In what may rival the dumbest marketing decisions by a company in the past 50 years, NetFlix seems to want to compound the problem by blaming the consumers reaction to their raising rates on (of all people) the Tea Party and Occupy Wall Street…
Considering the share value of the company has dropped from a high of $300.00 in July to $87.00 yesterday – I think if I was sitting on a box full of NetFlix shares, the management would have to come up with a whole lot better story than that! The company has bled 800,000 customers since the fateful announcement that they could be nearly doubling their rates.
This one is bound for a “B” School Case Study right beside “New Coke” and Xerox’s “nobody wants those little copiers”.
I think the folks at RedBox are licking their chops at the idea NetFlix will exit the mail business.
Anyway – my view of the world is, that the only way you can sell the “cloud” and cloud based services to the public is if broadband access is free, reliable, and available to anyone – anywhere. If a guy can’t pay the mortgage, the cable bill isn’t far behind. And at rates going from $100-200 or more a month, the only “triple play” is the one where the carriers sock the consumer with a bunch of hidden charges every month on top of that advertised $99/month bill.
Reed Hastings was soaking in a hot tub with a friend last month when he shared a secret: his company, Netflix, was about to announce a plan to divide its movie rental service into two — one offering streaming movies over the Internet, the other offering old-fashioned DVDs in the mail.
“That is awful,” the friend, who was also a Netflix subscriber, told him under a starry sky in the Bay Area, according to Mr. Hastings. “I don’t want to deal with two accounts.”
Mr. Hastings ignored the warning, believing that chief executives should generally discount what their friends say.
He has since regretted it. Subscribers revolted and many dropped the service. The plan further tarnished a once widely respected Internet service that had already been wounded by an unpopular price increase in the summer. Mr. Hastings was forced to reverse the planned split — but not the price increase — three weeks later and apologized.
On Monday, the company revealed the damage that had been done. It told investors that it ended the third quarter of the year with 800,000 fewer subscribers in the United States than in the previous quarter, its first decline in years. The stock plummeted more than 25 percent in after-hours trading. [In regular trading Tuesday, the stock was down more than 30 percent by midday.] Read the rest of this entry »