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Their stock price is down 80% since July 2011! Is this company going to be around much longer? Are online entrainment prices going to go up.Kind of ironic that the company that sent the brick & mortar video stores into bankruptcy ... may end up going that route itself. I guess it's like the Bob Marley song said - What Goes Around Comes Around.
If you understand, things are just as they are; if you do not understand, things are just as they are.
--Zen Proverb
Edits: 12/04/11Follow Ups:
Nexflix Profits and Operating Income are higher than ever.
Netflix's management is as smart as they come.
These guy's rock! "It's more and more different".
If you understand, things are just as they are; if you do not understand, things are just as they are.
--Zen Proverb
$250+ stock price was based upon the exponential growth of the company over the past few years, and the success of migrating customers to streaming from hard delivery. For the past 5yrs, their cost to stream video was locked in at very low rates and each customer that streamed instead of receiving a disc literally multiplied the cos profit margins by 2-300%.
4 issues have beaten down the stock price:
1)horrendous management of their new 2 tier pricing model
2)expiration of existing streaming rights contracts and subsequent renegotiation at a much higher cost to netflix
3)competition
4)significant slowdown in the rate of new subscriber growth
That said, Netflix is still a viable company. Ironically, since they are number 1 in the field and the stock has come down so much, they are now a takeover candidate. They generate huge amounts of cashflow and have an extremely large customer base that would be very attractive to other companies seeking to cross-sell.
Netflix management was very smart to ensure that just about every new flat screen tv, Blue Ray player, tablet computer and game box includes Netflix connectivity. Only exception is the iPad and I believe it can be hacked to access Netflix. If the delivery system is already in your room, it becomes very convenient to click and stream at $7.99 per month.
Price may drop further, but we are getting close to the point where the company is attractive from a valuation basis.
When the new pricing model was announced, we downgraded to a streaming only account and haven't looked back. Every time I log in I see more and more current content available for instant streaming. Bottom line is we saved money and got what we wanted.
Best,
Ross
I haven't seen a company implode like this since the dot com bomb era. The company could well be bought out ... but prices (for rentals) will probably go up substantially as a result.I went with Blockbuster online after the price increase ... it really would not have cost me anymore money with Netflix ... I would have had to drop my online download option and stuck with DVD/Blu Ray through the mail (only about 10% of the movies I wanted to see were available for download). Just didn't like the fact that they were increasing prices with no increase in services ... in this economy. I didn't get a 60% increase in wages ... why should I give them one?
If you understand, things are just as they are; if you do not understand, things are just as they are.
--Zen Proverb
Edits: 12/05/11 12/05/11
I watch Netflix on my iPad, no hack required. Just download the free Netflix app. Also available for the iPhone and iPod Touch.
--eNjoY YouRseLf!.....
I get 3 blu-rays a month and streaming. It's a great deal.They shot themselves in the foot with the way they handled their price increases, but Netflix still offers great service and value.
I was with Blockbuster online for awhile but they DIDN'T HAVE ANY DAMN BLU-RAYS. Everything I wanted to see was 'unavailable', 'long wait', 'on order'. It was a joke.
At least Netflix has what you want.
"Lock up when you're done and don't touch the piano."
-Greg House
Edits: 12/04/11 12/04/11
Netflix was definitely faster at delivery of DVD/Blu Ray. Movie selection is the same IMHO. I agree that Netflix still offers great service and value from a customer perspective.
It's the business model that appears to be going down. Online entertainment prices (content providers are charging) are gong up ... before Netflix was just a niche player in the movie rental business ... those days are gone. The big movie studio's are wanting their money and there are other players with deeper pockets than Netflix.
If you understand, things are just as they are; if you do not understand, things are just as they are.
--Zen Proverb
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