Not to mention Netflix has been highly overvalued for a long time. And, I heard on the news today that 22% of users said they are canceling their subscription.
Run away, far away from this company. It is going to collapse.
Thursday, September 1, 2011
Quick Thought 9-1
Today is the day, the beginning of the end of the Netflix business model. They've ended Starz - althought a small percentage it was a huge attracting factor for many members. They've gone through an outrageous price hike. They've failed to control costs over the past few quarters (their financials show close to 20% cost growth in recurring costs alone).
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Netflix had already lost the Sony movies. Netflix can negotiate directly with Disney for some of their movies, as they have already done with Disney channel shows. The money earmarked for the Starz deal renewal will be able to buy more movies and TV shows, and possibly some original programming. I don't think there will be many long term cancellations as Redbox is limited in selections and is in the middle of a quiet price increase in some markets, and will probably roll it out everywhere soon. What could cause Netflix to come apart would be if the cable companies started offering full library access to their TV shows and movies, then they'd only have the cord cutters left subscribing.
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