Netflix Reed Hastings, CEO of subscribers want to know you've heard.
You do not want to order DVDs from a separate service called Qwikster? It destroyed that plan.
You do not like paying more for less selection in streaming-video library of the company? He is beating the bushes to get more movies and TV. He also made to simplify how difficult it is to do that. For the first time, has begun to recognize that Netflix is facing serious obstacles in licensing content, especially movies from major studios. Therefore, almost everything is being put on "pause", including a major international expansion, so you can focus on your audience of home for a while.
"Qwikster became the symbol of Netflix does not listen."
- Reed Hastings, Netflix CEO
Netflix reported earnings today and the company felt the full force of subscriber dissatisfaction. Video rental Web's leading service had added at least 1 million subscribers in each of the last seven consecutive quarters prior to the third quarter of this year. However, for the three months ended September 30 Netflix lost 810,000 subscribers. The company reported 24.6 million subscribers in the second quarter and 23.8. million in the third.
And the prospects for the next two quarters, even darker. For the first quarter of 2012, Netflix said it expects to report a net loss overall.
Although Netflix earnings for the third quarter met analysts' expectations, shares of the company were on thwack after-hours trading, the reduction of 27 percent or $ 32 to $ 86.84. It was not until last July the stock broke through $ 300. Since then, however, the company's shares have shed 71 percent of its value.
For most of the last two years, Netflix has been one of the great successes of the Internet, but is now in danger of becoming a cautionary tale of hubris and collapse. "I slipped into arrogance," Hastings said last month.
The trouble began in July, when Netflix announced that they no longer offer access to the DVD by mail service and unlimited video streaming cost $ 10 a month. Customers could pay $ 8 for streaming or $ 8 for disks or $ 16 for both. Customer cancellations and criticism from the media surprised Netflix managers.
At first, the company downplayed the customer reaction. Netflix expected to finish the third quarter with 25 million subscribers and Hastings boasted that the fourth quarter may bring the company its first quarter of $ 1 billion. Two months later, still screaming customers by increasing prices and the lack of selection in the library of streaming video, Netflix managers reviewed the projections of subscribers. Instead of 25 million subscribers, Netflix would emerge from the third quarter with $ 24 million.
Related
• Netflix subscribers down, disappointed Wall Street
• Netflix price increase raises the ire of subscriber (Abstract)
• Netflix Qwikster canceled spin-off
It did not even understand.
Compared to what happened next, however, those days may have been the happiest quarter period.
With customers still reeling from the price increase, Netflix announced abruptly that he was breaking the company into two separate services. Hastings said subscribers a new service called oversee Qwikster DVD rentals, and use it would have to create new accounts, queues, and receive a new bill. Netflix, a service valued for its simplicity, is complicated.
"In retrospect, it is difficult to justify [the announcement Qwikster]," Hastings said during a conference call. "Qwikster became the symbol of Netflix will not hear. Quickly reversed course on that, and we will continue with the DVD as part of the Netflix brand."
In relation to new found humility Hastings, also sounded a cautious tone in a letter to shareholders on the company's ability to acquire more streaming-video content.
Netflix's leaders had said repeatedly that downloading movies over the Internet is the future of home video. But in the past, the company presented openly arrogant task of persuading Hollywood to content licensed from Los Gatos, California, Netflix. Hastings managers shrug and say all they needed was his pen and checkbook.
"The total available is likely to remain divided between Netflix, Showtime, HBO, Hulu and others."
- Reed Hastings, Netflix CEO
Hastings played his company "virtuous circle" where the Netflix content acquired, rather than attract more subscribers, what would pump new money that could use the license more movies and TV shows . In All Things Digital conference last summer, Hastings did not flinch at the prospect of paying $ 200 million a year to Starz, the pay-TV network that owns the online rights to the content of Disney and Sony Pictures.
"That [the price] would not be surprising," said Hastings. "We've grown a lot since [the payment of $ 30 million a year in 2008 for the Starz content], and we pay much more for its contents."
If the signature of Starz was child's play, why negotiations break down? And what happens now. If the number of Netflix subscribers shrinks, as it did in the third quarter, and then - using the logic of Netflix - which means that the company would have less money to pay for TV shows and movies, which means attracting fewer subscribers and so on. In this scenario, the virtuous circle becomes a whirlwind nightmare.
In his letter to shareholders, Hastings detailed some of the challenges in acquiring content.
He wrote about how licensing agreements in the fields of film and television are usually based on exclusive offers and rights to a lot of important content and sewn by others. He cited Hastings online exclusive rights to Universal Pictures has sold to HBO. It does not say is that HBO has similar agreements with 20th Century Fox and Warner Bros. This is the contents of three of the six Hollywood movie studios that Netflix can not touch.
With the agreement dead Starz, Netflix is not the most sought after content from five of the six largest.
"Given the existing licensing structure of the cable television industry," wrote Hastings to shareholders ", the total available is likely to remain divided between Netflix, Showtime, HBO, Hulu and others."
What he is saying is not to expect too much from us regarding the latest movies from major studios.
This is probably one reason why Netflix is playing films obtained from "mini-major" film studios and television series reruns. What else needs to attract new customers? During the conference, Hastings was asked by email if he and his company are pleased to be a "replay TV" service.
"It's how I characterize it, but it is fundamentally wrong," said Hastings. "We have incredible full seasons before the last two seasons of 'Men of Man," "Breaking Bad", etc, and creates a great customer experience for episodic content. "
But the point is that this type of content is enough to bring back their old subscribers and grow Netflix? The next couple of quarters that gives us an answer.
You do not want to order DVDs from a separate service called Qwikster? It destroyed that plan.
You do not like paying more for less selection in streaming-video library of the company? He is beating the bushes to get more movies and TV. He also made to simplify how difficult it is to do that. For the first time, has begun to recognize that Netflix is facing serious obstacles in licensing content, especially movies from major studios. Therefore, almost everything is being put on "pause", including a major international expansion, so you can focus on your audience of home for a while.
"Qwikster became the symbol of Netflix does not listen."
- Reed Hastings, Netflix CEO
Netflix reported earnings today and the company felt the full force of subscriber dissatisfaction. Video rental Web's leading service had added at least 1 million subscribers in each of the last seven consecutive quarters prior to the third quarter of this year. However, for the three months ended September 30 Netflix lost 810,000 subscribers. The company reported 24.6 million subscribers in the second quarter and 23.8. million in the third.
And the prospects for the next two quarters, even darker. For the first quarter of 2012, Netflix said it expects to report a net loss overall.
Although Netflix earnings for the third quarter met analysts' expectations, shares of the company were on thwack after-hours trading, the reduction of 27 percent or $ 32 to $ 86.84. It was not until last July the stock broke through $ 300. Since then, however, the company's shares have shed 71 percent of its value.
For most of the last two years, Netflix has been one of the great successes of the Internet, but is now in danger of becoming a cautionary tale of hubris and collapse. "I slipped into arrogance," Hastings said last month.
The trouble began in July, when Netflix announced that they no longer offer access to the DVD by mail service and unlimited video streaming cost $ 10 a month. Customers could pay $ 8 for streaming or $ 8 for disks or $ 16 for both. Customer cancellations and criticism from the media surprised Netflix managers.
At first, the company downplayed the customer reaction. Netflix expected to finish the third quarter with 25 million subscribers and Hastings boasted that the fourth quarter may bring the company its first quarter of $ 1 billion. Two months later, still screaming customers by increasing prices and the lack of selection in the library of streaming video, Netflix managers reviewed the projections of subscribers. Instead of 25 million subscribers, Netflix would emerge from the third quarter with $ 24 million.
Related
• Netflix subscribers down, disappointed Wall Street
• Netflix price increase raises the ire of subscriber (Abstract)
• Netflix Qwikster canceled spin-off
It did not even understand.
Compared to what happened next, however, those days may have been the happiest quarter period.
With customers still reeling from the price increase, Netflix announced abruptly that he was breaking the company into two separate services. Hastings said subscribers a new service called oversee Qwikster DVD rentals, and use it would have to create new accounts, queues, and receive a new bill. Netflix, a service valued for its simplicity, is complicated.
"In retrospect, it is difficult to justify [the announcement Qwikster]," Hastings said during a conference call. "Qwikster became the symbol of Netflix will not hear. Quickly reversed course on that, and we will continue with the DVD as part of the Netflix brand."
In relation to new found humility Hastings, also sounded a cautious tone in a letter to shareholders on the company's ability to acquire more streaming-video content.
Netflix's leaders had said repeatedly that downloading movies over the Internet is the future of home video. But in the past, the company presented openly arrogant task of persuading Hollywood to content licensed from Los Gatos, California, Netflix. Hastings managers shrug and say all they needed was his pen and checkbook.
"The total available is likely to remain divided between Netflix, Showtime, HBO, Hulu and others."
- Reed Hastings, Netflix CEO
Hastings played his company "virtuous circle" where the Netflix content acquired, rather than attract more subscribers, what would pump new money that could use the license more movies and TV shows . In All Things Digital conference last summer, Hastings did not flinch at the prospect of paying $ 200 million a year to Starz, the pay-TV network that owns the online rights to the content of Disney and Sony Pictures.
"That [the price] would not be surprising," said Hastings. "We've grown a lot since [the payment of $ 30 million a year in 2008 for the Starz content], and we pay much more for its contents."
If the signature of Starz was child's play, why negotiations break down? And what happens now. If the number of Netflix subscribers shrinks, as it did in the third quarter, and then - using the logic of Netflix - which means that the company would have less money to pay for TV shows and movies, which means attracting fewer subscribers and so on. In this scenario, the virtuous circle becomes a whirlwind nightmare.
In his letter to shareholders, Hastings detailed some of the challenges in acquiring content.
He wrote about how licensing agreements in the fields of film and television are usually based on exclusive offers and rights to a lot of important content and sewn by others. He cited Hastings online exclusive rights to Universal Pictures has sold to HBO. It does not say is that HBO has similar agreements with 20th Century Fox and Warner Bros. This is the contents of three of the six Hollywood movie studios that Netflix can not touch.
With the agreement dead Starz, Netflix is not the most sought after content from five of the six largest.
"Given the existing licensing structure of the cable television industry," wrote Hastings to shareholders ", the total available is likely to remain divided between Netflix, Showtime, HBO, Hulu and others."
What he is saying is not to expect too much from us regarding the latest movies from major studios.
This is probably one reason why Netflix is playing films obtained from "mini-major" film studios and television series reruns. What else needs to attract new customers? During the conference, Hastings was asked by email if he and his company are pleased to be a "replay TV" service.
"It's how I characterize it, but it is fundamentally wrong," said Hastings. "We have incredible full seasons before the last two seasons of 'Men of Man," "Breaking Bad", etc, and creates a great customer experience for episodic content. "
But the point is that this type of content is enough to bring back their old subscribers and grow Netflix? The next couple of quarters that gives us an answer.
