“Netflix Inc shares plunged 38 percent in pre-market trading after its weak outlook spooked investors and prompted several analysts to cut their recommendation on the stock,” Arpita Mukherjee reports for Reuters.
“On Monday, the company warned of more cancellations as it grapples with the fallout from a price increase and other unpopular moves,” Mukherjee reports. “The company that shook up Hollywood with its DVD-by-mail service has seen its shares plummet since July, when it announced a price rise for subscribers who wanted both DVDs and streaming. A wave of cancellations hit the company that had been famous for red-hot growth and loyal customers.”
Mukherjee reports, “Netflix — which is trying to recover from the roughest patch in its nearly 15-year history as it moves to emphasize online streaming of television and movies — has forecast a loss for the first quarter of 2012 as it spends more to expand into Europe… Netflix shares were trading at $74.05 in pre-market trade on Tuesday. They closed at $118.84 on Monday on Nasdaq.”
Read more in the full article here.
MacDailyNews Take: We never really understood Netflix’s popularity beyond those deeply committed to ripping DVDs. It always seemed anachronistic to us to be waiting and snail-mailing physical media back and forth, and their streaming offerings were/are underwhelming, to say the least. We’re one group that Netflix won’t ever have to worry about losing as it stumbles and bumbles, potentially on its way out.
Sc**w’em. Got greedy while not offering a big value.
I’m sorry, but how is $8 for nearly any movie you could want to watch, with no return-date and postage pre-paid, anything but a colossal value?
I should add that the streaming option is not that great of a value. Sure, you get tons of stuff for cheap, but not much recent stuff outside of TV shows. Netflix’s price change made me realize how little I used the streaming, so now I’m Blu-ray only. Couldn’t be happier.
Funny. My thinking was just opposite of yours. I cancelled the DVD by mail service, as Redbox just works better for me for movies. I always had problems getting new releases from Netflix in a timely manner. But I love the streaming feature of Netflix. For me it is a killer deal – $8 per month for all the tv I can consume with NO COMMERCIALS. Couldn’t be happier. There’s tons of tv shows I haven’t seen yet, and it will take years until there’s nothing left for me to watch. I don’t mind being a year behind the current series. On the contrary, I prefer being able to watch one episode a night for a month until I’ve seen an entire year of the series.
To each his own, I suppose. My geography probably determines my position. I live a good distance out into the country (still able to get broadband though), so to get something via Redbox, it would be a 20-30 minute drive. Having the USPS deliver it straight to my mailbox is much more convenient in my case.
Ahh, makes good sense. I live 2 minutes away from at least 8 redbox stands. No matter where I’m going from my house, I pass at least one of them. Hence, redbox is very convenient for me and I can always get the new releases. They’re even starting to carry quite a few on blueray now. But if you don’t live near one, I can see how Netflix could be much more convenient.
I don’t consider a massive collection of old TV shows, documentaries, and stuff everybody’s seen already, all streamed in “pseudo-HD” and over-compressed stereo a “colossal value”.
A Blu-ray from Redbox? When I can get it, that’s an excellent value. New releases, beautiful 1080p picture and surround sound. I ditched Netflix because I just wasn’t getting the value after I’d gone through their pathetic catalog and couldn’t find much I wanted to watch anymore.
The problem for Netflix is that just like Apple, they’re at the mercy of the content owners and bandwidth providers. Five years from now, Netflix will either be out business, or their business model and pricing will look very similar to cable or satellite. It’ll be $40-50/mo and everybody will reluctantly pay that to get the service they don’t really like that much. You can iCal me.
If you re-read what I wrote, you’ll notice that, in my opinion, the DVD/Blu-Ray option (Mailflix), is the colossal value, not the streaming plan.
Sorry but I just do not get this stock market thing. Netflix delivers a great product for many many people, and now including streaming.
I know several people that love having the dvds come to the house with no (expensive) gas powered trips to the store. No late fees. etc. And now streaming for super cheap.
True, no anti-gravity or teleporting but otherwise, what is the beef??
Just curious.
en
1. Sometimes the techno snobbery of MDN rivals even that of fandroids. iTunes streaming offerings are nothing to brag about either.
You nailed it. Snobbery in the extreme. MDN seems to think that everyone has the money for, and access to, the high speed Internet necessary for streaming movies. Millions of people do not. My 88-year-old father has no Internet service, but burns through six or more DVDs a week with a two-day turnaround. My brother handles the queue. His Netflix service is an extraordinary value.
Apparently the MDN crew pees its pants with impatience over not being able to see movies RIGHT NOW, DAMMIT; it’s really not that hard to plan a day or two ahead for movie viewing that is of better quality and reliability than streaming.
For my slow bandwidth, Netflix works and iTunes makes me wait (and costs more).
I dropped streaming and went with DVD which works pretty slick. Ala carte services like Apple charge too much for HD for those of us who watch 4-8 movies a month.
If Netflix would update their streaming TV offerings in a more timely manner and get recent movie releases into the streaming service then I would pay triple what I am paying now. I would also cancel DirecTV.
I love Netflix streaming service. I have given up on cable TV and don’t use it anymore. We don’t have the physical media and snail mail thing in Canada and I wouldn’t want it. Streaming all the way!
Really, you can’t see the appeal of Netflix’s streaming service?
It’s like cable TV, excepts it is a third of the price, no commercials, all content is on demand instead of in fixed time slots, you can watch any number of episodes or a whole series in one sitting, you can pause and continue where you left off at any time without any hassle, uses very well designed and easy to use software including the best fast-forward and rewind interface I’ve seen in any video player ever, and they can even send you DVD’s in the mail of any movie or TV show not currently available for instant streaming. In what way is that not a compelling product?
Don’t it require Silverfish, or whatever that MS junk is called? Since I run a MS-free zone on my iMac, that don’t play.
Not many people actually use their computer to stream. Netflix is supported on so many devices that the chances are something that is plugged into your TV supports it.
Hey, I’m still dealing with a CRT in the living room. Nothing attached to it is connected to the internet, and I watch over-the-air DTV. I’ll join the 21st century one of these days, but I don’t envision Netflix being there when I do.
My kids would rather watch on the iPad. $8/month for freedom from (well, reduction of;-) whining is a bargain.
I mostly use the Netflix App on my Wii, which doesn’t use Silverlight. Same thing goes if you use Netflix on iOS, AppleTV, or any other video game console or set top box.
The web browser version of Netflix does use the Microsoft Sliverlight plugin, which is a drag. But if you want to use Netflix in a web browser, and if you can suspend bias long enough to give it a fair try, it’s really not that bad at all. If the choice was Silverlight or Flash, it looks like Netflix clearly picked the better and more reliable option.
Do you have flash installed? Because Silverlight is only half as much of a piece of shit as flash… for a MS product, it’s not bad!
You can watch it via Nintendo Wii. Works just fine.
+1
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Wow. Can you say “paid shill”?
Netflix hardly has anything available for streaming that I want to watch, and if you want to also get a dvd, it costs a lot more.
Which is why people are pissed, and canceling the service.
So, no it’s not such a good deal any longer.
If there’s nothing on streaming that you want to watch, why would you waste your money? Just get the DVD option. It’s the same price as the streaming option. It’s only when you want both that it becomes pricier (if $16/month is pricey).
It used to be $9.99 for streaming & a dvd. That was a good deal.
$16 for the same is a pretty steep increase.
That’s not really a good deal any longer.
And it’s not a matter of not being able to afford it, it’s a matter of not wanting to be stupid enough to give Netflix my money.
Let me get this straight: you’re on an Apple fan website, contributing a comment, and you’re calling me a “paid shill” because I said something positive about some technology I use?
Are you f’n serious, buddy?
What Mac daily news forgets is that when Netflix began 15 years ago, the only game in town was Blockbuster, which charged outrageous late fees and rental fees and required a drive to the local store where they rarely had any decent movies at the time you went. Netflix was an upstart versus Goliath, a la Apple versus IBM. Those of us who started using the service back then felt a certain loyalty to the company, like Apple users. But with their recent move, it was as if they had forgotten the loyalty of their earliest customers and were treating us like crap. I think the market is treating them exactly as they deserve to be treated for their misstep.
I’m not too bothered about seeing the latest movies as they come to DVD/online release. I’m happy to trawl the likes of ebay and Amazon for <£5.00 good films that I then get to keep.
I’ve had Netflix since shortly after they started. Things were going so well I bought a modest amount of stock. Then they added a fee for having access to Blu-ray. They added free streaming somewhere along here. Then they changed it to a fee per number of discs you had at home. I sold my stock after that increase. It had done amazing going up 5x from what I paid. Then recently they got even more greedy with the additional cost of streaming and wanting to separate queues and services.
I still have their 2 at a time, blu-ray, and streaming but I question their ability to survive with their current leadership. I use the disc service because I have a great surround setup and hdtv so I want the quality of blu-ray. Everything in my queue is blu-ray. I wouldn’t subscribe to the streaming by itself, not enough selection. Streaming is great for watching TV series in large chunks though.
As a stockholder you should know that it wasn’t only greed that drove these price changes. I’m sure greed has something to do with it, but mostly, the new contracts that the content providers are making them sign are onerous and are forcing them into these new pricing models.
what’s the alternative?
I too would pay more for a larger streaming selection and more current content.
Apple’s price point is out of wack ($3 per TV show) and Hulu is just as limited as netflix (in different ways), so where do we go?
I’ve enjoyed Netflix for years but like so many others have changed the way we use the service. I had a 4 DVD subscription for probably 3-4 years. At ~$30 a month they were getting ~$400 a year from me. I could get 16 DVDs a month on average which was a good deal provided I watch the content and returned within a few days.
Along came streaming which added another level of value to the service. After a while what with being very busy at work etc I stopped watching the DVDs and for months didn’t return them frequently enough.
It occurred to me that there was no need for me to have the 4 DVD service because I was mainly watching the streaming option. So in June I switched to 1 DVD plus streaming. My guess is that a lot of customers were doing the same thing over the course of this year and Netflix were seeing their revenue plummet.
All this while Netflix were offering streaming for free. The content owners wee probably giving Netflix a big break in order to set them up as competition for Apple. However this was still costing them money and eventually they decided to start charging for it.
After receiving a number of unplayable DVDs I decided to give up on the mailing option and just keep the streaming part of the service. Probably many others are doing the same.
The moral of the story is don’t give the best part of your service away for free. The streaming service is very good for the most part. Netflix should have added this as a bonus for those who pay for 3 or 4 DVDs. Offering it along with 1 DVD for $9 was eventually going to mean everyone migrates to that cheapest option.
They tried to grow to fast and gain market share without protecting their revenue base and profit margin. Fails every time, just look at Compaq, Dell and HP.
Only Apple understands how to build a business into a sustainable model. If they introduce a new product / service which may compete with another product then that new product brings in more revenue (i.e. iPod to iPhone transition).
Very well dissected. It is always easier to lower your price than to raise it.
I am very pleased with using NetFlix, and use both the mail and stream. I don’t know of a better service.
I don’t like Netflix. If only iTunes had an equivalent service, I would dump Netflix and Cable like a hot potato!
Prior to this summer, Netflix’s performance has been flawless in the 5 years that I’ve been a customer. They are fast, usually a 2 day turnaround on DVDs, and I have had great experiences with the streaming as well. Yes, I’d like there to be more available on the streaming side, but that isn’t their fault, it’s the studios’ fault. Same with the price change – the studios are responsible for that. The whole Netflix/Qwikster debacle was a major misstep, but I give them credit for admitting the screwup and course correcting before going through with it. I don’t know of any cheaper or better service, and there isn’t much hope for one when it comes to availability of content because the studios hold the strong cards. Truthfully, my hope is that they just get their act together and get back on track.
I have both mail and streaming – for me, the benefit of the mailed disks is subtitles for the hard of hearing. I hope Netflix survives.
I’d like to see a survey of Netflix users, are they the same people who used Tivos?
I’m waiting for Amazon’s bubble to burst like Netflix’s. Their PE ratio is now a normal 17.5, where it was over 70 back in July. Amazon is way over 100 now. Apple’s PE is about 11, net of cash.
I called it, Amazon’s bubble burst.
So what are some recommendations other than Netflix? I use iTunes/Apple TV a lot but the once a month fee of Netflix is appealing. I do find enough there each month to justify the monthly $8.00 charge but I would prefer some better content, more current content. I was planning to look at Blockbuster and Amazon to see how their respective services work. In the end, I want what I want, when I want it, for free!! It does not exist…..yet!
Sure it does, it’s called bittorrent. It’s just not honest or legal, but it does exist.
The content providers are so dumb that they are killing the goose that gives them the golden eggs.
For now, everyone is blaming Netflix, but soon enough the most people will open their eyes (and minds) to the reality that most of this isn’t Netflix’s fault.
Netflix’s only error was in pricing things so low in the hopes that their content providers would simply renew the contracts at the original rates. The content providers instead decided that they wanted most of the money that Netflix was making and changed the terms of the contracts accordingly.
I wouldn’t blame this on Netflix. For the same reason why Itunes is limited in movies we need to know the real issue here. The Motion Picture Association. They wanted more money. They wanted DVD’s seperate from Streaming. Netflix provides service for content, like cable providers. Is cable cheap? Is HBO cheap? Why don’t they drop their prices. People need to leave Netflix alone. They are the problem. Greedy Hollywood is. Even Apple can’t control them their pricing. If Apple had their way it would be 2.99 rental for ANYTHING and purchases probably at fixed 9.99. That won’t happen anytime soon while there is cable and Redbox etc..
dumped them a day before the price increase hit my account. I don’t miss them one bit. Net shit is on its way out.
Netflix is a great value if you use it, either way. Sure, if you go to the movies all the time, or have all the premium channels and watch them a lot, then the value decreases. Otherwise, there’s lots of good stuff to watch, in HD as well, on demand, commercial-free. All you have to do is explore a bit and not care that the show or the movies is more than a few months old. As far as I’m concerned, it’s a great value. Combine it with Blu-Ray rentals and Off-Air HD with DVR, and it’s a sweet set-up. Make sure it’s on the Apple TV though. This is the best Netflix experience by far.
My favorite streaming channel. Love netflix
Comcast cable is just an outlandish ripoff. Basic II cable service is just too expensive for what you get. I watched, maybe, 10% of their channel offerings.
Our family dumped cable, use another DSL service, bought a WiFi media streaming box, I use my Mac and iPad and we use, exclusively, Netflix and Hulu Plus streaming services. We get a lot of content now!
Our area DSL services stream data fast enough for our family to watch TV and movies on 2 TVs or computers from 2 different areas of the house.
If you include just the monthly cost of our ISP and the two content providers, we pay alittle over $40/month.
We get a lot of commercial movies and TV shows from NetFlix and we can watch recent TV shows with shorter,limited commercials on Hulu. All of this on demand and we can watch whatever we want, as many times as we want anytime we want.
This is a great deal for us and a no-brainer!
Yeah, the Netflix streaming service lags behind as new/newer movies are released one or two months after their initial release on DVD, but that is not really a problem for us. We can either wait or, if it’s a movie I want in my collection, go buy it.
Our family is happy that we have content we actually want to watch. AND, no more $65-$70 cable bill that includes fees for renting of their cable boxes and remotes.
Flippin’ highway/content providing robbers.
I, also, forgot to mention that AppleTV is not really a bargain, either, compared to what we are using.
Netflix and Hulu are a set price per month subscription with Netflix being commercial free.
A lot better deal than the AppleTV/iTunes combo setup.