One month after Netflix said 1 million subscribers would cancel over an unpopular price hike, and its woes continue. New reports reveal the instant streaming giant's stock fell a precipitous 35 percent this week. An axed Qwikster launch didn't help. Some believe this could be the beginning of the end for the 14-year-old company. CEO Reed Hastings believes otherwise.
"Qwikster became the symbol of Netflix not listening," said Hastings during an earnings call Q&A session. "And we quickly changed course on that, and we're going to stick with DVD as part of the Netflix brand."
Ironically, the ill-fated spin-off meant to take over Netflix's DVD by-mail business was first announced during Hastings' apology for not listening. "I messed up. I owe you an explanation," said the CEO. At this rate he may want to consider adding that to his business card.
The Qwikster blunder cast another shadow over the company, but Netflix's trouble started months ago. In June, subscribers cried foul over user interface changes. Subsequent tweaks to the member review system were similarly maligned. By the time the company pulled DVD-related Open API features, customers derisively joked that movies were next to go.
Hastings promised investors that Netflix would be "very aggressive" with pushing instant streaming while maintaining the DVD by-mail service. An upcoming UK/Ireland expansion underscores that promise. The company launched streaming services in 43 Latin American and Caribbean countries last month.
"The focus for us is in getting back our reputation and brand strength," he said. "But that's not through grand gestures, signing some crazy content deal or doing something else. It's the same set of steps that we've been using year after year for the past 10 years in terms of building our brand, which has a steady focus on execution, improving our service quarter-after-quarter."
Whether Hastings can deliver is up for debate. Netflix has struggled in the past and bounced back. And with Dish only offering half-hearted competition with its streaming/by-mail rental Blockbuster Movie Pass, Netflix still enjoys considerable clout. Now it just needs to hold on to it. That's the hard part.
