How much of a beating? About a 32 percent drop in stock. But that’s nothing compared to the nearly 60 percent drop in stock price over the past 52 weeks. Yes, NFLX went from a high of 304.79 to a low of 125.02; it closed at 129.36 on Friday.
Anyone who has followed Netflix for the past few years knew that the company was headed toward a solely streaming business. It should not have been a surprise to customers, but I do not think the company fully assessed how much backlash there would be when it decided to push so quickly.
Had the company earlier spun off the DVD rental business into Qwikster instead of raising fees, the company may have saved itself some heartbreak. Instead, it tried to have its cake and eat it too by forcing some customers toward streaming video only with lower fees, and keeping some customers who still rented physical media but getting extra cash out of them.
Had the company asked, I would have told them that I knew no one who only subscribed to their streaming service. To many, streaming video is just the icing on the cake.
[image via D&L]