Friday, October 14, 2011

Netflix Righting A Sinking Ship

Netflix has been having a ton of bad press, with poor management decisions leading to a loss of subscribers, and a huge drop in its stock price. So to return to normalcy, Netflix backtracked from its Qwickster spin off (although they kept their 60% price increase). So what is their latest plan?

Well this latest move says it all, content is king. To right a sinking digital ship, Netflix is adding more content. The latest deal with the CW gives streaming rights to all their shows. "Netflix can begin showing episodes of all CW scripted shows (not unscripted ones) beginning the September after the season in which that episode aired. So, any episodes airing now will become available in Sept. 2012." Great opportunity to recapture the younger audience who have enjoyed shows like "Gossip Girl". The monies spent could reach a billion. A lucrative deal, but the timing of its start is questionable.

But will Netflix be around to start airing shows and pay out. The content doesn't flow to Netflix till next September, almost a year away. Customers, annoyed at Netflix, may not stay around much longer as their prices have gone way up. And once you lose a customer, it is harder to win them back. Netflix needs more good news to offer to enable a turnaround and keep customers on board. Content acquisition can do it but the timing to offer it is now, not next year; otherwise the Netflix ship may only continue to sink.

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