It’s not like Neflix is the new kid on the block. They’ve been around since 1997. They started out as a pure DVD through mail operation but Reed Hastings, their CEO, has made claims he visioned Netflix eventually as solely providing streaming content over the net from the beginning.
So what is Netflix all about? Dig deep enough on their website and you’ll come to a spot where you can download their logo (https://signup.netflix.com/MediaCenter/ImagesLogo). In those guidelines you’ll find: “For the love of movies. We do what we do because we believe in making it ridiculously easy for everyone to enjoy the TV shows & movies they love.” Looks like the mission of Netflix is to make it easy for you and me to sit back and enjoy our favorite shows - provided Netflix holds the rights to distribute them.
Reed Hastings was prescient when it came to his vision of streaming media. The business model of mailing out DVDs and dropping them off at your mailbox blew competitors like Blockbuster, with its mortar and brick stores, out of the water in the mid 2000’s. Netflix was a hit across a broad demographic with that model but Hastings sought to make using Netflix “ridiculously easy” and the best way to do that was to cut out the trip to the mailbox — stream directly to various media devices. This also targeted a much younger demographic and best of all it was possible to do once the world began the transition from Web 1.0 to Web 2.0.
In keeping with that vision, according to the company’s timeline (https://signup.netflix.com/MediaCenter/Timeline) in 2008 they teamed up with “consumer electronics companies to stream on the Xbox 360, Blu-ray disc players, TV set-top boxes and the Apple Macintosh computer.” In 2009 they get the PS3 and internet connected TVs and devices. In 2010 they’re found on iPads, iPhones, iPod Touches, the Nintendo Wii, along with other devices. Life is good! They end the year 2010 with 20 million members! What could go wrong?
Which brings me to the subject line: ignorant or just incredibly stupid? Hastings is on a roll, Netflix is flying high with stock prices in the $300 range. The company is worth billions. So why introduce an abrupt change in the winning business model that will, by the way, stick it to your customers in the form of a 60% price increase for your basic product which combined unlimited streaming and one mailed dvd? Sure! let’s split those two items and charge for each separately. I’m sure no one will mind or even notice.
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Well, as you can see from these charts customers and stockholders did notice and they were not very happy. After losing 810,000 subscribers (check out: http://business.newsfactor.com/story.xhtml?story_id=12100005TEBH) Hastings delivered a mea culpa but did not budge on the price increase or the new model.
Ignorant or stupid?
