The Netflix Gamble
Netflix stock was trading at around $295 per share in July 2011. Now, Netflix stock is at around $130 per share. What happened? Three big things happened. Netflix split the pricing for streaming and DVD mail services. The streaming service price stayed the same, but it was no longer free with the DVD mail service. Also, the DVD mail service went up in price. Netflix failed to renew its Starz contract for streaming, which included Disney and CBS content. Netflix officially splits its streaming and DVD mail services. The streaming content will remain Netflix and the DVD mail services will be called Qwikster. Separate accounts are required. This lead to Netflix losing customers. 600,000 lost customers by the time this quarter ends in September. Netflix thought they would be adding 400,000 customers this quarter. Was it smart for Netflix to focus on streaming? Yes. They have to be aggressive about their streaming service, which they have been. The DVD mail service, while pr