Netflix has screwed up bigtime and the company is paying for it — literally. Netflix announced Q3 results yesterday and revealed that it had lost more than 800K subscribers who quit in protest for its summer price hikes. Netflix stock was down 40% at one point this morning as institutional investors expressed skepticism about the company’s long-term outlook.
The reason I bring this up is that it’s part of a larger story about the challenge of defending leadership positions on the Internet: Friendster, AOL, Yahoo, MySpace and now Netlfix are part of that story. Groupon could be added to that esteemed club as well.
If another site were to come along (e.g., Hulu, Google-YouTube, Apple) and offer the same content for comparable prices Netflix might see its subscribers defect en masse. While Netflix arguably has a stronger brand than any other video site/provider that brand has been greatly weakened by this summer’s pricing fiasco and the bad will it created.
The only way for Netflix to continue to lead is to maintain its content and UX advantage. It could do a better job with customer service as well.
However, as I said, if another provider were to offer a comparable or better catalog Netflix would see massive defections. I’m simply waiting for that moment myself.
October 25th, 2011 at 6:46 pm
Greg – Is the time now for Amazon to swoop in with an offer at $100 and put them out of their misery? Thoughts?
October 25th, 2011 at 6:50 pm
Yes, I neglected to mention Amazon. They would be a great one to buy and fix Netflix or create a more viable competitor