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Thread: Netflix Stock Plunges As Subscribers Quit

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    Netflix Stock Plunges As Subscribers Quit

    NEW YORK (CNNMoney) -- Netflix subscribers threatened to flee in droves when the company whacked them with a surprise price hike, which kicked in this month.

    Now they're making good on that threat. Netflix on Thursday cut its subscriber forecast for the current quarter, saying it now expects to end the period with 24 million customers -- down from the 25 million the company forecast just a few weeks ago.

    That's also down from the 25.6 million global subscribers Netflix had on June 30, the end of its second quarter.

    Investors punished the stock, sending Netflix (NFLX) shares down nearly 19% -- even though the company did not change its earnings or sales guidance.

    The writing has been on the wall since July, when Netflix angered many subscribers by saying it would begin charging separate prices for its DVDs-by-mail and streaming video plans. That amounted to a big price hike for Netflix customers, as the cheapest-possible bill for customers who want both services jumped from $10 to $16 a month.

    Enraged customers flooded Netflix's site with tens of thousands of comments, as well as a barrage of tweets under the hashtag #DearNetflix.

    Angry subscribers aren't good for business, of course, but even more concerning are the reasons for the price hike. Netflix is struggling to build and maintain a robust streaming catalog, but that's getting tougher as studios demand more money and threaten to take their content to Netflix's growing list of rivals.

    As a result, customers have been complaining about a smaller selection -- and asking why they're paying more for less. Earlier this month, cable network Starz ended contract renewal negotiations with Netflix and will pull its movies and TV shows from Netflix early next year. It highlights the sometimes contentious relationship that Netflix has with content owners such as Sony (SNE), Walt Disney (DIS, Fortune 500) and Time Warner (TWX, Fortune 500), the parent company of CNNMoney.

    Now that streaming video is so popular, providers are upping the price for the content they're licensing to Netflix. One analyst predicts that Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

    "There may be a renewed sense of urgency for Netflix to go out to acquire film and TV content to replace Starz," says Anthony DiClemente, Internet and media analyst at Barclays Capital, which owns Netflix stock.

    "To keep subscribers, or lure them back, you need offer them value at a good price," DiClemente adds.

    Netflix's competitors have become a bargaining chip for studios: If Netflix won't pay studios what they think their content is worth, they'll simply take their business elsewhere.

    Beyond direct rivals like Hulu and kiosk service Redbox (owned by Coinstar (CSTR)), big tech players like Amazon (AMZN, Fortune 500) and Google (GOOG, Fortune 500) are jumping into the streaming game. Cable providers including DISH Network (DISH, Fortune 500) are also ramping up streaming, on-demand options.

    Despite its growing list of problems, Netflix has been one of the hottest-performing tech stocks of the past few years. Shares are up a staggering 460% since 2008.

    DiClemente, the Barclays analyst, is still bullish on Netflix shares. He now predicts that the U.S. subscriber base will recover to 28.8 million by the end of the year -- though that's lower than the 30 million he had projected.

    Netflix had been adding subscribers "radically," he says, noting that in recent quarters the company's revenue has been up about 40% to 50% year-over-year -- which gives it a fatter wallet for snapping up new content.


    Source: CNNMoney

  2. #2
    Soundwave
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    I have to be honest I'm a little dissapointed with Netflix now days. I seldom see any new worthwhile content being added to the streaming media portion of it and I am beginning to wonder if it is even worth having access to the DVD rentals at all anymore with the delay for new DVD's having been put in place. It's usually back catalog stuff for really old movies. It's neat to be able to catch up on some older series or the few newer series that I missed some episodes on but any one of us could download a torrent and enjoy it offline as well. It's even worse when you consider they don't have any real new releases any more. It seems like Hollywood just keeps doing everything they can to ensure people choose piracy as an option. It's sad that you can download a hd movie weeks before you can get it from netflix or Redbox and I can't honestly tell you the last time I have been able to find an open blockbuster store. I'm just kind of waiting to see what happens with the blockbuster/dish deal to see if they have the ability to stream first rate early release movies and if they decide to cater to folks like us with an android based lifestyle or if they will start first with the sheeple who use tamPads.
    boret likes this.

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    Count me as one who bailed. I was doing the mailed and the streaming. If they had just gone up a little then 6 months later another little, but no they had to boost me through the roof. I can get, (some), more recent movies pay as I go from CinemaNow Wasn't watching enough of their movies for it to pay to stay.

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    These companies will never learn!!
    They are too greedy!

    No wonder we end up the pirate route!

    I got tired of the satellite company charging $90+ so that I can get HD programming and premium channels... you never have the option to chose the 15-20 channels you really watch, so I moved to Netflix and torrents. Now I will probably drop Netflix and just stay with torrents through sites like eztv.it

    I am tired of cellphone companies throttling and limiting bandwidth. I haven't purchased a CD in ages, I refuse to buy ebooks at full price and I am discovering new writers selling their works for a dollar or two directly to ebooks.


    I wouldn't mind paying $50/mo for full access to EVERYTHING on demand. You can see what I access and distribute the royalties accordingly. That includes music, books, movies, etc. Or a per item basis. Let me chose the channel I want to watch, let me chose the content I want to absorb.

    Now I listen to Pandora, or stream my own collection through Google Music, download ebooks and read them on my Nook and from time to time will buy ebooks if below paperback price (looking forward to amazon book rental aproach, might drop b&n if I like it).

    I purchase apps from the Android Market if I like the app, and if the price is reasonable.
    I purchase technology because it meets a "need" in my day to day.

    But I don't go to Movie Theaters, will never buy a CD or a DVD ever! (already purchased over 1000 CD and hundreds of VHS tapes and DVDs)

    I just dislike the fact the companies (distributors, editors, studios, etc...) keep forcing an old fashion model that needs to die!

    Ok, I feel better now after the Rant!

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    If Redbox ever decides to offer a streaming service at a reasonable price it will spell the end of Netflix. Just like Netflix and Redbox sent brick and mortar rental stores plunging to their doom.

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    I find 2 ironies in all this:

    First....the Netflix banner ad I got at the top of this thread.

    Second...I regularly visit numerous threads here and on other tech websites where Netflix was the best thing next to sliced bread according to literally thousands of posters who practically lusted for it collectively. As soon as the prices go up and Starz departs...many of those same loyalists bail at 100 MPH.

    I have never had a strong affinity towards Netflix, nor other similar download services. Yes, I have periodically used them, and yes, they bring an enjoyable service when requested. Even at a $10 price, I can see some folks seeing it as a nice resource for on-demand content viewing. Nothing wrong with that. What surprises me, however, is the rapid escape of customers due to the last price change. I bet the results even exceeded Netflix's own churn forecasts.

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    Starscream
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    Whats wrong with $16 a month? If you stream only 1 movie a month your saving $48 a year over cinema prices. And you get tv shows and documentaries. I do streaming only and am very happy with it.

    Sent from my Transformer TF101 using Tapatalk
    Sent from my Transformer.

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    What never changes much in tech is the fact that things change, rapidly. When a company comes out with a better mouse trap there will be other companies trying to knock them off their perch. Often those companies succeed.

    In the early days of IBM PCs they were innovative to the max but every time they came out with a new technology someone else would do them one better. IBM's CGA became VGA and the list goes on.

    There are plenty of selections for video streaming. Netflix built their rep on a great idea. The price boost was probably a necessary evil and I'm sure they calculated some lost business but maybe they underestimated the backlash.

  9. #9
    Jazz
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    I have no issues with a price boostfor the streaming. Just add more premium content. When I run out of content that interests I will cancel. It is getting there....

    Sent from my Transformer TF101 using Tapatalk

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    Angry Netflix, I Hardly Knew Ya, Then You Annoyed Me... (Rant Alert)

    I joined Netflix when they made streaming available through the Wii Console. At that time, I thought they were the greatest thing since sliced bread. I like old movies, I like some old tv shows, and I loved the convenience of streaming. At first, I even liked their 24 hour customer service by phone.

    Over the last year, the bloom has come off the rose a bit, and it's not even the price increase. I can't say the price increase really surprised me. To me, Netflix has a big, red target on its back, thanks to the greed of the movie and tv studios and distributors. The content providers have been making money hand over fist for old content that has fallen off the radar. In my opinion, Netflix has bent over backwards to be a good partner to content providers (sometimes, too much, like giving in to that 28 day window crap). The hundreds of millions of dollars Netflix has given has been (more than) fair consideration. But that's not good enough. Now the studios want billions of dollars for stuff that has been on free tv through syndication for decades. Ridiculous!

    Unfortunately, Netflix has made a bad situtation worse by their truly lunkheaded way of dealing with customers while they navigate these troubled waters. Changes made to their website make it less convenient for customers to use. Customers have been pleading for years for a way to comunicate with Netfllix with written messages through the website, in addition to being able to talk to their reps. That has fallen on deaf ears. Then, as the quality of streaming content has noticeably deteriorated in leaps and bounds, they impose a 60% price increase and act like the loss of subscribers who aren't willing to pony up the "cost of a latte" to stay with Netflix is just no big deal. I have to wonder if the Keystone cops are running the public relations department at this company!

    I have had a chance to think about whether to keep my current plan, reduce it or just quit. For now, I have decided to keep my plan because Netflix is still the best deal going. I just saw two independent movies last week that I really enjoyed and would never have seen but for Netflix. My enthusiasm for Netflix has waned, though because of their somewhat callous, bunker-like mentality when dealing with the people who keep them in business - their customers. We are not the enemy - we are the lifeline, but they don't seem to get that. So now I am willing to be tempted by another, better deal, if and when one comes along. At one point, I would have been willing to stay with Netflix out of loyalty even if they weren't the best deal, but from now on, it's just business.
    alaskan likes this.
    Girl Geek Alert! Rocking Trans Infinity, Nexus 7 and Trans 101

 

 
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