Netflix 1 Million – When you see 1 million and Netflix in the same sentence, you probably thing this is a positive report, but you would be wrong. The movie rental company, Netflix, is having some problems as of late and it all stems from a strategic business decision they inflicted on themselves.
Netflix, Inc stock price dropped 18 percent on Thursday. This was a tremendous nose dive in the value of the stock, but it was the result of an announcement by the companies CEO, Reed Hastings, that they would have 1 million less customers than expected in July of 2011.
Netflix 1 Million
Netflix 1 Million
The Netflix 1 million subscriber adjustment was announced on Thursday, but you need the history of this announcement before we can start to add our opinions to the matter.
In July, the company announce they expected to have 25 million subscribers total at the end of the third quarter. The breakdown was expected to be 22 million streaming subscribers and 15 million subscribers using the DVD by mail service. These numbers overlap a bit with 12 million users subscribing for both services.
However, that was July. On Thursday, Reed Hastings came out and declared they were revising their July expectations downward by 1 million subscribers. The new expectations calls for 24 million Netflix subscribers by the end of the third quarter, with 21.8 million being streaming subscribers and 14.2 million DVD subscribers. Inside of these numbers are 12 millions Netflix subscribers using both services.
The adjusted figures rocked Netflix stock price sending it downward by 18%, which did not make shareholders very happy to say the least. However, the company is sticking by its decision to split their services. They feel it is still the right strategic decision moving forward for the business.
I can tell you personally as a Neflix user that I wasn’t very pleased with the adjustment in the service plans. Before the switch, I signed up for the streaming service and DVD by mail for $8 a month. I thought this was the most outstanding service on the planet.
September of this year marked the time when the company decided to split their service into two offerings. They would be $8 a month for each service costing someone with both services $16 a month to maintain what we had gotten use to.
Being that I am up on current business events, I was aware they had made the change and adjusted my account accordingly. Instead of paying the $16 a month, I adjusted my subscription to just steaming video. I am very happy with the decision and will keep the service.
Netflix 1 Million, but I think they Lose More.
Netflix 1 Million adjust isn’t enough in my eyes. They should be more realistic with this decrease. If you ask me, the numbers are inflated. You have to understand most users of the service don’t follow the daily business of Netflix. I would guess many of them are not even aware the service price has increased or just haven’t made the time to go and adjust their subscription.
Taking the temperature of many of the Netflix subscribers I know, they are not very pleased with this decision to split the services. In fact, many of the subscribers I know said they are going to dump the service all together.
It is for this reason, I believe the Neflix 1 million subscriber loss will continue to grow over the conclusion of the third period, but I would love to hear from you. Do you think the Neflix new business model will hold up or are people expecting much more for less and will decide to stay away from the service? - Netflix 1 Million
We thought about getting Netflix but we realized what they offered in Canada wasn’t the same as the USA. Most of the movies were old. We have found it much better to go through other sources to get our shows.
That sucks! I know Netflix is newer to Canada, but I thought it was the same.
I was one of those million. I was not happy to hear the price jumping up for the same service and I would not let them get away with it. I am happy to go back to using Redbox when I want to watch movies.
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With the rise of Hulu and alot of full length movies and stuff on YouTube, you definitely have options!
This should surprise no one! When you raise prices, you will lose some customers. A company like Netflix is a subscriber based company and will be criticized for this. They now have more competition and they may have hit their upper price limit in a bad economy.
NFLX is now down almost 50% this month alone. It might be a good opportunity to go LONG here… What do you think?
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