Can’t say I didn’t see this coming from a mile away. There are a few contributing factors to this drop off, such as the streaming and DVD plans being split, the price hike for each, lack of new content, loss of studio support and the failed attempt spin off the DVD rental service as Qwikster. As a result, Netflix’s stock has dropped 37% to $75.28 this morning, resulting in the biggest decline in the companies history since October 2004. Because of this drop off, Netflix is expecting more customer to leave the service in 2012 and will not spread to any more new territories until they can turn this problem around.
CEO Reed Hastings will not be stepping down and said the following:
“Pausing is a good thing from an investor standpoint,” Chief Executive Officer Reed Hasting said in an interview. “We are going to pause and restore our global profitability.”
“Our streaming marketing has been very effective in the past two years,” Hastings said. “We are going to work on improving the user interface, expanding to more platforms and delivering more content. There’s no grand gestures, there’s just a lot of steady and intense efforts.”
Netflix is in a tight spot right now, because they can’t lower prices due to the cost they have to pay studios and expenses they’ve incurred from their expansion in to countries like England and Ireland. With customers jumping ship, they can really own hope to level off and then rebuild from there.