20:05 // 8 months ago
» How hard will moving forward be? During yesterday’s earning report, Netflix’s CEO, Reed Hastings explained off his company’s tough year like this: “We made a couple of big mistakes this year. It’s up to us to own up to those mistakes and to move forward.” But will owning up to those mistakes be enough to stop the bleeding amongst investors? A 75 percent drop in three months — when your stock is worth more than $300 — is just insane. It dropped 36 percent today alone. If you think Netflix is going to bounce back, though, now’s the time to buy their stock.
legospaceship asks: Don’t you think it’s a non issue, ultimately? Can you see the core of their streaming business going anywhere? I don’t see any other folks in the space being able to rise up and challenge them right now unless i am missing something.
» SFB says: I wouldn’t be so sure it’s a complete non-issue. This isn’t to say they’re going away anytime soon, but they’ve lost nearly three quarters of their market value in just a few months — that could lead to a change at the top. They’ve hurt their customer relations pretty severely in that time, and while they can get it back eventually, they’re starting fo face more difficult factors which could hurt their business over time. The costs for their streaming business are rising. There’s a chance they’ll see some significant competition in the next year or two (Dish Network and Hulu are each currently in the midst of an upswing, and Dish has content deals comparable to Netflix, including the Starz deal Netflix is losing). The real question is, can they bounce back? — Ernie @ SFB
» Oh, and it gets worse: The once-high-flying company now has 99 problems, and a shrinking stock price is one — one that dipped 26 percent in after-hours trading today. The company — which recently raised the cost of its legacy DVD plan, tried to split off DVDs into a separate site and then backed off after everyone hated it — also informed investors today that it would have a couple of unprofitable quarters as it expanded into the UK and Ireland. ”We expect the costs of our entry into the UK and Ireland will push us to be unprofitable on a global basis; that is, domestic profits will not be large enough to both cover international investments and pay for global G&A and technology and development,” the company said. CEO Reed Hastings blamed the drop in subscribers on the price increase.
It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password… in other words, no Qwikster.Reed Hastings • In a very short post on the Netflix blog about the about-face his company did regarding Qwikster. He added: “While the July price change was necessary, we are now done with price changes.” That’s all you needed to say.
In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, ‘Actions speak louder than words,’ and we should just keep improving our service. But now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. It wouldn’t have changed the price increase, but it would have been the right thing to do.Netflix CEO Reed Hastings • In a lengthy apology he wrote on the Netflix blog. Let’s repeat that first sentence again: "In hindsight, I slid into arrogance based upon past success." That sounds like a quote for the ages, the famous last words for many a company.