

Netflix's lost year: The inside story of the price-hike train wreck - nkurz
http://news.cnet.com/8301-1023_3-57468798-93/netflixs-lost-year-the-inside-story-of-the-price-hike-train-wreck/?tag=readMore

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paulsutter
Crap streaming selection is the real reason that spinning off the DVD business
couldn't work. Most of the good movies are DVD-only. If all titles were
available in both forms, consumers would have been a lot more comfortable with
the change.

The moral of the story is that success teaches us little.

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earl
tl;dr: In 2011, Netflix raised prices for their combined dvd + streaming
service, then shortly thereafter decided to split dvd off as a company named
qwikster. Subscribers didn't like the price hike or the inconvenience of split
companies and separate movie lists, etc. The change was walked back, but
netflix lost roughly 800k subscribers (of 23.6mm in the us in april '11 [1])
or 3% and 77% of their stock price. The reporter claims this mostly happened
because four key executives who had been at netflix basically from the
beginning and whom the ceo Reed trusted and listened to had left the company
and there was nobody left that he trusted enough to seriously consider their
opinions.

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I think the reporting is interesting. I'd just assumed this whole thing was
basically blunt negotiations between the studios and netflix over streaming
rights, and that the studios had wanted to get paid per subscriber, whether
that subscriber wanted dvds or streaming or both. Netflix can basically buy
dvds and do whatever they want because of the doctrine of first sale, but if
the studios don't license content they can't do a damn thing.

What's also interesting is I've heard a lot of grumping about netflix from an
employees' perspectives. People seem to get randomly fired. This jibes with
what happened with qwikster. Reed had already started staffing qwikster up so
employees that agreed to switch or had been hired basically got dicked. This
lost them one of the key executives that had built dvd fulfillment and
customer service.

[1] <http://en.wikipedia.org/wiki/Netflix>

