Maybe it was the weird spelling, the fact it was too close to Qwikstar (the Amway rebrand) or the twitter is owned by the Pot Smoking Elmo. Nonetheless, Netflix announced today they will not be seperating the company into two. Netflix DVD rental will still be $8 (with an additional $8 for streaming).
How Netflix Screwed themselves in the last 3 Months.
In July, Netflix came to the realization their service was not priced efficiently for the company to make a profit. Therefore, they announced by Sept 1st, they would be changing price plans.
The service separated the streaming from the DVD rental. For $8, you could get one DVD at a time. Add another $8 and you could get Netflix streaming. It was a move that happened too fast, so people lashed back.
Last month, Netflix’ CEO Reed Hastings outlined plans to separate the DVD by mail business and give it’s own name – Qwikster. People started speculating Netflix was planning to sell the DVD mail side and focus more on streaming. Within 14 days, Netflix saw a major decline of customers (Some calling the idea “Qwikstupid”) .
Netflix stock dropped almost $100 a share from Septembers’ announcement, and over $200 a share from July. Netflix lost millions of dollars in the last 90 days with these changes. Needless to say, this is not a great business plan.
What Netflix Needs to Do to Recoup this Large Deficit.
First of all, it would be a VERY GOOD idea to offer at least 1 free month to current customers (although 3 months would be better). After all, these are the people that stuck through it all. Next – cut the service price for DVD rental and streaming. Meet in the middle – $12 a month for 1 DVD at a time and streaming.
Reed Hastings also needs to put together a very big public apology. I don’t think it’s time for him to pass the CEO reigns just yet, but maybe Netflix needs to shake up the board a bit. This was a horrible idea that was ultimately agreed upon by the directors.
Will You Go Back to Netflix?
This is the biggest question. After all these bad decisions, would you choose to go back to Netflix? They do have the most coverage in streaming options, being on most Over the top TV solutions and game consoles. Still, loosing 1/3 of their operating share makes you wonder if they can ever get back to the $300 / share peak they enjoyed back in July.
I personally use the Netflix streaming service – I abandoned DVD rentals simply because they sat on the coffee table for weeks at a time. With new additions in AMC’s Walking Dead and Discovery’s Mythbusters to streaming, I have a month’s worth of shows to watch. Tron Legacy also showed up this month, which gives me more of what I really crave – top movies that are only a year old.
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