Netflix: Content, Content, Content

October 24th, 2011

Netflix announced earnings today, revealing “significantly more cancellations than anticipated,” resulting in net 40% (!) drop. Most of those lost subscribers are surely due to the price hikes and then confusing DVD streaming split which was canned not soon after its announcement.

As 2011 heads to a close, Netflix is sure to make my personal worst-in-tech list. At this point, I wonder the red-envelope mail company can do to recover. I can think of only two things:

One: go further with the back-pedaling — roll back the price increases and drop some bones to bring subscribers back. Netflix maintained customer loyalty by offering pro-rated refunds for service outages. You can’t raise fees on customers that quit Netflix entirely.

Two: Content. The equivalent of Ballmer’s “developers, developers, developers” dance in the video world is “content, content, content.” I only count one or two recently-added movies in Watch Instantly that I have any interest in; that’s clearly insufficient, and I may as well shunt the monthly Netflix fee to iTunes rentals instead. The Watch Instantly selection isn’t beefy enough to replace Netflix’s DVD service and is arguably of lesser value than Hulu’s arsenal of recent TV shows. And no, back seasons of The Wonder Years, CW shows, and Mad Men aren’t enough.

Watch Instantly has got to have enough content to where odds are decent that whatever you want to watch is available. Right now, the selection is more like: pick something from this below-average selection. Which isn’t much different from flipping through channels and settling for what’s on.

Yes, I realize the situation that Netflix needs more money to pay the content holders, and the price increase is part of that equation, but I don’t care how the sausage is made anymore. This is a simple matter — do you have the content or not?

If Netflix fails to make any major moves in either the price or content departments before year’s end, I’m skeptical they’ll be able to turn things around. The stock will continue to plummet, and cancelling Netflix actually seems within the realm of possibility.

(And yeah, I recently signed back up for Hulu Plus).