17 Comments

Summary:

You might have noticed the free-for-all on Netflix these days. The company’s vanishing stock market capitalization and missed earnings has everyone screaming for CEO Reed Hastings’ head. Sure, some of it the anger is justified, but I think now we all are going overboard.

reed hastings charlie rose

I am pretty sure you might have noticed the free-for-all on Netflix these days. The company’s vanishing stock market capitalization and missed earnings has everyone screaming for CEO Reed Hastings’ head. Sure, some of it the anger is justified, but I think now we all are going overboard with it.

Take this headline: Netflix Said to Cut Jobs After Subscriber Loss. Bloomberg says Netflix is going to cut 15 jobs after its earnings debacle. This is what I call “piling on”: Netflix might have many flaws, but to make a big deal about them pruning an estimated 15 out of 2,180 total employees, or roughly 0.6 percent, is making mountain out of a molehill. From the looks of it, Netflix has 40+ jobs listed on its own website alone.

So net-net, it seems they are still adding new people. But hating on Netflix makes a great headline, if not a good story!

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  1. I’d have to agree. This Netflix backlash is going overboard. I really trust that they are making changes to try and help their customers. Clearly though, this logic hasn’t extended beyond the boardroom. Still though, they are one of the only services offering a subscription based streaming service, which is, I think, what most consumers want. Let’s hope these are growing pains and not the beginning on the end.

    1. Very succinct Jeff.

    2. Yeah…who is to say that they weren’t doing performance reviews and found 0.6 of their employees weren’t doing the job required of them? It’s so easy to want to be negative in an environment that seemingly can’t handle a ho-hum news story. Sometimes no news makes for good news. Not all performance review firings, if that is the case, are meant to be a predictor of the apocalypse. hehe.

  2. Arundhati Sampath Wednesday, October 26, 2011

    Spot on. Earlier Netflix could do no wrong and now they can do no right. There is a tendency in the media to run down companies when they’re going through a rough spot, without actually analyzing what’s going on.

    I actually think their price increase was, to an extent justified. Content acquisition costs are going up drastically. They still offer a very good deal-compare their pricing with Vudu or Amazon – but their streaming selection is not yet quite there.

    I did do an analysis of their cost structure, and in order to offer a $ 8 price for streaming-only, they’d need an additional 6M subscribers. That’s pretty challenging, given how they are losing subscribers at this point. http://techstuff123.wordpress.com/2011/10/04/netflix%E2%80%99s-calculated-bet-on-streaming-1/

  3. Nothing wrong with Netflix. Profitable now, will continue to be so. One hiccup, big deal…! Sounds to me like someone’s shorting them big time, and pulling in a few favours to make some quick and filthy profits.

    Paging Patrick Byrne…

    1. Actually, they say, “will not be profitable for the first few quarters of 2012″. So much for that “plus”.

  4. Hastings has set himself up for some of this. Check out the Netflix Culture presentation’s (http://www.slideshare.net/reed2001/culture-1798664) first two desired employee attributes, and what it says about people who deliver adequate performance.

    Second, Netflix was pretty sleazy about the way they settled the class action lawsuit accusing them of ‘throttling’ high-volume subscribers. They offered users temporary, free service upgrades that started charging extra automatically if users didn’t remember to discontinue them.

    Reed seems like a very sharp guy, and maybe even a very good guy. But you can’t forge swords on the expectation that they will never be used against you.

  5. Kelley Mitchell Wednesday, October 26, 2011

    Agreed! Netflix was once the cool-kid-on-the-block, and they offered a good service and alternative that helped drive the cordcutters movement. But several yucky corporate-ish actions have made it easy to pick on them. They still offer a good service though and will probably bounce back. They just may not be as popular as they once were.

  6. Chanapun Panich Thursday, October 27, 2011

    Agreed! Netflix was once the cool-kid-on-the-block, and they offered a good service and alternative that helped drive the cordcutters movement. But several yucky corporate-ish actions have made it easy to pick on them. They still offer a good service though and will probably bounce back. They just may not be as popular as they once were.

  7. Chanapun Panich Thursday, October 27, 2011

    I actually think their price increase was, to an extent justified. Content acquisition costs are going up drastically. They still offer a very good deal-compare their pricing with Vudu or Amazon – but their streaming selection is not yet quite there. Nothing wrong with Netflix. Profitable now, will continue to be so. One hiccup, big deal…! Sounds to me like someone’s shorting them big time, and pulling in a few favours to make some quick and filthy profits.

  8. Netflix has no real competition that I can see. It’s true they seem to be trying to open the door wider to a competitor, but I haven’t seen anyone walk through that door yet. So, I’ve unsubscribed twice and resubscribed twice this year.

    1. Interesting. I agree to some extent. You can replicate what Netflix has to offer except you need to jump through the hoops. I am happy paying $8 to them for occasional entertainment versus $80 a month for occasional entertainment.

  9. Doubled edged sword. The “pile on” in the good times and the bad. Adoring one day, hating the next, that’s Wall St. You can’t only want their attention when things are going well.

  10. This is not going overboard, this is voting with our dollars. Frankly, it’s about damn time this type of hand-slapping happens, and more of it should happen. Let’s start with Netflix, and then make sure a few banks take notice. Next, Apple needs to learn they are not a holy institution.

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