After raising prices and the unsuccessful split of its services, Netflix has lost almost a million customers.
2011 has been a rough year for Reed Hastings, the CEO of Netflix. With the price of licensing deals from Hollywood entertainment companies rising, Hastings split its DVD-by-mail service from its streaming video into separate subscriptions of $8/month each. When customers complained, Netflix released a statement that the two services were so different that they demanded different company names. But when half the Internet openly mocked Qwikster, Hastings said, "Just kidding" and put humpty-dumpty back together again. The debacle continues for the company that was once the darling of Web 2.0, with its stock dropping 37 percent on Monday alone and analysts predict losses through 2012 as Netflix tries to rebuild its base.
Hastings said he is not going to try to expand any time soon. "Pausing is a good thing from an investor standpoint," he said. "We are going to pause and restore our global profitability."
Three months ago, Netflix reported 24.6 million subscribers, but that number dropped to 23.8 million at the end of September. For many companies who were in decline from people who "cut the cord" from content providers like cable and satellite TV, the fall of Netflix can be seen as a boon.
"For those on the wrong side of the cord cutting debate the last several years - the cable/satellite/telco operators, Netflix's subscriber slowdown and escalating content costs are a source of relief," said a financial analyst from Morgan Stanley.
While I can see that Netflix's public reputation has taken a hit - Hastings was even lampooned on a recent web-only skit on SNL as the complete opposite of Steve Jobs - the service still performs as advertised. I watch Netflix using my Xbox 360 and PS3 regularly, and my wife loves watching Mad Men on her new Android phone. My question for you is, how much does this news really affect you as a customer? Do you discontinue services or refuse to buy products based on how their stock is performing?