Netflix: Not Feeling Lucky Anymore

September 15, 2011

Earlier this year I bought some Netflix stock in the low $200s. Which looked like a smart idea when it neared $300. But even when I wrote that “feeling lucky” post I threw in some cautious words about selling the stock to lock in the gains.

Well – should have sold when I had the chance. Following the price increase and lowered content offerings, they’re losing subscribers, and the stock has plunged beneath $200. And am thankful I didn’t buy more. And it’s not without reason; Netflix has made some uncharacteristic mistakes over the past few months, that I wrote about at the time:

Anyhow, at this juncture, Netflix no longer looks the most likely company to provide my long hoped for “video nirvana.” Hulu might make it happen, but it’s worthwhile noting how individual studios and channels seem to have finally caught on to streaming video over the Internet, via their own websites and iOS apps. So we have NBC, ABC, PBS, Crackle, etc. apps streaming entire episodes with commercials, or the HBO Go iPad app that serves up content to those with an HBO cable subscription. Then add in┬ástreaming said content to an Apple TV (with screen mirroring between the iPad and Apple TV in the upcoming iOS5) and you have slightly kludgy but still, pretty compelling alternative to the one service to rule them all.

And in this future, Netflix looks less relevant. They’re nothing without content, and content owners may no longer need Netflix as a middleman.

Will stick with the Netflix subscription for now – but the stock smells like toast.


  1. Rob O. says:

    Given how entrenched they are, it really floors me that they’ve allowed their greed to flub this so badly. This smacks of some TiVo-style mismanagement. They’ve taken a revolutionary concept and sunk it in spite of the users desperately trying to keep it afloat all the way down. Every Blu-Ray player and TV sold in the past 2-3 years has Netflix integrated right in. How do you get so cocky that you blow that kind of phenomenal market lead? As an early adopter of Netflix from more than a decade ago, this both saddens and infuriates me!

    • My thought is they had to raise prices to pay for increasing payments to content holders. But if that were the case, it’s not working too well as Watch Instantly is *losing* content. Plus the introduction of the plan wasn’t done in anything remotely resembling a nice manner – it was dropped rather suddenly with some weak spin that is was a benefit to customers.

      I personally think they should offer refunds. They’ve been quick to do so in the past when services go down. Even Apple did the same with the iPhone following a big price drop. Maybe delaying the price increase for long term, loyal customers?

      Anyhow the negative PR from those price increase moves continues, and the stock keeps falling.