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Netflix feels the wrath of consumers, investors

post #1 of 44
9/15/11 at 12:18pm
Thread Starter 
... according to THIS report from CNET. As one of those million angry consumers who cancelled, I'm glad to see such a big impact. Stock has plummeted to less than 60% of its high a few months ago, which is ironically the same percentage as their massive price hike. Ouch!
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post #2 of 44
9/15/11 at 1:40pm
I tend to wonder what hit they would have taken if they had agreed to pay Starz what they wanted and or didn't raise prices... who knows it might have been even bigger. Far too early to tell how streaming will play out however at this point in time they have little or no streaming competition (based on my usage of the available services).
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post #3 of 44
9/15/11 at 1:58pm
While the price hike and Starz didn't help, the stock market itself took two huge hits over the last month, so stocks across the board are down. In other words, there's a few factors at play besides the recent news.

Even if I was angry (which I'm not), I don't see the point of cheering that arguably the largest, most affordable, and most convenient way of legally watching content has taken a stock hit. I mean, I'm happy for you that you cancelled Netflix and am jumping up and down with joy that their stock is down (for some reason), but AVS isn't about stock prices.

Regardless, I'm hoping Netflix will recover. I'd hate to see the buffet model get killed off by the greed of studios (and companies such as Starz). And not just Netflix's buffet model, but if they kill Netflix, they'll go after Hulu or Amazon with full-force next, and we'll be right back at being forced to endure the VOD pricing structure, which sucks.
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post #4 of 44
9/15/11 at 1:59pm
Thread Starter 
You're right AVS isn't about stock prices. But the long term viability of these streaming services is a valid topic IMO. I think the long term outlook is still very good, given their expansion worldwide. I saw today's over-reaction by the market as a great stock buying opportunity. As a long time subscriber, however, I still hate Netflix for the way they handled their attempt to abruptly exit the DVD business.

They seem to actually have contempt for their customers. Aside from the cavalier way they handled the price hike and loss of Starz and other content recently, they seem to be doing all they can to make their customers angry. They redesigned their site then refused to change it back in the face of overwhelmingly negative comments, making it much more difficult to use. They removed the ability to manage your streaming devices. They removed the ability of 3rd party developers to make apps or sites to manage your DVD queue. And there's never been a way to contact them via email. I can't think of any other company like that I can't contact via email.

In spite of all that, I agree that they're still the best streaming value around and will probably continue to be for a while. I won't subscribe again out of principle, but I hope to profit from their missteps.
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post #5 of 44
9/15/11 at 2:36pm
Here's the engadget article with the old and revised prediction chart. Surprisingly to me, it appears they are predicting the "disc only" plans to drop more than the streaming plans (800,000 vs 200,000).

http://www.engadget.com/2011/09/15/n...edicted-mostl/

I guess I shouldn't be surprised. At $8 for 1 disc in the mail, you'd really have to watch/return rapidly to get your money's worth over a Redbox, and I don't know that that many people are as religious as myself about watching movies the day I get them and getting them back in the mail to maximize your disc shipments. I think even with my dedication to watching them rapidly, I might be able to get 8 discs a month if I was only on the 1-at-a-time plan. Even with the BD surcharge at Netflix and Redbox, I'd barely be coming out ahead vs. the kiosk option (but the better selection and not having to drive to kiosks or stores would put it quite a bit ahead).

I still find Netflix a great deal for my particular viewing style. YMMV. And while Netflix is taking the short-term hit (larger than expected though), the long-term outcome will probably be decent, but we won't really know that until Q4 results are in, or possibly even Q1 2012.

I do get the animosity though. For many of us (myself included) a plan realignment/price hike is still miles ahead of the 20+ years of Blockbuster "f*k the customer over as much as possible" philosophy. So while you (mdavej) won't do business with Netflix again, I won't do business with Blockbuster again.

See this: my faceless corporation is indeed better than your faceless corporation!
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post #6 of 44
9/15/11 at 8:48pm
Cheering for a company to suffer because you did not like their price hike and cancelled your service is a bit churlish.

It's not like this company is greedy. It's actually a very well run company and they do not have contempt for their customers. On the contrary, they spend a tremendous amount of their resources trying to figure out how to best serve their customers and even delight them. And they have done a pretty good job of it if you look at the landscape of their competitors and other similar digital-delivery service providers. That is why they were so highly valued until recently and why they were the best game in town.

They are a fast leader and they are in uncharted territory. They are flying blind, for the most part, and they are making business decisions based on what they think they need to do to maintain or strengthen their position. That is pretty hard to do when you are almost single-handedly forcing a transformation in the business model of many of the creative studios in the country and doing it on top of the twin shifting sands of the country's broadband infrastructure and the panicked confusion of your suppliers.

I'm sure they expected defections and a stock drop. In fact they predicted both. But the market has punished uncertainly in the past month and there has been a flight to quality in equities. Netlfix is sailing in waters that are too murky for it to be considered a safe growth stock right now.
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post #7 of 44
9/15/11 at 10:23pm
I agree that it is rather silly for people to cheer at the news. Lets not forget that netflix increased prices due to rising costs from studios. With that being said, I have been saying for a while now that netflix stock is overvalued. I expect it to fall more. I see more people switching back to DVD only as the streaming only plan is lacking content. Thus this could backfire for netflix since if ppl switch to DVD only, they will rent more DVDs than when they had the DVD and streaming plan. Ultimately I think MS, google, or another company with deep pockets will buy netflix as they can't afford the rising costs without passing the expense to customers.
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post #8 of 44
9/16/11 at 3:03am
Quote:
Originally Posted by Ironlight View Post

Cheering for a company to suffer because you did not like their price hike and cancelled your service is a bit churlish.

It's not like this company is greedy. It's actually a very well run company and they do not have contempt for their customers. On the contrary, they spend a tremendous amount of their resources trying to figure out how to best serve their customers and even delight them. And they have done a pretty good job of it if you look at the landscape of their competitors and other similar digital-delivery service providers. That is why they were so highly valued until recently and why they were the best game in town.

They are a fast leader and they are in uncharted territory. They are flying blind, for the most part, and they are making business decisions based on what they think they need to do to maintain or strengthen their position. That is pretty hard to do when you are almost single-handedly forcing a transformation in the business model of many of the creative studios in the country and doing it on top of the twin shifting sands of the country's broadband infrastructure and the panicked confusion of your suppliers.

I'm sure they expected defections and a stock drop. In fact they predicted both. But the market has punished uncertainly in the past month and there has been a flight to quality in equities. Netlfix is sailing in waters that are too murky for it to be considered a safe growth stock right now.

It should be noted also that the subscriber target number is just that a target number of the subscribers they thought they would have at this time actual cancellations are a number we won't be allowed to see. Companies are pummeled for missing their numbers all the time.
As to all those complain about greed from companies guess what could be said the next time YOU want more money "Get your greedy
------ back to work...._
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post #9 of 44
9/16/11 at 4:58am
Quote:
Originally Posted by Cygnus2112 View Post

I see more people switching back to DVD only as the streaming only plan is lacking content.

At worse I see Netflix streaming replacing a HBO or Showtime. It's less per month and when they get shows like Mad Men and Breaking Bad the content is certainly there. Heck if they add only one quality series a month it's a much better value and has a good chance of defining what programming packages people subscribe to... basic channels only please. With their numbers disc only dropped at four times the rate of streamers only?
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post #10 of 44
9/16/11 at 5:51am
Quote:
Originally Posted by mdavej View Post

...As a long time subscriber, however, I still hate Netflix for the way they handled their attempt to abruptly exit the DVD business.

They seem to actually have contempt for their customers...

I would have to disagree. Personally, I find it refreshing that Netflix continues to make decisive moves in this industry. Prior to Netflix, movie/tv content delivery hadn't changed one bit in the 3 decades I was alive. I hope they continue to make measured changes to their service until they find the mix that works best.

As for contempt, I just don't see it, relatively speaking. But then, I've just spent the last 3 months and endless futile calls trying to get digital internet service completely hooked up with my local cable company

-Suntan
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post #11 of 44
9/16/11 at 6:28am
Let's not forget, they went from offering a ridiculously good deal to their subscribers to merely a really good deal. $7.99 a month for all you can eat streaming is a really good deal if you like their library and my family of four continues to find all sort of TV and movie gems tucked away in its depths.

I believe the $7.99 for one disc out is still a good deal for this kind of service. I forget what it was two or three years ago but it could not have been too much less.

I'm not sure that they will get bought. It's not a matter of someone with deeper pockets coming along because the issue is really the content providers discovering how to value the licensing of their assets in a way that the market can bear. They are terrified of Netflix acquiring too much leverage and they know that any deal they sign with them will set the bar for suppliers and distributors and so they are moving very cautiously. The next few years are going to be tumultuous I expect but ultimately we'll end with a landscape that sort of mirrors what happened in cable. Streaming is obviously the future and there *have* to be service providers that aggregate and distribute content with a user-centric customer experience.
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post #12 of 44
9/16/11 at 7:40am
(Some of) You guys are insane. I posted this at AVS' facebook, but it bears repeating:

I think this whole "debacle" is sensationalism and studio greed at it's finest. Netflix easily offers the best value around, even with it's new pricing. Sorry, fickle and short-sighted consumers, that Netflix was only able to fend off the abhorrent studios and their antiquated licensing demands for a couple years so you could enjoy your amazing service at an incredible price. And sorry, asinine consumers, that you now have to pay a couple bucks more to continue to take advantage of what is without a doubt the best service available. How horrible life is. #firstworldproblems
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post #13 of 44
9/16/11 at 8:17am
I was actually surprised that the value of Netflix decreased so quickly--and they lost that many subscribers. I was never happy with the decision they made in July but I took a moderate approach and reduced my BD from 2 at a time to 1 at a time and kept streaming--price is about the same as before. I may change it again, but I doubt I would ever completely dump Netflix--unless something better comes along. Time will tell if they can recoup their lost members.
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post #14 of 44
9/16/11 at 8:47am
Netflix subscribers have already done that (replace premium channels with netflix). I haven't had hbo or showtime in years. By forcing their subscribers to choose, netflix is basically competing against themselves. Thus I think over time DVD only will get more subscriptions as streaming only does not cut it, unless they get some major deals which is getting harder to get. I think netflix made a big mistake for jacking up the 1 DVD/streaming so high. It should have been increased to $12.99 at the highest. There would have been less complaints and more would have the DVD/streaming plan. I suggest netflix introduces a new plan: 4 DVDs per month, unlimited streaming for $12.

Quote:
Originally Posted by Charles R View Post

At worse I see Netflix streaming replacing a HBO or Showtime. It's less per month and when they get shows like Mad Men and Breaking Bad the content is certainly there. Heck if they add only one quality series a month it's a much better value and has a good chance of defining what programming packages people subscribe to... basic channels only please. With their numbers disc only dropped at four times the rate of streamers only?
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post #15 of 44
9/16/11 at 9:18am
I'm not happy with the ($5.00 for me) price increase either, but I do enjoy the convenience and range and depth of what they have to offer. I spent a lot of money and time building my basement home theater in order to enjoy watching movies on the big screen to let $5.00 a month stand in the way of entertainment. Just my $.02
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post #16 of 44
9/16/11 at 9:23am
Quote:
Originally Posted by lwright84 View Post

I think this whole "debacle" is sensationalism and studio greed at it's finest. Netflix easily offers the best value around, even with it's new pricing. Sorry, fickle and short-sighted consumers, that Netflix was only able to fend off the abhorrent studios and their antiquated licensing demands for a couple years so you could enjoy your amazing service at an incredible price. And sorry, asinine consumers, that you now have to pay a couple bucks more to continue to take advantage of what is without a doubt the best service available. How horrible life is. #firstworldproblems

Well put. Even with the price hike Netflix is the best value around. Besides, don't forget about the days when video rental stores charged you $100 just to join. And that was with a far more limited selection and before anyone had even imagined streaming.
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post #17 of 44
9/16/11 at 9:47am
Quote:
Originally Posted by Cygnus2112 View Post

Netflix subscribers have already done that (replace premium channels with netflix). I haven't had hbo or showtime in years. By forcing their subscribers to choose, netflix is basically competing against themselves. Thus I think over time DVD only will get more subscriptions as streaming only does not cut it, unless they get some major deals which is getting harder to get.

Perhaps some Netflix subscribers have although the last stats I saw showed most Netflix subscribers were inclined to subscribe to premium (cable/satellite) services as well. Overall they viewed of lot of content via various sources. I'm guessing their goal is to become a streaming network and in this vain it hasn't even begun. Nor has the content been defined.

I don't think they have forced subscribers to choose (anything) and even in some cases subscribers paid no more or even less with the latest round of pricing adjustments. I feel the reaction to the latest pricing was simply a gut reaction by the most price sensitive subscripters and going forward the price has to be sustainable. They clearly see streaming as their future and at some point you have to focus in that direction regardless of short term hits. Positioning yourself by not overpaying for content and charging a fair price which removes the next to nothing factor... hoping someday you can figure out how to make a buck.

For licensing fees clearly the lower number of subscribers the better and by removing the price sensitive customers they can lower those fees and offset much of the lost revenues with higher rates. Long term content will reach its market value and in my eyes Netflix teling Starz to take a hike was a good thing. Let someone else overpay for the content or let Starz find out a good chunk of money is a lot better than none as their content sits on a shelf gathering dust.
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post #18 of 44
9/16/11 at 10:41am
I think Netflix is a good deal. However, the only reason why I'm pondering about cancelling my account is that my son and daughter said to me, "Dad Netflix sucks. They don't have anything new to play."

My son and daughter used Netflix almost every day. Now, we haven't been using Netflix, but twice this month due to their lack of new content.

I used to like having streaming and dvd for $10.00, and at $16.00 dollars still a good price, but we had a little of bad luck with the dvd's since a couple of them were scratched, and wouldn't play correctly. So, we decided to stay with the streaming only thinking Netflix would increase their online content, which has not happened at all.

So, after this month I'll be one less customer for Netflix. Once Netflix start getting more new content, then I'd consider becoming a Netflix customer again.

Heck, I'll pay $20.00 a month just for streaming only if they were to put all of their DVD library for streaming.

I do hope Netflix gets better with time, and it gets the necessary licensing to get new and better content.
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post #19 of 44
9/16/11 at 11:11am
Netflix has TONS of GOOD and even GREAT streaming content. Hell, I have over 300 items in my streaming queue alone... of course, if all you care about is new stuff then you're going to be disappointed.
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post #20 of 44
9/16/11 at 11:39am
Quote:
Originally Posted by GusGus748s View Post




Heck, I'll pay $20.00 a month just for streaming only if they were to put all of their DVD library for streaming.

That day is a loooong ways off. They can't stream dvds they've purchased for rental. Streaming rights must be paid for separately, for each movie or tv show on the service, And the major studios are holding back selling them streaming rights to newer movies because they fear it would encourage people to stop buying the dvds.
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post #21 of 44
9/16/11 at 12:49pm
My understanding is that the studios would love to ditch discs. They want more than anything a pay-per-view pricing model that can't be pirated. That's the holy grail for the studios. Netflix refuses to do this and therefore we all get to suffer for a while.

Quote:
Originally Posted by Westly-C View Post

That day is a loooong ways off. They can't stream dvds they've purchased for rental. Streaming rights must be paid for separately, for each movie or tv show on the service, And the major studios are holding back selling them streaming rights to newer movies because they fear it would encourage people to stop buying the dvds.
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post #22 of 44
9/16/11 at 1:24pm
Quote:
Originally Posted by Taperwood View Post

They want more than anything a pay-per-view pricing model that can't be pirated. That's the holy grail for the studios. Netflix refuses to do this and therefore we all get to suffer for a while.

Why should they when Amazon, VUDU, CimenaNow and an endless number of other services already offer such? Too different markets. Although, many dream and or for some unknown reason believe they should be one.
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post #23 of 44
9/16/11 at 1:28pm
Quote:
Originally Posted by Taperwood View Post

My understanding is that the studios would love to ditch discs. They want more than anything a pay-per-view pricing model that can't be pirated. That's the holy grail for the studios. Netflix refuses to do this and therefore we all get to suffer for a while.

But consumers accepting a ppv model is a long ways off. Its been around for years and always struggled. Witness how "popular" Vudu is compared to Netflix for example. While the studios would love this, getting tens of millions of renters to switch from mail order discs or buffet streaming at cheap and reasonable costs to dishing out $4 to $6 per view (as their primary means of viewing and not as an occasional supplement) is not going to happen for awhile.

What I mean is in the current market, ppv and VOD are still niche, IMO.

Netflix refusing to do ppv is best for everyone. Consumers start to accept and demand streaming, it pushes the technology into homes and into devices, it gets the studios to (slowly) accept it, etc. If it wasn't for Netflix, there would be no, or very little, streaming market as it exists today.
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post #24 of 44
9/16/11 at 8:26pm
Quote:
Originally Posted by mproper View Post

What I mean is in the current market, ppv and VOD are still niche, IMO.

Quite so. I wasn't inferring that PPV should be the standard, just that's what the studios want. Hence, the current stalemate.

I make it a point to read the comments section in every general article on streaming I come across. My conclusion over the past few years is that people in general are just not yet ready to give up the current model. Everyone says something like "I love streaming, but..." or "I love the idea of streaming, but..." Well, we can't have it both ways. For better or worse, people have to switch, period. That's the only way streaming will continue to grow. Unfortunately, too many people now are focused on Netflix content only and neglecting the other streaming services and the very real convenience and time-saving advantages of streaming in general.

One would think between Netflix, Hulu's, Amazon, Vudu, Roku channels, game box channels, AppleTV, etc., (not to mention the Internet itself), just about everything is covered except certain sporting events. We all have computers, so news is well covered, and sports would quickly follow if the market started moving there. Yeah, sometimes the quality sucks, but so does the stuff shown on cable. Technically, there is no reason anymore to not switch for the vast majority of people who have access to reasonably fast internet.
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post #25 of 44
9/16/11 at 10:56pm
I love Netflix streaming. I think a lot of people who cancelled Netflix because they were "mad" will come back. There is nothing out there even close in price. We only have Netflix streaming and our OTA antenna.
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post #26 of 44
9/17/11 at 8:53am
Yeah, everyone has different tipping points. One friend of mine didn't care about the cost differential and didn't care about the 24/7 access, but when I mentioned he could watch a one-hour TV episode in 40 minutes the light came on in his head. He liked that idea and is now thinking about moving towards streaming.

Quote:
Originally Posted by Jim McC View Post

I love Netflix streaming. I think a lot of people who cancelled Netflix because they were "mad" will come back. There is nothing out there even close in price. We only have Netflix streaming and our OTA antenna.
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post #27 of 44
9/17/11 at 4:24pm
Quote:
Originally Posted by mdavej View Post

You're right AVS isn't about stock prices. But the long term viability of these streaming services is a valid topic IMO. I think the long term outlook is still very good, given their expansion worldwide. I saw today's over-reaction by the market as a great stock buying opportunity. As a long time subscriber, however, I still hate Netflix for the way they handled their attempt to abruptly exit the DVD business.

They seem to actually have contempt for their customers. Aside from the cavalier way they handled the price hike and loss of Starz and other content recently, they seem to be doing all they can to make their customers angry. They redesigned their site then refused to change it back in the face of overwhelmingly negative comments, making it much more difficult to use. They removed the ability to manage your streaming devices. They removed the ability of 3rd party developers to make apps or sites to manage your DVD queue. And there's never been a way to contact them via email. I can't think of any other company like that I can't contact via email.

In spite of all that, I agree that they're still the best streaming value around and will probably continue to be for a while. I won't subscribe again out of principle, but I hope to profit from their missteps.

Totally agree!
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post #28 of 44
9/17/11 at 5:34pm
One other point to bring in the conversation. There are no contracts with Netflix. You can quit whenever you want and go back whenever you want. Some people may quit now but will come back when some of the content gets changed out.
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post #29 of 44
9/26/11 at 7:22am
As for me, they'll lose a DVD/BD customer and keep streaming (for now). For discs, I am off to Blockbuster (yes it pains me to type that). THe price is better and the in-store exchanges means no more rainy weekends without a disc to watch, if we want to head down to the store, that is.

With a 92" theater system, it is hard to watch too much Netflix on that setup.
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post #30 of 44
9/26/11 at 8:06am
Quote:
Originally Posted by larrimore View Post

With a 92" theater system, it is hard to watch too much Netflix on that setup.

What device do you use for streaming? Just curious. I've seen Netflix on a PS3 (with 1080p) on a similar-sized screen it looks pretty good. Yeah, still not BD, but much better than one of the 720p devices I've seen. Of course, my primary viewing is on a 50" plasma.

With a screen that size, it's probably (and by that I mean definitely) worth investing in a Roku2 if you don't already have one or a PS3, so you can get the best streams. Assuming your ISP is fast enough, I mean.
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