Goodbye Netflix?

Have any of you ever watched a stock plummet while others were holding their own or going up in value and wondered what was going on within the falling company's ranks?

Netflix, a favourite company of mine for the last seven years, has, I believe, shot itself in the foot, not once, but twice. The stock, which had soared to three hundred dollars per share in July, fell upon announcement of a sixty percent rise in the cost of subscriptions. Those of us with the unlimited higher end plans did not see as high an increase as did folks paying $7.99 per month.

Unfortunately, a sixty percent hike in any cost these days is likely to be met with extreme rancor, something Netflix CEO Reed Hastings and his team should have been able to predict. While he has since apologised for the way the announcement was handled, the change in pricing structure remains as company  stock continues to fall.  Additionally, however, while apologising to customers, Hastings also stated  that the streaming of films and home shipment of DVD's are soon to be divided into separate entities, each with its own website, billing and customer service teams. What was once convenient and seamless for customers who enjoyed both services, is soon to become yet another bill and service requiring time and attention.

When one examines the situation, it is apparent that Hastings sees the market for mailing DVD's eventually shrinking in favour of streaming content. At present, Netflix supply of DVD's outstrips its available content for streaming. A look in stores, libraries and websites such as Amazon would indicate that while streaming is the next frontier in online entertainment, DVD sales and availability are like to remain viable for some time.

People continue to tighten their belts in response to rising expenses, lacklustre employment and competition for their entertainment dollars, making me wonder at yet another case of poor timing on the part of a company whose services I and many others once enjoyed.

The markets were up today. Despite this, Netflix stock continues to take a thrashing. I sold the few shares I had at 143 this morning. As of this writing, the stock is at 130...

Until Next Time...