Netflix Un-truths

Sep 20 2011 Published by under American Consumer, Corporate America


Reed Hastings the CEO of Netflix posted a video on YouTube on 9/18 to apologize and clarify the changes he is makeing to Netflix.  The big change he announced, in the video, is the splitting of Netflix into two companies. One for streaming called Netflix and a new company for the DVD by mail business to be called Qwikster.

Reed apologized over and over for not communicating  this change, in business strategy, effectively to the current subscriber base. Reed only makes a small mention that splitting of the company will cause a cost increase.

The cost increases  announment was made over two month ago. So if you think about it Reed must have been thinking about the changes for  2 or 3 month before that. I would think a company of this size would do some planning before making shuch a bold change as splitting the company.

So when  you look at the new Qwikster website (9/20/11 screen shot above) and only see a one page website announcing the new site is comming soon? You start to wonder how much planning has gone in to the YouTube video and the decision to split Netflix. After four months of time you think there would be a real site for the Qwikster business. Why would Reed make this huge change and not have the web site ready.

Makes you think he is backpedaling in the video to recover from a bad decesion to raise subscription rates so soon again. The price hike  has caused a loss of over a million subscribers.

Not only are subscribers unhappy, look at Wall Street,  the stock price is down to $143 from an all time high of $286 just (last month Aug 2011). That is a 50% loss in value in a month.

Reed better do a lot better then he did in his apology video or that subscriber base and stock price will continue to erode!

Or was the split done to position Netflix for Amazon to purchase Netflix?

 

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