Forum Post: The People vs. Netflix
Posted 13 years ago on Nov. 21, 2011, 12:28 a.m. EST by Novista
(14)
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Netflix may not have killed Blockbuster but their business model certainly helped.
The DVD-by- mail service established Netflix as market leader and Blockbuster decided in 2004 this was right for them, too. Netflix sued in 2006, Blockbuster counter-sued, but ended with a settlement to Netflix of $4.1 million in 2007.
What with one problem after another, by July 2010, Blockbuster was delisted from the New York Stock Exchange. At its peak, the company had over 4,000 stores and 60,000 employes. It all started in Dallas, TX in 1985 with one store. That September, Blockbuster filed for Chapter 11 bankruptcy.
Their $900 million in debt sunk them. By March of this year. the DOJ determined Blockbuster had no exit plan nor funds to continue restructuring. At one point, the firm had international operations, Canada, Australia, U.K. Ireland, Peru, Spain, Portugal and more.
What was left of assets went on the block for $320 million to Dish Network.
Netflix, Inc., established in 1997 as a subscription DVD-by-mail distribution system. Their website launched in April, 1998 as an online version of pay-per-rental model. They introduced the monthly subscription model in September, 1999 and dropped the single-rental model in 2000. Flat-fee unlimited rentals without due dates, late fees, shipping or handling fees, or per title rental fees -- what could go wrong?
In 2009 Netflix offered 100,000 DVD titles and had exceeded 10 million subscribers. That increased by April, 2011 to 23.6 million subscribers.
August, 2010. Netflix organizes a streaming video service of new movies and television shows. Before long, web traffic in the U.S. and Canada appears to be about 24% Netflix!
July, 2011. Who needs a satisfied customer base and a working business model? Enter Qwikster. No more both services for $10/month. DVD-by mail from separated service Qwikster. And new, improved prices: $8 for DVDs and $8 for streaming or $16 for both. Not to mention unanticipated problems in licensing streaming content.
That month, Netflix stock was around $300. It's lost something like 71% of its former glory.
October 24, 2011. Netflix reported a loss of 810,000 US subscribers in the third quarter with more losses to come in the fourth quarter.
CEO Reed Hastings: "Qwikster became the symbol of Netflix not listening."
Qwikster died a premature death, a victim of hubris. Hastings also said, ""I slid into arrogance." Although he's learned a bitter lesson, by early 2012, the company will probably see a net loss in its world business.
If you take your customers for granted, the outcome will not be what you expected. That is the power of the invisible hand -- which is the sum of customers voting ...
Yup your movement is just like Arab Spring since Netflix was def a cornerstone of the democratic movement in the middle east. God, you guys are like a self parody now.
I post and let the message be considered or not. However, 'you guys' doesn't quite fit. I only came back to add something about GoDaddy -- same story, same outcome.
You probably won't see this, and who knows or cares if anyone else reads this. But you may the apprension I am in/with NYC -- no, I am an old American living in Australia and not a direct part of OWS, though I support the fact that OWS did the walk -- before Sept. 17, all over the blogosphere there was whining that 'no one is protesting about all the corruption, and everything else' so a cohort turns up and the whining continues, just in a different way.
As for me, I'm a libertarian and see a wide spectrum of ideas and attitudes with OWS, some of which I don't agree with but I know the best way to work together is to agree on what we agree and agree to disagree on other points.
You, however, misunderstand the point of my post and add nothing to the discussion. in fact, you misunderstand so completely, I just might know (or know of) you -- here in the land of oz, one bbs sysop I knew years ago, the other a well-known writer. Y/N?
do you think the stock is at a reasonable price to buy back in, or do you think it's going to go any lower?
Just two points:
1) No one mentions how companies like Verizon, Time Warner, Starz and Blockbuster tried to force Netflix to raise it's prices so that they could raise their own when they rolled out there own streaming services or how Verizon and Time Warner tried to get congress to allow them to throttle or block Netflix from their ISPs in favor of their own services.
2) The death of Blockbuster was predicted long before Netflix gained control of the streaming market. They became too big to adapt fast enough to the changing technology.
Love your summary and conclusion. Nice job, and good point!