Sadly, I do own stock in NFLX, and looking back on how they’ve handled themselves this summer I have to say what the hell? This company is probably a textbook case of how to take a perfectly good business model and run it into the ground. Perhaps they were trying to encourage their competitors over at BlockBuster to stick around a bit longer? Better yet, why take great brand recognition and create the Qwikster debacle? Don’t take your perfectly good service and make it more expensive, harder to use, and alienate your customer base. I can only assume that Mr. Reed Hastings didn’t want to pay so much tax on all those stock options he’s been exercising…
- July – Netflix unbundled their DVD rental and streaming plan
- September – Netflix CEO Reed Hastings announced that DVD rentals and streaming would become two totally separate services. The streaming service would retain the name “Netflix,” while the DVD branch would be called “Qwikster.”
- October 10 – Before Qwikster had even launched, Netflix ended the failed experiment.
In the understatement of the year, this is what they had to say in their letter to investors:
While we dramatically improved our $7.99 unlimited streaming service by embracing new platforms, simplifying our user-interface, and more than doubling domestic spending on streaming content over 2010, we greatly upset many domestic Netflix members with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service. In doing so, we’ve hurt our hard-earned reputation and stalled our domestic growth.
I think this graph says it all:
And that my friends, is how you cut 75% of your company’s market value before year end, make $12 billion in shareholder wealth plunge into the void and lose 800,000 subscribers.