Eleven months ago Netflix (NFLX) was on the verge of
becoming a $300 a share stock, a milestone Apple (AAPL) was striving for at
that time. While Apple reached its peak at nearly $630 a share and is still
valued in the upper $500 range, Netflix has plummeted to $62 a share. A lot can happen in eleven months. What is so
tragic about Netflix’s fall from grace is that it was entirely their doing. If
an analyst wrote a script on how to drive Netflix customers away, I expect it
would look exactly like what happened from July to September in 2011.
Netflix and Coinstar’s (CSTR) Redbox had already sent
Blockbuster into Bankruptcy
proceedings and Netflix was still light years ahead of every would-be
competitor in the streaming video market both in technology and content. Customer
satisfaction was sky high, subscriber numbers were over 23 million and
climbing and then it happened. In July of 2011, Reed Hastings, CEO of Netflix,
announced that as of September 1st, 2011 Netflix was going split the
streaming and DVD delivery services and charge a separate fee for each that
equated to a 60% price hike. Public
outrage erupted immediately. The Facebook (FB) post in which Netflix
announced the price change received over 28,000 comments many of which were
customers threatening to cancel their subscriptions. Read more...
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