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Comments

Robert Emmerich

First - thanks to Mike for printing the letter as CNBC, Reuters, etc. didn't have the entire thing.

Second, what's up with those charts? I mean the graphics are so far off why even bother? People subscribing to both streaming and DVDs is their largest group but it's the smallest section on the chart. How does that help anybody? My first grader could do better.

Third. It still boogles my mind that people subscribing to both don't get a .99c discount. $14.99 looks so much better than $15.98. OK, $12 million is still $12 million, but marketing and goodwill should count for something.

Fourth - has anybody at NF explained how, quoting from the article - "but we believe this split will help us make our services better for subscribers". What has been done to make services better for subscribers? I check this website nearly every day but nothing comes to mind as an improvement to go along with the split and price increase. .

Robert Emmerich

Fifth - I don't care too much b/c I'm not one, but I don't see how losing 40% of your stock value in 3 months ($300 - $180) is good for your shareholders either.

Where's Jolly?

Leegaupp

>Robert - excellent 5 points.

Makes me wonder if Netflix will modify their business in 6-12 months if things don't go the way they hope. It would seem to me that if you want to shift your business like this you take more gradual steps. We'll just have to see if "burning the ships" is best.

SPLG

Dear Fellow Shareholders,

We thought we could reward the loyalty of our customers by sending them a giant fuck you with a massive price increase. And why not? Our behavior towards our users has always been aggressive and based on the idea that if they don't like it, they have nowhere else to go.

But it seems like folks have realized there are a lot more options now for streaming or they can get their movies from kiosks like Redbox. Oops.

Tsuyoi

Looks like it's under $170 right now, down about 18.5% today. Ouch.

Bobby McDaniel Jr

I Hope They Keep Losing Subscribers. They deserve it! I Can't Wait until it fall to under $100 a share. I will be laughing my ass off

Dockholidaiy

They don't listen to there customers. Millions of us told Netflix the new user interface sucks and they ignored us. Why?Millions of us said a 60% price increase was unacceptable and they ignored us. The result was millions of us took a long hard look at what we were paying for and we adjusted are plans accordingly. What did they think was going to happen. I went from paying 22 or something a month to 7.99. If everyone did that then the stocks are going to go even lower. Mwahahaha

Lyndon Allydice

I don't understand what all the excitement is here.

netflix is paying a lot more for streaming that they used to. Starz just turned down 300 million dollars a year, so getting good content is going to keep getting more expensive.

What most companies do when they're costs go up is they eat some of it and they pass the rest on. Starz wants 10x what they got a few years ago. If netflix had simply raised prices on everyone, then the dvd only people would complain that they don't use streaming that much or at all, and don't want to pay more.

Some people who have cancelled are going to stay away, some are going to come back realizing that this is still a great deal.

I just don't get all the personal animosity. Some people react as if they've been betrayed by a family member.

I get people quitting if the price is too high, or if it's not worth services rendered. I don't get the rest.

Robotskilledyou

Uh, why would they lose DVD-only subscribers? if anything, they're going to gain more since it's $2 cheaper than the DVD/Instant combo. I know plenty of people that think Instant was a nice touch when it was $2, but aren't satisfied with the content enough to justify ditching DVDs.

Scrivner

Lyndon - I do feel as if I've been betrayed. I've been a loyal Netflix customer for over 10 years. For most of that time they were very customer-centric and it was refreshing to see that from a company. I felt that Netflix was a great company and I let people know that.

But then in the last two years or so - starting about the time that it was obvious that Blockbuster had been beaten and the main competitor was out, Netflix did a 180 on us and very quickly turned from customer-centric to profit-centric.

They have now had two price increases within a year - one of which was this latest 60% hike. Their customer service is terrible, they have neglected the DVD side of the business, they use groups of paying customers as guinea pigs to test their broken software updates (and refuse to take you out of the beta testing pool when you complain). Netflix has become the new Comcast. (For those of you that don't know Comcast - that's a really bad thing).

BoB

"Uh, why would they lose DVD-only subscribers? if anything, they're going to gain more since it's $2 cheaper than the DVD/Instant combo. "

---

I dropped my plan from the 2 DVD/Streaming down to just 2 DVD plan. Saved almost $3 a month. We're now thinking of dropping NF altogether after having them since 2005. We are so far behind, new releases in our queue are now showing on the premium channels (HBO, etc.). We may drop NF later this month before our renewal date.

Streaming is in its infancy. Until they offer the FULL catalog of movies and TV, reliably, in streaming to match the DVD catalog, then I don't have much use for it. NF also seemed to have had as much downtime in streaming this past month as they have had all year.

Directv just fumbled with their streaming of NFLST to PS3 and phones in their recent rollout. No reliability - yet!

With free movies and content from so many places now (Amazon Prime, Roku channels, HULU, etc.) I'll pass on it from NF. I can get new releases from 7 Redbox's with a 5 minute drive from me as well. We still have 3 mom-n-pop video stores here as well.

NF seems to think they are the only game in town, or that they are indispensable but in these economic times, they certainly are not!

gir

Decreased subscriber base was expected, though apparently NetFlix underestimated the loss (and HackingNetflix polls overestimated - maybe - we haven't seen the real numbers yet).

More important IMO is what happens to the revenue numbers. With streaming, NetFlix has some significant fixed costs. Decreasing revenues despite the price increase would be a very bad thing.

ClydesMP

Okay, so which is it, according to this article, (http://bit.ly/oI22Qe) they want to get rid of DVD's forever and just concentrate on streaming television:

Netflix executives have responded to the bad news with a glimpse at where the company is hoping to take its streaming service in the future – and a sign that the DVD by mail system may soon be a thing of the past. Netflix plans to shift its focus to television series available to stream rather than movies, according to chief content officer Ted Sarandos, and DVDs are on the way out:

(Although) the DVD business has a long life in middle America, it’s just not part of our future.”

Where and how Netflix is going to obtain the kind of television series’ for its streaming services that will keep subscribers hooked and bring in new ones is the question at hand now. The decision to move into television puts Netflix in direct competition with Hulu, even more so than they are now. New shows, better shows and quicker turnaround is going to be the key to keeping Netflix alive in the streaming TV arena.

Once DVD's no longer serve their purpose, a Netflix supply that is quickly dwindling, it'll be adios to Netflix entirely for me as well.

Ron-Kate Rockwood

Glad to see the downward slide has already started, and that not all Netflixers drank the kool-aid.

They deserve everything they get.

Jason

1 million out of over 30 million customers is only about 3%. Any company or service with these kinds of numbers of customers that is a fairly normal shift one way or the other. Stock holders now a days are not smart enough to be stock holders. Heck we almost had a new great depression because of all the idiots who sold all their stock and dropped shares way low on every single stock on the market. A huge amount of the lower price of netflix stock is probably mainly due to that. I know stocks I hold in other companies are still down 30-40% from where they were at before all these idiots screwed up the market with the paranoia.

The real issue here is them moving forward regaining quality of service and continued gain of catalog content. A number of areas have gone downhill in quality.

1. They are getting an increasing number of bad (technical issues making unwatchable) encodes from the movie/TV studios

1.5 And as far as I can tell reported bad encodes never get replace (unknown if it is netflix or the studios responsible for this)

2. customers grossly abusing the review system with complaints an other non-review content

3. increasing number of DVD titles not available but can be saved to queue. However saving them to queue does no good as if they are not new releases they sit in the section for months even years waiting for them to be added to their catalog.

4. increasing and quite frequent technical problems with the website and software behind the site. Queue problems that have been an issue now for probably a year now and still not fixed but they claim they are. I'd like to know how that works. Hey my car won't start, repair guy: yes it does, car owner: no it doesn't see, repair guy: yes it does we fixed it, car owner: no it doesn't see I'm turning the key but it doesn't start see. This is what we got going on right now with netflix and queue issues. And who knows what else it wrong and broken or breaking.

Oyelucky1

after being a member for 10 years (since inception) on 3 dvd+bluray plan and a very very low usage customer , i cancelled this month. why ?
paying 30 bucks to watch 1 movie is so not worth it. redbox will be little pain (5 mins walk) but worth now.
die netflix die.

RJM35126

The bottom line is netflix works for shareholders first.

Im of the opinion the stock was way, way overvalued and is still overvalued.

They have to do what they think is best even if it pisses off some or most of us.

Their revised projections arent down that much. The street must have thought they would do much better.

I think a lot of the people that left or downgraded will eventually come back and/or upgrade again.

I agree with the poster above...a slight discount to someone subscribing to both is in order.

We have to face facts. Netflix wasnt cheap for all these years because they were never going to raise prices.

Its STILL a pretty darn good value.

When my gift subscription runs out, I will go from 3+ streaming to alternating from 2+ streaming one month to 4 DVDs only the next.

That will keep my total cost down, help me get more for my money and hopefully cut down on the DVD "long wait" throttling issues Ive been having.

Really, the best value for me would be streaming only because there is a LOT of content that I have not seen and would enjoy.
(I dont watch TV and havent for 8 years now)

I watch netflix.

Even though I get free cable to my house, it was hooked up when I moved in and attempts to get cable connected were met with "Your house doesnt exist". I said it does and I just bought it. Call me back when you figure it out. Im still waiting.

I do watch a dozen or so NCAA basketball games during the season. And then some of the tournament. Thats about it.

I cant be mad at NF for trying to make money.

Sure, it appears to have backfired based on the marketcap they lost today.

But, in the long run, netflix is a viable money making business.

I own lots of stocks. NF is not one of them.

I am 100% customer.

Now, if I drove by a redbox 10-12 times a week like a lot of people, I might opt for more rentals. As it is, working from home and not getting out much. Its a 4+ mile round trip to rent a movie.
Poof goes the value in 99 cent rentals.

Not to mention the 5+ minute WAITS at some locations.

For years, i think Netflix actually LOST money by having me as a customer. Now, they are entitled to make some. And, there simply are no better options for my roughly $252 a year. (6 months at $19.98 & 6 months at $21.99)

My guess is that in 5 years, prices will be at least 30% higher and maybe 40-50%.

I hope,from a customers standpoint, that competition keeps them down but Im not betting on it.

Netflix is not a charity.

And they had to pay a lot more to get content. Now they have to charge more.

Joel Bloch

Netflix may not be a charity but it is also not a particularly well run business, as evidenced by the dumping of shares. Reed Hasting's blunder should be studied in business schools for years to come. By forcing customers to choose between a technology (the post office) that is teetering on the verge of bankruptcy and a new technology (broadband) that is painfully underdeveloped,as well as a business model (e.g. Starz) that is woefully out of date, he has lost control of the control of the future of his company.
Whose fault is it that every time I try to stream a movie, it stops 10-15 times: my router?, the WII?, ATT? or Netflix? It doesn't matter; I'll blame Netflix for putting in this situation.
And as along as the content providers think they are going to set up a new type of cable, which the Internet had already made obsolete, Netflix is not going to be able to control its content. What a mess!

Lonny

Wow!!

I cannot believe what I am seeing. Did netflix actually lose customers, or are they coming up short on how many customers they were expected to gain?

The sad reality of the Stock market is it doesn't matter if Netflix is a great company with a great product at a very reasonable price. There are forces out there that are determined to drive this company into the ground! Some are doing it for short term gain (shorts) and some are doing it as a an effort to keep the status quo, so they can continue to rape an pillage thier customers as long as they can, before they eventually end up like Blockbuster.

IMO, Netflix is a game changer that has shaken the powers that be in the home entertainment industry to their core. And what you are seeing is the powers that be, taking action to prevent Netflix from gaining any more ground in that arena.

I believe the Starz deal falling through is part of that effort. There is collusion going on here between Starz, and the cable industry, and their other media outlets, against Netflix. How else do you explain Liberty media walking away from 300 million? Is Dish going to to pay them almost as much as they paid for Blockbuster itself to stream their content?? I don't think so.... I think Liberty media has made a back room deal with the Cable industry to get their 300 Million.

Look around on the internet. Google "Netflix News" and see how many you stories you find out there that ALL mention the Starz deal, a 60% price hike, increased competition from companies that are not really competition at all.

I am telling you.... Big media is out there trying to crush Netflix. That will truly be unfortunate for all of us that have enjoyed the Sevice Netflix has provided. Unfortunately Netflix could wind up being like Napster. A great idea, but ultimately crushed because it was too great an idea.

ScottZ

Wow, what a bunch of whiners.

First, Netflix is not losing any money from splitting services, they are making more money! Netflix is going from 24mil customers with 24mil paid units of services to 23million customers with 40mil units of service.

Second, it is expected that the stock value will drop when a forecast is reduced. This does not mean they are losing money and it does not mean they making less money. It simply means they needed to readjust their forecast.

Third, everyone bitching about the price increase is quoting 60% price hike. 60% is a worst case scenario, you are all using this figure to get attention as a vast majority experienced a lower price increase.

People are stating how Netflix used to be responsive to their customers and they aren't anymore because of the splitting of services. Netflix cannot ignore the business aspect either. Netflix is simply responding to the growth in streaming services, increase in content, and increase in content cost. Netflix eventually needed to adjust their business practices to represent the difference in content acquisition costs.

me.yahoo.com/a/PQxFSsE0itt4Wuoe2fcIw7UVLJw-

If your movie is stopping 10-15 times per movie, I'd say it's AT&T.. which I presume means you have DSL. I thought DSL was on the very low end of what netflix needs in terms of bandwidth, which would mean that in iffy situations, it pauses.

Sounds like you need faster Internet.

Mike Ekholm

First of all, you can not look at as Netflix loosing 1 million customers. Over the past several quarters, Netflix has added 1.5 to 2 million subscribers per quarter domestically. There past guidance was that for this current quarter (q3), subscriber count would be flat, for every subscriber that left, a new one would join. If past trends hold true, on the low end, netflix would have 1.5 subscribers leave, but that would be made up by the normal amount of 1.5 million subscribers that joined.

They updated there guidance, saying that they where wrong, things will not be flat, they will not have enough new subscribers to make up for all the people leaving.

So, they are loosing the original 1.5 million subscribers AND loosing an additional 1 million subscribers for a total of 2.5 million subscribers.
It went from a no growth quarter, to a negative quarter as far as customer counts.

ScottZ

@Mike Ekholm
Yet their Revenue Units and profit will still go up.

Bob

Rented "Paul" from Blockbuster Express tonight - funny. That another dollar that Netflix doesn't get.

RJM35126

compute that the NFLX marketcap is down $7.86 billion from its high. Which coincides with the price increase. I am not pointing this out to say what they did was right or wrong, only that its cost them a heckuva lot.

Its very possible that that bubble was going to burst eventually anyway.

It will be interesting to see if NFLX makes some adjustments or changes. I think its possible despite what they previously said.

Losing $8 billion in marketcap can cause companies to change their mind. At least a little bit.

I still say that the netflix value proposition used to be too good to be true.

Now its closer to realistic.

Mike Ekholm; the correct spelling is "Losing".

Mike Ekholm

RJM35126, your post contains a large amount of fragmented sentences; You should investigate proper sentence and paragraph structure in your posts.

RJM35126

Agreed. But "losing" is a 4th grade word.

Sentence structure comes later.

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