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The company announced a bleak 2012 outlook yesterday and analysts have since cut their price targets for the company

Netflix was once king of the video streaming/rental subscription business, but has had a rough time ever since announcing the price hike and plan changes back in July. It hasn't been able to bounce back, and now, Netflix anticipates a loss in 2012 that has Wall Street worried.

Originally, Netflix only anticipated a loss in the first quarter of 2012. But the company announced a bleak 2012 outlook on Monday without going into detail as to whether it sees losses for the entire year.

According to Netflix, the problem at hand is a loss of subscribers over the months and increasing copyright costs. The DVD/streaming company has 22 million streaming-only subscribers, but has seen a decrease in DVD customers, which makes up most of the profit.

"The DVD business, which is 80 percent of the profit, is starting to go away, and if there's a thin margin on streaming, those two things go against one another," said Tony Wible, Janney Montgomery Scott analyst.

Analysts from Janney, Caris, Wedbush Securities and UBS have all cut their price targets for Netflix after the announcement of the bleak 2012 outlook. Netflix shares have also taken a beating today, dropping by $3.90 (5.2 percent) to $70.57 in afternoon trading. It fell as low as $69 earlier, which is the lowest it's been since March 2010. 

"If we do not reverse the negative consumer sentiment toward our brand, and if we continue to experience significant customer cancellations and a decline in subscriber additions, our results of operations including our cash flow will be adversely impacted," said Netflix.

Netflix also announced Monday that it would raise $400 million in cash by selling convertible notes and stock to T. Rowe Price Associates and Technology Crossover Ventures.

After raising prices and changing plans in July, Netflix hit a few other bumps in the road that ticked customers off. In September, Netflix limited streams per account, lost its distribution deal with Starz (come February), lowered Q3 subscriber forecasts by 1 million, and decided to make a DVD spin-off service called Qwikster, which it later retracted.

Source: Reuters

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I really don't understand...
By pandemonium on 11/22/2011 9:11:04 PM , Rating: 2
...why everyone is so unreasonable about all of what Netflix has done. Sure, it's never acceptable, to the customer, for prices to raise. But they didn't really raise that much. The name change thing was dumb and they backed out of it anyways.

I think of it like this:
-I pay for decent-high quality streaming of a plethora of TV shows and movies, a lot of which would not be available locally (since I enjoy foreign films) [sure, they're never new, but I really don't care].
-The price raise was only a couple dollars. Their servers were being taxed to the point of large growth demand. And let's be honest, the cost of their instant streaming package is super cheap. Eight dollars a month for unlimited streaming WITHOUT COMMERCIALS. Where else can you get that? Not Hulu. Not Blockbuster. Not your cable provider, dish networks, or any other service provider.
-Did I mention NO COMMERCIALS?

I've had my Netflix account since 2005. I used to religiously get 3 DVDs every week. Now, however, streaming is just 10x easier. Which, by-the-way, Netflix's price/package restructuring made it CHEAPER for me, by about $10/month.

Netflix is losing business because streaming is the future for media distribution, not simply because they "drove their customers away." Also, Redboxes scattered all over the place are a quick, convenient, and cheap. I see people browsing over the titles available on those stations all the time.

My only problems with Netflix are the use of Silverlight - what a piece of garbage. I'd be thoroughly impressed if they got a worthwhile media player, like Media Player Classic going, with some options for V-sync, color enhancement, post processing effects, etc...

RE: I really don't understand...
By mac2j on 11/23/11, Rating: -1
RE: I really don't understand...
By pandemonium on 11/23/2011 3:58:02 AM , Rating: 3
Grats, you can whistle blow on something you can't prove. Get your paranoid head out of your rear end. What I said was fact. If you don't believe it then that's your "viral campaign" conspiracy-driven problem. By your own logic we can say you're virally marketing Hulu + Amazon.

Did you take any of what I said into reasonable consideration before you went flamboyantly out of your way to rant?

If you don't even have the decency to counter debate rather than let your little internet imagination run away with your logic, then don't bother.

Enjoy your commercials.

BTW, "original Netflix customers" didn't get BR disks. That came much later. Also, Accords range, and have ranged from $22k-$32k.

By inperfectdarkness on 11/23/2011 7:14:38 AM , Rating: 2
Judging by the total number of posts the guy above you has, I'd say you're probably right.

RE: I really don't understand...
By Reclaimer77 on 11/23/2011 10:03:04 AM , Rating: 1
Netflix didn't "raise" their prices, they simply started charging for streaming. Which was, for years, absolutely free and tacked onto the DVD plan. Did you praise Netflix for all the years they offered free streaming? Nope. But $8 a month is "massively increasing" prices hahaha.

I guess I'm a "Netflix employee" too! Seriously though, people like you should be slapped repeatedly when you write drivel like that.

And Hulu!? Hulu charges more than Netflix for the same crap that you can currently watch on daytime TV, AND you have to sit through repeatedly annoying commercials! Hulu is nothing but a puppet for big media, it's practically run by the networks. So grats on giving them your money and ultimately supporting a movement to make web streamed content just as marginalized, controlled, and commercialized as television!


OH GOD THE HORROR!!! ANYTHING BUT THAT!!! Less than cable TV rates for unlimited streaming and Blu-Ray disk service!! NOOOOoooooooooooooooooooooo!

RE: I really don't understand...
By wallijonn on 11/23/2011 12:20:25 PM , Rating: 2
ess than cable TV rates for unlimited streaming and Blu-Ray disk service!! NOOOOoooooooooooooooooooooo!

I don't use Netflix and I hate cable. Our cable company charges $24.95 for basic and if you want HD you first have to buy the extended package, which brings you up to $49.95. Throw in HD and you're at $74.95. So a lot of my neighbours go with DirectTV and the Dish.

Me, I use rabbit ears (soon to be roof mounted antenna) to get OTA HDTV and our local DVD store charges $1.25 per new release and $1 for old release. Me, I'll keep buying one to five movies a month (on sale, of course). I've about 1000 movies in my library at the present time (DVD, HD-DVD, BD).

It seems ridiculous to pay higher Internet ISP charges to be able to stream content. You know the telcos and cable companies don't care - they don't want fast downloads - and when they offer it they charge through the nose. NTY. Paying $16.95 to Netflix while having to pay $100 for a fast internet connection is no bargain, imo. Yeah, I know, Internet access is almost mandatory. But still, I'd rather pay $24.95 than $99.95 a month. $75 a month still buys a lot of movies.

RE: I really don't understand...
By Dr of crap on 11/23/2011 12:57:15 PM , Rating: 2
$100 for fast internet???
I get 7meg for $40. I checked it and it's always right on and never have studering issues.
You better shop around or move!

RE: I really don't understand...
By macross2012 on 11/23/2011 1:39:42 PM , Rating: 2
I pay $55 for 25meg internet with charter plus i also subscribe to blockbuster $19.99 3 dvd/bluray/videogame total access plan. I don't include my internet bill in my entertainment budget because i run a home business and so many family members enjoy and use the internet (4 computers plus 3 or 4 smart phones, wii and soon a ps3). i don't use netflix by choice (canceled aug and switched to blockbuster)i'm happy with free hulu for streaming. So i get a lot for my $20 and i get a lot for my $55. I have no problem with netflix price you spend a lot more going to a movie just once i just decided to go a different route with my entertainment budget. That's what its all about my friends "CHOICE".

RE: I really don't understand...
By Reclaimer77 on 11/23/2011 1:28:13 PM , Rating: 1
What is this business about tacking on the price of Broadband onto Netflix? That's like adding state taxes to the sticker price of a vehicle. And $100? My 10 megabit connection is like $50 and it's more than enough for HD Netflix.

I mean it's 2011, we should just assume that broadband is a given.

RE: I really don't understand...
By Obujuwami on 11/23/2011 2:34:54 PM , Rating: 3
There are still places in the US that don't have broadband and unfortunately still use modems. I do agree that $100/month for broadband is quite excessive and I am curious where that guy lives if he has to pay that.

Overall, Netflix is a good service but they need to increase their streaming library. I, like all geeks, want to be able to watch my IT Croud, Star Trek, Star Wars, Big Bang Theory, and other misc movies/TV shows without having to complain about having them ONLY on DVD.

What would be nice is if they just partnered with Microsoft or Google to offer a cloud streaming service and just give Microsoft a kick back + leverage Microsoft's legal department into negotiating for lower licensing fees for streaming the content. That would make everyone but the MPAA/RIAA happy and I am all for pissing them off!

RE: I really don't understand...
By Reclaimer77 on 11/23/2011 3:30:33 PM , Rating: 2
Microsoft and Google doesn't own the rights to the content though. How is that going to improve service? Microsoft's legal department? Are you high or something lol. Your idea would not only RAISE Netflix's costs, but it wouldn't address the problem. The problem is the content providers wanting billions of dollars for the rights to stream their movies and shows. Starz refused over $300 million for a contract renewal. God only knows how much Netflix has paid in similar negotiations.

Overall, Netflix is a good service but they need to increase their streaming library

This is easier said than done. In a sane world they could do this as easily as you or I go buy a DVD. But in this new world of Intellect Property ruling everything, they have to pay thousands percent more than the content is worth for the "right" to stream it.

Netflix's biggest "mistake" was free streaming in the first place. In this culture of instant gratification and entitlement, it obviously never occurred to some that they were getting a great service for free and that one day that would have to change.

RE: I really don't understand...
By nocturne_81 on 11/23/2011 7:30:26 PM , Rating: 2
Hulu is run by the networks... NBC Universal, I believe..

RE: I really don't understand...
By rburnham on 11/23/2011 9:52:12 AM , Rating: 2
Netflix is still the best value in media distribution you can get. Well, aside from pirating, but even then you have to wait for things to download and do a bit of searching.

I do with that Netflix in WMC did not use Silverlight, or that Silverlight was updated to include GPU acceleration.

Up until recently, I was happy with Streaming + 1 blu-ray at a time. However, my wife asked that we try going pure streaming and use Red Box for our disc rentals. Since then, we only rent one or two discs per month, and the rest of the time the streaming provides plenty of entertainment. I do want to someday go back to disc rentals via Netflix, but for now this is an interesting experiment.

As for Netflix overall, I am still very happy with the service. If that changes, then I will change my setup. Even if streaming starts to lose a lot of its content, I could just do the crazy thing and go disc-only. Wild man, wild.

RE: I really don't understand...
By Zaranthos on 11/23/2011 11:53:57 AM , Rating: 3
I dropped traditional TV and Hulu for Netflix because commercials have gotten so frequent I was ready to stab out my own eyes.

Netflix with no commercials and unlimited streaming for my wife and I is an unbelievable bargain. I love it. Screw you old media and Hulu with your endless drug commercials that are like watching a made for TV mini series. I won't pay to watch advertising.

By TakinYourPoints on 11/24/2011 6:16:45 AM , Rating: 2
I absolutely agree, even with the cutbacks it is still a tremendous value compared to what we had to deal with when there were movie rental stores.

Once Netflix stabilizes the available movies for streaming, and I do believe it is inevitable, then it will be incredible. Random rotation of what is available for streaming is the only thing I find annoying, but I do believe that will go away as Netflix moves away from physical distribution.

I do disagree about Silverlight though, I really like it, much better than Flash IMHO.

RE: I really don't understand...
By Wolfpup on 12/14/2011 10:14:10 AM , Rating: 2
Yeah, I don't understand this either. It went from being a phenomenal service with better pricing than anything else, to a phenomenal service with better pricing than anything else that's a bit more expensive for some people.

It was actually CHEAPER for me, as I don't use streaming, and was ticked last year when I had to pay more for it.

But either's still awesome. Blockbuster's the only comparable service, but I don't know if it works as well or has as good selection.

Subscriber count
By DarthPierce on 11/22/2011 8:19:34 PM , Rating: 3
I wonder how many people have their accounts "on hold" like I do and whether I count as a subscriber or someone who cancelled as far as reporting is concerned.

I've been "on hold" since june and just keep extending it in case I ever want to return and dont want to recreate my queue.

I'm certainly not contributing to their revenue, but I technically havent hit "cancel" either.

RE: Subscriber count
By OAKside24 on 11/22/2011 10:19:45 PM , Rating: 2
Good question. I've also been on hold (98% of the time, for years) thanks to their ingenious queue setup. Another 1-2% of the time I'm on free trials. (Sorry, Netflix.)

Their Arrested Development deal (2013) seems quite impressive. Other than that...

Reap what you sow
By inperfectdarkness on 11/23/2011 7:12:09 AM , Rating: 2
This blame goes chiefly to the MPAA. Netflix's contracts with content providers has forced many many US residents--stationed overseas--to be forced to use IP masking in order to still use the service.

Now where netflix messed up has been in raising prices/cutting services dramatically, rather than a marginal price increase (forced by content providers) and "eating" a small drop in profits. They compounded the issue by eliminating dual streaming (wii + laptop at the same time).

It's fairly clear that the MPAA wants people to torrent their movies. Digital content availability is next to nil, poor quality, and delayed well beyond all other forms of release. I'm a quick study.

RE: Reap what you sow
By joex444 on 11/23/2011 10:33:37 AM , Rating: 1
Yeah, I'm out of country and I get greeted with a warm little "This service is not available in your country" message.

Fuck that, it IS available in my country. I'm still American, the US is still my country. The account was setup in the US, just because when you trace my IP you end up with a .fr or .ch at the end you block me? Screw that, I blocked them.

And honestly, what's getting everyone so hot and bothered about the streaming service? It has TV shows. The movie selection is pretty much utter crap unless you happen to like obscure movies from the 80s. The only new releases (also mostly crap) are available from DVD/BD.

RE: Reap what you sow
By nocturne_81 on 11/23/2011 7:39:30 PM , Rating: 2
Do the research... the whole concurrent streaming thing was blown out of proportion -- refer to the numerous articles explaining it on this very site months back.

And blocking overseas IP's... I can only say duuuuuuh. The content is licensed for the US -- if you are overseas, it doesn't matter if you are a US resident -- the laws and rights of ownership are entirely different.

Still a subscriber, but...
By Kremlar on 11/23/2011 5:50:05 AM , Rating: 2
They absolutely pissed me off. How can they expect otherwise?

- They doubled my monthly price.
- They slapped me in the face by offering NO kind of discount for staying with DVD and streaming.
- They've offered no value add for the price increase. As a matter of fact it seems like available content has dropped.

Their streaming service pretty much stinks. Content is low and donwtime is significant. I've had a week or so of downtime using streaming through Windows Media Center over the past year. What's even worse is if you call them with an issue, they tell you they don't support it and to call Microsoft - even when the issue is clearly on their end!

I've been watching a series on NetFlix (Stargate Universe) and out of 18 or so episodes so far 2 have had horrible audio sync issues and 1 episode is completely incorrect - saye episode 17 but plays 15 instead.

I think the sad reality is that they WANT their streaming service to take off but the fact is most people prefer the mail-in service. So, instead of trying to encourage people to move to streaming by improving their service, they're trying to punish mail-in customers by basically doubling the price.

I mean come on - you can't even manage your mail-in queue from their iPhone/iPad app. What genius made that decision?? It's almost like they hate their mail-in customers..

They figured people would cancel the mail-in service rather than cancel streaming, but I'd guess they've lost more streaming customers than mail-ins and they've disgruntled many people enough to lose their business completely.

PR101 - if you're going to DOUBLE your price you'd better provide a damn good reason and you'd better offer some kind of value add. "We need to get profitable" is fine for stock holders, but customers don't want to hear that. They want to hear - "hey, we're increasing your price but here's a new discount we can offer you if you stay with both our services to help compensate, and also we're adding all this content".

The second someone comes in with a competitive service including a solid Windows Media Center add-in I'll be moving my business from Netflix.

RE: Still a subscriber, but...
By retrospooty on 11/23/2011 7:26:20 AM , Rating: 2
"- They doubled my monthly price."

They doubled mine too. I just still think its worth it and I choose to keep it. I have the 1 out DVD/Blue ray and unlimited streaming. I like the streaming TV shows that I have missed over the years, and if I just do 2 DVD's a month it's equal to renting from a video store. To me its worth keeping.

Honestly, I thought it was undervalued for years. They could have raised prices years ago, or done like most companies and do it a bit more each year and no-one would have cared.

If they rented current movies...
By masamasa on 11/23/2011 10:52:21 AM , Rating: 2
I might consider this, but everything is dated. Not interested in paying a monthly fee to watch reruns of old movies.

RE: If they rented current movies...
By Piiman on 11/23/2011 3:02:15 PM , Rating: 2
So what service has original first run movies and shows on it? Let me guess NONE!

Bad decisions
By spread on 11/22/2011 8:03:00 PM , Rating: 2
This is what happens when you piss off your customers while your competitors are trying to tear you apart.

Should have happened sooner.

In summary...
By Golgatha on 11/23/2011 12:15:07 PM , Rating: 2
The portion of Netflix's business which requires nothing more than redistributing discs under "fair use" doctrine is doing better than the segment of the business which terms are dictated largely by the content producers.

Who'd have thunk it?!

the sky is falling..
By nocturne_81 on 11/23/2011 7:26:47 PM , Rating: 2
Shares drop to the lowest since... 18 months ago?!?! Seriously?

Really, nobody cares... most Netflix users were happy for the change -- they pay less! All this editorialization is just attempting to create a story where there is none.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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