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Comments

Kenny Johnson

I'm no expert, but it seems that Netflix was trying to lose the hybrid users. The mail business was costing them too much money. I switched from hybrid to streaming only. I'm actually a happier Netflix customer today than I was before they raised prices. Why? I wasn't really using the DVD service I was paying for and they've added a ton of great content lately.

Xenothaulus

I averaged 3-4 DVDs a month. I sometimes go through 3-4 hours of streaming in a single day. I'm happier with streaming-only, and I'm technically saving a dollar off the old price.

DVDs aren't quite dinosaurs yet, but they are mastodons.

JohnnyO

I'd guess the analyst's idea of broken is different than mine. He is probably focusing on business, and by the snippet above, believes that they "broke" something by the large price increase.

As mentioned above, I think Netflix was quite willing to risk the loss of hybrid customers. Could they have better hit a sweet spot by only raising rates 45% instead of 60% and still met their financial goals? Who knows. I'm still satisfied with Netflix.

TJ

No Netflix isn't broken. As a hybrid customer, I still enjoy DVD's and streaming at what I still consider a great value for the price. I will stay hybrid as long as it's still an option because streaming only or cutting the cord is putting all your eggs in one basket (your Internet connection). When I have problems with my connection as I had tonight, at least I had two DVD's to watch. That is invaluable to me!

Louis S

I agree with everyone here. I didn't mind the price increase so much because I almost felt compelled to watch a ton of blu rays and DVD's to justify the cost...and when I had 2 discs at a time, it was worse. Now I have streaming only and I'm fine with it. The selection is very good for the price and there's no discs to mail back, which is always a good thing. I was primarily using Netflix for television shows and now I'm doing the same thing. I do like that they added How I Met Your Mother and other shows to the lineup recently and sure it's a lot of old movies but that's OK too. The faster people begin to realize that streaming is a whole new animal like disc rentals by mail was 10-12 years ago, the better this transition will be.

DW

This analyst does not know math.
Assuming what he estimates is correct,
before the price increase
Revenue = 11 mil * 10 = 110 mil / month
After the price increase
Revenue = 7 mil * 8 = 56 mil / month
So Netflix needs
(110 - 56 ) mil / 8 = 6.75 mil new streaming subscribers to get the same revenue.

Considering that there are still several mil remaining hybrid users, who pay more after the price increase, so the revenue gap is even smaller than (110 - 56) = 54mil, which requires less than 6.75 mil new members.

FearNo1

I hate to agree with pachter but he is right. Netflix got too aggressive with streaming by spending too much on it for so little content. Now the prices and competition for streaming have risen and netflix can't afford the costs. Netflix hopes they can weather the storm or get bought out by MS, amazon or google. As they currently are, I don't see them lasting too much longer.

ClydesMP

Show me someone who says DVD's are dead, and I'll show you someone who is one of the people who rent 59 million DVD's from Redbox in a month.

Whether you do or don't, and whether I do or do mpt, the majority of the people who rent DVD's still want the newest, freshest, blockbusters that played in theaters three months ago. And Netflix streaming will never have that in it's current state, and it's a strait-jacket that will always be the big bugaboo for most people when it comes to streaming. They gave up on the DVD business way too soon.

And by losing the Starz contract, and whether you view that as good, bad, or indifferent, much of their streaming movie content will once again be scene as just old stuff and TV reruns. There is nothing out there to replace Starz, and it appears that even if there were, Netflix currently may not have the resources to pay for it.

I really don't care what the profit percentage on streaming is compared to DVD rental. The fact remains that the disc rentals was still a profitable business, and Netflix cut off it's nose to spite it's face by letting it deteriorate way too much too soon. End of story.

mrmanmac

Pachter is an idiot! He has been wrong in his analysis of Netflix for years. In fact.. this guy has been so wrong for so long, I am thinking I should load up on some more stock!. This is the same guy that threw it out there that Netflix was going to sell the streaming business to Amazon, and that swore Blockbuster was going to eat Netflix for lunch.

In my view, analysts like this are armchair CEO's that throw opinions out there to suit what the company they work for wants. The shorts have been betting against Netflix forever, and so has Pachter.

mrmanmac

Netflix is far from broken. Netflix is a pioneer blazing a trail that has got the attention of the entire industry they are in. Unfortunately it is difficult to blaze the trail and not make errors along the way. I only hope that Netflix doesn't get crushed by the powers that be, because of a mistake or error in judgement, only to have some other mega corporation step into the space. A good example would be how Napster got crushed trying to do the right thing for all parties, only to have apple step in to screw all parties. Try playing that tune you bought on iTunes in any other device but an apple device.

If that is what you want..... Blockbuster, Apple, Amazon will be there for you. I am sticking with Netflix. It is still the best entertainment value out there.

For 20bucks a month 2 DVD's at a time, plus streaming i have all bases covered. I get the latest and greatest, and a huge catalog of stuff that I would never rent or buy, but find very entertaining.

Mike S

Nope. I always insisted users would be happy to take a fee hike IF the result was more streaming titles and a stable catalog. We stuck out the changes, and it's very clear from recent behavior Netflix is trying hard to do just that. We'll see if I still feel this way when the Starz stuff expires next year, but for now I am happy with both selection and price. Streaming quality during high traffic hours, on the other hand, I'm not so happy about.

AndyG

Michael patcher is a joke and needs to kick rocks... After his 13 straight play station price drop goof ups, I don't know how people are still giving this guy attention...

Ryan

When Netflix increased the price I switched to streaming only. As others have said I'm much happier and pay less than I did before even if it is only $2. I really didn't watch the DVD's. My family does not use DVD's at this time. We have plenty that the kids still watch but our kids are on Netflix on our iPhone's, the 360 or the Roku. How can anyone think that Netflix is "broken" or "dead". I'm sure there are a lot that still use DVD's but is clear and has been for sometime that digital (read streaming or downloadable) media is the future and is here to stay. Netflix is quickly ushering this service to the masses and I for one could not be happier with Netflix. Sure, there are times when it is down or they are having streaming issues that have caused trouble for me or my family but hey what can you do. I'm sticking with Netflix and the quality of streaming for me is great.

Gobotron

How hard is it for Netflix and everyone to understand that people want a wide selection, and streaming, while having a big selection, doesn't have everything? When everything becomes streamable, then it can consider dumping discs or shafting disc users. I guess I'm in the minority; I've always been quick to mail discs back within two days or so, partly to try to make the most out of the monthly fee and partly because I want to see stuff as soon as I can. It can become a chore and annoying to mail discs but I will never stop being a "hybrid" subscriber.

Richard D

as long as Disc are the only real way to see CC, I will be one of those that still uses the DVD sevice. I get about 8 to 12 DVDs a month while I stream very little. Not being a techie and older, the CC function on streaming is wasted on me due to not wanting to watch them on my computer and buying another thing, like Roku 2 just for captions is a waste of my money... And bedore you mention TV's and Blu-Ray players with Netflix, most do not have the CC feature. So for now, DVDs are the only way to go for me... And, yes, I watch my DVDs and return them the next day or so...

Michael Thornton

I prefer the streaming myself. The quality of the content has gotten a little better, but if you take into account that NF will be losing its STARZ content very soon, it's not going to be much of an improvement. They really need to honestly work on more original content, or try to bring back a lot of those cancelled shows many of us were so fond of. But are they dead, nah, but if they're not careful, they are going to fall into the bowl.

JebNY

I downgraded to one disk at a time and streaming. Gives me the best of both worlds, streaming for older stuff and still a steady stream of new stuff on disk.

It is only broke until you compare it to the competition. Cable, much more expensive, Amazon Prime (I just recently signed up for a free month). What a joke, terrible interface and very little content that interests me and when they do have a series I'd like to watch, it starts in the middle. Hulu is a possible contender if they can keep improving their content and polish the interface a little.

Jim...

William Ballew

I had the streaming service with (1) DVD option for 7.99 then 9.99. When Netflix split the services I opted to just stream for economic reasons. I don't have TV access. I use Netflix for shows I enjoy and Hulu and CBS.com for keeping up with current shows I enjoy. I have used Hulu plus but not currently. All my choices are for purely economic reasons. I don't think Netflix or any company looks at those folks that simply are trying to survive and need some form of entertainment and an arrangement with news outlets for realtime news and weather would be something I would welcome.

Nate Hiatt

DVDs via mail could take a KO punch if most of what they're discussing with the USPS comes to pass. Drop Saturday deliveries and the closures of sorting facilities that will add 1-2 days to first class mail delivery.

Nick

Michael Pachter is an idiot and a terrible soothsayer. He is consistently wrong, look up some of his past predictions. Let's agree to stop caring about what he says. It's not noteworthy.

gir

I don't think the service is broken (yet) but I do think the business is broken.

Streaming doesn't have the protection of the first sale doctrine. I think NetFlix streaming is destined in time to become just as unaffordable as cable - unless they go out bankrupt first.

Yobagoya

William Ballew-

Netflix offers unlimited streaming of over 20,000 titles for just $8/month, how is that not taking the economically challenged into account? Keep in mind that a company does have to make a profit to keep their business afloat. And if you want news and weather to go with that look into some of the devices Netflix supports. Roku for instance has both weather and news apps completely free.

michael

I have stream-only. If the price goes up anymore, will have to cancel all of netflix.
I have cut out every single luxury, except for streaming. hope the price doesnt go up.

moviegeek

I like Netflix streaming but their business model is broke, they are paying too much for content. The NF board has made it clear that they will be in the red in 2012, if they were smart they would put ads at the beginning of shows(eg Hulu). Hulu generates much more revenue from ads than subscription fees.

As much as I hate ads it would increase revenue and the price of the sto

moviegeek

To continue(somehow my previous post got truncated):

stock, I would rather have them be ad sponsored than have my subscription fee go up.

Zwei

Netflix is not broken …people's expectations are.

What?

It looks like many of you are misinterpreting what is meant by "broken" in this article. If you read the full article, this is not in reference to the quality of the service, but the business itself.

If, indeed, Netflix is currently operating at a loss, how long does the company have to turn things around before it can't continue? Companies require profit to keep going and the cost of content will only continue to rise.

Expanding to other countries only helps if they can add enough subcribers to offset the costs for delivering content to that country. Remember, just because they've licensed it for the US doesn't mean they can stream it anywhere. They've got to negotiate a whole new contract for each country.

If the loss of subscribers and stock price has irreversably hurt the company's profitability, the company may very well be "broken" despite how much all of you enjoy the service they are providing. If they can't afford to keep up the pace of content licensing, the quality and quantity of available titles will begin to suffer, making it much harder for them to entice and retain subscribers.

Plus, at this point, any more missteps could spell their doom.

BK

Zwei is right. People's expectations are delusional. $16 for unlimited streaming and 1 disc is still the best value in entertainment. People pay $5 a day for their Starbucks, but complain about the price increase. The popular alternatives (itunes, Amazon, Hulu) are just as expensive and have a worse selection.

Adam

I wouldn’t call it broken. The service is still an ok value even with the price changes. What was irreparably damaged was their image. I don’t think they can fix that. I left after the price change and won’t be going back, especially now that I have the Blockbuster Movie Pass. For $10 per month I get streaming as well as DVDs, Blu-rays and video games and the even include about 20 additional movie channels with my DISH Network service. As an employee I know no other company can beat that much entertainment for such a low price. It is services like that that will really drive nails in the Netflix coffin.

Walt D in LV

No, I don't think Netflix is "broken", but it could use some tweaking. The recent price DECREASE was a nice surprise. I say DECREASE, because I was previously paying $24 for 3-at-a-time Blu-ray account, and it went down to $20. Since I do not stream, I welcomed this discount. Other DVD/Blu-ray plans were similarly were discounted.

However, I would rather pay more for more content. It is quite obvious that Netflix is spending more time and energy on Streaming, and getting content there, however, the quality of Streaming is just not very good compared to the HD Video and 7.1 Surround Sound of Blu-ray. Also, Netflix does NOT seem to spend the effort on getting Blu-ray titles as they do Streaming. A check of Blu-ray.com shows that recent Blu-ray releases of classic and popular movies are just not available through Netflix, such as Scrooged, Hook, It's a Wonderful Life, The Big Country, Copland, Pee-Wee's Big Adventure, The Family Man, Anastasia, The Guns of Navarone, or The Conversation. Some of these examples were released in October, so even the 28-day release window is not a cause for the delay.

Netflix broken? No. But I would be happier paying more money and getting more Blu-ray titles.

Walt D in LV

Oh, and of course, the Netflix Friends feature.
A few years ago, Netflix thought to remove Profiles (separate Queues for family members). That was met by backlash, and they opted to keep them.
Last year, they removed the Friends features. Despite overwhelming opposition and frustration, these features have not returned. This is where many people feel that Netflix "jumped the shark".

The Friends section included such features as seeing what your Friends had rated a movie, or where you could put in a "mini-review" to recommend a film to a Friend.
What isn't said often enough, is that the downfall of the Friends Feature may have been when they instituted a "Reviewer Rank" (which is still available to this day). This idea was great in concept: the more people that mark your reviews as "Helpful" the higher your Reviewer Rank. However, it created an unneeded competition, which had people trying to get more and MORE Friends, and to create "Top 10 Lists", harassment to get people to rate their reviews, all to get a higher Reviewer Rank.

So, a great idea (seeing your Friends' movie ratings or their mini-reviews) was spoiled by the fervor of a higher Reviewer Rank.

Friends Features were "broken" and removed, but I think could have been fixed. I so wish they were still there, for nothing else than to see my Friends' ratings of a film or what they thought.

Heck, because of that Reviewer Rank, Netflix even removed Profile names from the Member Reviews themselves.. Broken!

Jason

Annalists just like journalists have biased agendas. It seems to me he overlooked one important detail. Those who decided that upgrading to more discs at a time as a better value with the price increases. For example I (as I'm sure a lot of others too) switched up to 3 at a time from 1 at a time (before the hike). The way I figured it if I'm going to pay almost twice as much for 1 at a time why not actually pay slightly above twice as much but get 3 times the content out of it.

At least until streaming is to the point where discs are unnecessary. In other words all TV shows have all of their episodes available to stream, movies are of their proper aspect ratios, and netflix promptly fixes/gets fixes for bad encodes (so they don't expire with never having a good encode). New releases would be nice too but to be honest there is so much stuff I can watch that isn't a huge deal.

What they could do is offer a new type of hybrid style and allow pay per disc with the no late fees etc perks. That way those who only get a few discs can still have a disc queue but not over pay for the option to get discs. Think of it as redbox but through the mail with netflix disc perks. The price per disc could be less than redbox $1.20/$1 if it is feasible. With streaming up to par with my expectations for it then I would definitely desire this option from netflix for the occasional disc I would want to get. I had even thought what if netflix had kiosks on top of through the mail. But then I thought that might be over complicated to work with the current design of the netflix service.

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