Netflix is showing signs of market pressure. The streaming-movie company said Monday it would not go forward with plans to turn its mail-order DVD service into a separate operation named Qwikster. DVDs will stay at netflix.com. But there's still no budging on the price increase.
"It is clear that for many of our members, two Web sites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs," Netflix CEO Reed Hastings said in his latest blog post. This means no change: one Web site, one account, one password...in other words, no Qwikster. While the July price change was necessary, we are now done with price changes."
Adding Insult to Injury
Netflix has lost a flood of customers and angered many others while also watching its stock drop. After steadily declining since it announced the price increase in July, Netflix stock dropped another 25 percent on Oct. 7 after Hastings announced Qwikster to more customer outrage.
"When you look at the feedback since the announcements, it's been negative. Netflix has lost subscribers. If you are going to go to a source like Netflix to get content, frankly you should be able to get it in any format you want," said Zeus Kerravala, principal analyst with ZK Research. "The long-term viability of the Netflix business model has been a question anyway. There are so many other sources to get content from."
The way Netflix was handling the streaming-DVD split from a practical standpoint was also causing waves. Netflix sent an e-mail out to consumers who switched to the streaming-only plan -- and who still had DVDs out -- that threatened to charge them if the DVDs weren't returned.
"Recently, you switched to a streaming-only plan. We noticed that you still have [a DVD] at home. Since you are now on a streaming-only plan, we ask that you please return the disc within 7 days," the e-mail read. "If you decide to keep it, your account will be charged $14 for each regular DVD and $20 for each Blu-ray disc plus tax."
A New Netflix CEO?
Hastings said Netflix was done with the price changes, but that's what started the hoopla in July. Unlimited DVD-only plans in the U.S. are now $7.99 a month for the one-DVD-out-at-a-time plan and $11.99 for two DVDs at a time. The unlimited-streaming plan is still $7.99 a month. The price for getting both unlimited streaming and unlimited DVDs will be $15.98 a month, about 60 percent more than it once was.
Despite a blogged apology from Hastings, customers still have not forgiven him for the price increase. Now, some are calling for his resignation. "Reed, you don't know what you're doing, do you? Please offer me a job, I've got a few easy steps to save the company," commenter Devon Chambers wrote in response to Hastings' latest blog post. Many others echoed the sentiment.
"The CEO's job it's to work for your customers but also for your shareholders. Hastings is certainly not getting the job done," Kerravala said.
"To make a decision of that magnitude and then retract it so quickly shows that he didn't do his homework or he didn't listen to the people who report to him. Clearly, it was the wrong decision. Either scenario is not a good one for shareholders."
Posted: 2011-10-10 @ 3:31pm PT
I need his job, he's out of touch with everything