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Netflix Loses 800,000 Subscribers After Qwikster Gaffe 325

bs0d3 writes "Netflix's video subscription service lost 800,000 customers in the third quarter, the single biggest loss in its history. Shares plunged by more than 25 percent in Monday's extended trading. Netflix is predicting that its combined loss of customers and European launch will push it into the red next year where it may stay for all of 2012, according to a letter to its shareholders (PDF)."
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Netflix Loses 800,000 Subscribers After Qwikster Gaffe

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  • by elrous0 ( 869638 ) * on Wednesday October 26, 2011 @09:36AM (#37843246)

    I didn't bitch about the price increase. I understood that one at least. With the big studios demanding more and more money for streaming their content, that was inevitable. And I *love* the streaming BTW. I think streaming was their best move in years. It's especially great for TV shows (which would take forever to watch if you had to get them one disc at a time). Where else can you stream the entire run of Battlestar Galactica (in HD, no less) for $8 a month? Louie, The X-files, Family Guy, Firefly, Lexx, BSG--my queue is filled with many days worth of geek greatness. And some of the content on there isn't available in HD in any other format.

    But the Quikster thing really left me scratching my head. Now various theories have been floated as to why they did it. My own personal belief is that they were planning to break Quikster off and then sell it (to focus exclusively on streaming). But whatever the case is was a truly bonehead move from the consumer perspective, especially coming so soon after the price increase. The fact that the CEO responded to the issue of customer anger at the announcement press conference by basically saying "Huh, well, we hadn't thought of that" didn't exactly make it look like a well-thought-out move.

    I think Netflix needs some new leadership. Keep the streaming, lose the dumbass moves.

  • by alexander_686 ( 957440 ) on Wednesday October 26, 2011 @09:44AM (#37843318)

    Didn’t we have an article here yesterday on disruptive innovation? To ignore quarterly profits and ignore your current customer base and boldly strike out with the best products?

    I am mention this not because I liked the Quikster idea – I hated it. But to point out that being innovative is hard. Any big radical plan will stir up the pot.

    As to management – All I can say is that they had the good sense to boldly put forward a plan – and then quickly kill it.

  • by Anonymous Coward on Wednesday October 26, 2011 @09:52AM (#37843402)

    What made sense to me was that as two distinct companies, Netflix and Qwikster could negotiate contracts separately, getting more streaming options for Netflix subscribers.

  • Re:I agree. (Score:5, Insightful)

    by TheRealFixer ( 552803 ) on Wednesday October 26, 2011 @10:11AM (#37843620)
    They really should have taken a page from Apple. When the music labels tried to strong-arm iTunes pricing in the early days, Apple just laughed at them and said "No. You'll take what we give you, and you'll like it." They could do this, because the iPod, and thus iTunes, was by far the most wildly popular digital music platform in the world, and they knew they had all the bargaining leverage against the labels that they needed

    Netflix is in the same boat. They are far and away the biggest streaming platform around, wildly popular, and almost ubiquitous at this point. At least in North America. Who can compete with them? Blockbuster? Their platform is a joke. Hulu? Nextflix is (was) not much more per month, and Hulu still forces ads on you and has asinine and frustrating device playback restrictions on certain content, mainly because they're run by the media companies. Netflix should have all the muscle needed to force their way around the studios.

    What they lack, is a strong personality like Steve Jobs in their leadership, who had no issues playing hardball with anyone, anytime.
  • Re:I agree. (Score:4, Insightful)

    by Anonymous Coward on Wednesday October 26, 2011 @10:11AM (#37843632)

    They can also push into the adult movie industry as well. It's absolutely HUGE, and would gain them millions of more subscribers.

    People... pay... for porn?

  • Re:I agree. (Score:5, Insightful)

    by haystor ( 102186 ) on Wednesday October 26, 2011 @10:19AM (#37843730)

    iTunes was able to negotiate price because they were by far the second most popular method of getting music. The most popular by far was copying (not sharing) music for free. People were still going to buy Apple's hardware whether Apple had a music store or not. Netflix doesn't have that luxury. They must have the content or else they will have nothing to sell.

  • Re:I agree. (Score:2, Insightful)

    by Anonymous Coward on Wednesday October 26, 2011 @10:38AM (#37843958)

    Netflix is in the same boat [as Apple].

    No they're not. iTunes Music Store had a power that Netflix lacks, due to the iPod. The iPod had success regardless of the iTMS and yet also encouraged people to use iTMS. As long as Apple mobiles have a large-enough marketshare (and I think that while it will continue to shrink it will effectively never fall below a viable niche) iTMS is guaranteed to be a major player.

    Netflex may not have serious competitors, but they can have competitors. There's no real barrier to anyone else setting up a competing business, other than the exclusive contracts Netflix is trying to make with content creators. All your criticisms about Blockbuster, Hulu etc as a user, are things that could be effortless fixed, if those companies ever decided that they would like your money.

    Contrast that to iTMS competitors: they may have no disadvantages to users at all (i.e. you wouldn't be able to bitch about them in the same way you'd bitch about Blockbuster or Hulu), and even be superior (IMHO, pretty much every single one of them is; the iTunes client requirement is a deal-killer for iTMS) and iTMS is still going to remain viable.

    Apple's verticalness protects them from competition at various levels, without the need for dirty anti-competitive (in the regulation sense) tricks. Netflix does not have that luxury.

  • by elrous0 ( 869638 ) * on Wednesday October 26, 2011 @10:41AM (#37844004)

    Because with Netflix, I don't need 300 different apps from each studio (each with its own unique passwords, fees, layout, content restrictions, etc.) to contend with on my Xbox. It's all in one convenient, easy-to-use place.

  • Re:I agree. (Score:5, Insightful)

    by shadowfaxcrx ( 1736978 ) on Wednesday October 26, 2011 @10:46AM (#37844096)

    The trouble is that as we know from all the bullshit RIAA lawsuits (going after 75 year olds who don't own computers, etc) the media publishing industry is somewhere in 1975 and would like to keep it that way as long as possible. This is an industry famous for fighting every advance in technology that later ends up making that industry craploads of money. Tapes, VCRs, etc, were all fought tooth and nail. Hell, Sony had to get Mr. Rogers to testify for them in court before the VCR was finally acknowledged as legal.

    With that model, not playing ball with them at this stage means that they will take that ball and go home, and Netflix will be back to streaming the crap content they were putting out when they first put their streaming online.

    They're going to have to walk a fine line for awhile until the entertainment industry gets their head out long enough to realize that streaming content will make them a lot of money.

  • by Guppy ( 12314 ) on Wednesday October 26, 2011 @10:47AM (#37844110)

    I think Netflix completely ignored the value of DVDs-by-mail in serving as a strategic defense against the media companies. If the media companies decide not to license content for streaming, Netflix is screwed.

    On the other hand, should companies refuse to sell DVDs to them, Netflix could purchase them through alternate channels. Redbox rentals was in a similar situation where studios refused to sell to them (correctly identifying them as a threat to DVD sales) -- they circumvented the studio embargo by getting their DVDs from Walmart instead. It's not an ideal situation (Using Walmart was logistically cumbersome, and required waiting until the retail release date), but it allowed them to continue deliver service regardless of what studios said.

  • by PatHMV ( 701344 ) <> on Wednesday October 26, 2011 @11:31AM (#37844758) Homepage

    Except that Warner Brothers DOES care, because if you have 300 different apps, you're very likely to decide that signing up for WB's service, going through all the hassle of giving your CC info to ONE MORE site, fixing compatibility issues with their ONE MORE player, etc., is just not worth it, when you just want to watch frickin' Batman tonight.

    Remember, movies compete not just with other movies, but with other leisure activities, including TV. "Honey, which app do I go to to watch Batman?" "I don't know, what studio came out with that one, again?" "Heck if I can remember!" "Well, look it up on the IMDB." "I can't the tablets in the other room!" "Well screw it, let's just watch that episode of Criminal Minds that got recorded on the DVR last night."

  • Re:I agree. (Score:4, Insightful)

    by LateArthurDent ( 1403947 ) on Wednesday October 26, 2011 @02:25PM (#37846918)

    What they lack, is a strong personality like Steve Jobs in their leadership, who had no issues playing hardball with anyone, anytime.

    Uh...from what I hear, they did play hardball. And Stars said, "ok, bye".

    The movie industry saw what happened to the music industry, and their strategy to a really powerful player is to make them less powerful by diminishing their library. Hulu and Youtube are just entering the arena now, but eventually what they want is for you to be completely unable to get everything you want from a single provider for $8. You'll have to pay $8 to netflix in order to stream Warner Brothers movies, pay $8 to hulu to stream things Stars has the rights to, pay $8 to youtube to stream HBO movies, etc, etc...

    Basically, they want to turn the streaming service into cable.

Q: How many IBM CPU's does it take to execute a job? A: Four; three to hold it down, and one to rip its head off.