Is Netflix Totally Broken?

Sections: Movies, Streaming, Video

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While it’s true that I’ve written some less-than-flattering things about Netflix in the past, and that I am now in the routine of daily checking their stock price to garner some twisted and sadistic satisfaction when I see that the share price is once again showing red numbers, the fact is, I’m still a subscriber and still have an interest in seeing them survive and continue in business.

I just wonder if maybe they haven’t made so many blunders lately that they might not be able to recover. That maybe CEO Reed Hastings’ pride and ignorance and seeming total lack of understanding and indifference of his customers and users has been the equivalent of him tossing bag after bag of sand into the engine to just stand back and watch what would happen and to see if the thing would finally blow; taking what was once a universally well-regarded, well-oiled, movie delivering juggernaut and turning it into a volcano that spewed Internet venom and vitriol.

Let’s look at Netflix prior to July of this year. Stock price is at an all-time high of $304 and Wall Street loves them. Netflix is piling on subscribers — and presumably profits — at a crazy rate. Netflix is pretty much a ubiquitous feature found in every “smart” TV, Blu-ray player, and portable device known to man. They basically crushed Blockbuster out of existence and have no real competition. They were Gods up on Olympus and they smiled down on puny man.

But then the Netflix machine took its first major blow when Reed e-mailed out his first little missive and announced a splitting of the streaming and disc-through-mail services and pricing changes back in July. Now this was not a minor little, “Well, postage has gone up, gotta raise rates by $1 a month, totally sorry but it’s a real cost of doing business and we have to” kind of thing. Rather this was a totally unexplained hike upwards of 60% for many. For me, keeping my account plan the way it was would have taken my monthly payment from $24.99 to $34.98. Could I swing the extra $10? Yeah, sure. But that wasn’t the point. The point was the tone of the message was basically, “Look, we’re raising prices, so suck it! Now pay up or piss off you bunch of movie-watching losers!” There was an arrogance to the e-mail that offered nothing in the way of explaining the price hikes or any benefits from separating the services or any improvement to the Netflix experience and offended many. It was a decree from the mountain: ye shall obey or ye may cancel, but we are Gods and care not either way.

At this point, Netflix may indeed be broken beyond repair. Click here to read all the reasons why.

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  • grolaw

    Manifestly stupid decision in mid-recession. Even worse that no substantive changes were made to the policy decision in light of the subscriber and stock losses.

    Perhaps the most telling aspect of the entire fiasco is that Reed Hastings remains CEO. If corporate governance actually was tied to performance he would be out of a job and defending himself from the company suing him for breach of fiduciary duty.

    Ah, but Netflix has offered their remaining subscribers a "free DVD" through mid January while they still don't have a feedback link on their web page. I'll take that DVD – if only to cost the company the processing fee.

    I'm happy to have shorted Netflix and fully expect the company to be acquired by AAPL or some other company with decent management.