Netflix shares tank amid backlash and defections

Tuesday, October 25, 2011

NEW YORK (AP) — Netflix shares plunged 35 percent Tuesday after the one-time Wall Street favorite revealed a massive departure of subscribers angered by price increases and other questionable changes at the rental service that was created to make entertainment a snap.

Netflix revealed late Monday that it ended September with 23.8 million U.S. subscribers. That’s down about 800,000 from June and worse than what the company had hinted at before. In September, the company predicted it will lose about 600,000 U.S. customers.

And it may get worse. Netflix said it expects more defections in coming months.

The exodus began after the company raised its prices by as much as 60 percent in July and split up its streaming and DVD rental services. Its website was flooded by comments from angry customers. Many people also canceled service, especially on the DVD-by-mail side. The company is betting that its future is in streaming video, and CEO Reed Hastings has said he expects Netflix’s DVD subscriptions to steadily decline, much like what has happened to AOL Inc.’s dial-up Internet service.

But Netflix bungled a spin off its DVD-by-mail service, giving it the name Qwikster and creating separate accounts for people who wanted both DVDs and movie streaming. By doing so, the company created what many perceived as a more complicated rental process at a company that began its meteoric rise with a new, easier way of searching for and finding entertainment effortlessly.

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NoMoBigBro 1 year, 7 months ago

Classic case of a company not listening to what customers want, but rather telling customers..."this is what you get!". This road leads to FAIL.

I tried Netflix. The one DVD I got was one of their newest releases, and it was not so new. They say they want to be a 'streaming video' company and have invested heavily in that side of the business. But the streaming portion that I experienced was very poor, unless you like movies that have been out for a year considered "new". The majority of content available to stream was much much older than that. I had seen mostly everything they had available. And if you want HD, don't look for much of a selection there either.

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