growth at the same rate of new subscribers as they saw
last quarter, without the mass exodus of existing subscribers. The market would
like to see bigger growth comparable to what Netflix has shown the last 4
quarters but that was probably not sustainable longterm anyway. If they are
forced to pay more now for content, they should be able to remain competitive.
pagan,this was a story about a video company. that's quite the
creativity, turning it into a venue to express your hatred for romney
@Redshirt1701Yeah, that makes sense, and like I said it did seem a
little too good to be true. And if the bulk of the increase is due to studios
wanting a bigger piece of the pie, then Netflix should have no concerns of
remaining competitive in the market place.
'... turning it into a venue to express your hatred for romney.' - lost in DC |
11:29 a.m. Sept. 16, 2011 Mikey B simply asked me a question
Lost. 'Since when has finding a profitable business model been a
disconnect...' - Mikey B | 9:42 a.m. Sept. 16, 2011 I simply
replied with a fact. A story printed by...the DSNews.
Pointing out the disconnect between the profit goals of big business...
and the well being of people, is not 'hate.' Shall I give other
examples? Enron Goldman Sachs, etc, etc. There is
no shortage of the business bottom line harming the well being of people. BP oil spill, 11 dead. How strange that you claim I
'hate'... when presented with...the facts of the matter.
Why is it conservatives always resort to hate...first?
It's not as much about what they offer or how much they SHOULD have charged.
It's that they are following the crowd of other companies and hurting the
general public when we are already being nickel and dimed to death. I am not a
subscriber to Netflix, and I was wanting to. But I don't think I will simply
because they have shown that the buck is far more important to them than a
human. They have abandoned their original high minded goals for
quick profit and I want no part in it. Obviously anyone can see the business
upside, but I also care a little bit about decency.
Perhaps not a death spiral, but they surely will find out how elastic their
demand really is. I did the math for my family... can you say "hello
Everyone has different objectives, but I personally dropped my cable about 6
months ago and bought a ROKU box and was living on Netflix and Hulu. It was a
royal pain and limited viewing of quality programs, but the price difference
made it 'worth it' to me.I'm one that dropped Netflix with the price
increase. I've watched all the good documentaries on Netflix and I'm not sure
if I've streamed a movie because of the poor quality of choices. We mostly had
it to be background noise and something to entertain the kid's once in a
while.I actually kept the lowest dvd plan w/Netflix ($4.99/mo for 2
movies) because I do like to be able to get the dvd's I want, when I want.
Redbox is convenient and cheap, but I can't always find what I want. I do love
Netflix for their DVD choices (everything ever made basically), but the
streaming is really marginal in my mind.I put Direct TV back in my house
last week. I definitely would not have switched, but the price spread didn't
justify not having tv any longer for me.
People are freaking out over the price increase. But what they'll realize
shortly after they leave is that Netflix is still by far the best value in the
Pagan we have learned well from Liberals.
DeseretNews.com encourages a civil dialogue among its readers. We welcome your thoughtful comments.— About comments