I told you guys to invest in Redbox. As I warned a few weeks ago, the new Netflix pricing plan was going to come with major consequences for both the company and its subscribers. Their clients have spoken, and nothing speaks to a company louder than when formerly loyal customers refuse to pay for their services anymore.
On the morning of September 15, two weeks after its new pricing scheme went into effect, Netflix stock dropped a whopping 15%. I’m not an economist and I don’t pretend to be, but I don’t think a decline that severe is ever acceptable. Netflix explained this to its shareholders by staying resolute and insisting “we remain convinced that the splitting of our services was the right long-term strategic choice.”
The company is extremely dedicated to this tactic, so much so that this next announcement isn’t as surprising as it should be: Netflix is splitting into two web sites. The original Netflix site will handle streaming and the new site, dubbed Qwikster.com, will be offer DVD and (in another new development) video game rentals.
This is clearly an attempt to:
- prepare themselves for the inevitable death of DVD rentals in favor of streaming,
- steal some of GameFly’s clientele with its new video game rental service
- and bring customers back with a few new gimmicks.
Netflix doesn’t seem to understand that no matter how many times they try to rebrand or attempt blatant publicity stunts, the reason their customers are leaving is purely because of the price. Students attempting to watch Toy Story 3 at 3 a.m. are more likely to turn to a cheaper alternative like Redbox. Unless Netflix swallows its pride and admits defeat, the only streaming will be done by the hoards of irate customers clicking the unsubscribe button.
Photo: _tar0_ at flickr.com