Here’s an interesting article that follows up on the Netflix situation discussed in class. It follows up on the huge losses brought forth by recent price increases. Upon checking Netflix’s long term stock performance, it shows that it’s valued at roughly the same point as September of last year. However, this is a colossal drop from its peak in July. Here are Netflix’s stocks in the last five years.
According to the article, the CEO claims the loss of customers should level off “as the price effect washes through.” Sure, but what about the company’s future? Netflix’s previous successes were made possible through technological advancements – what used to take several days to download now takes minutes. But, this means that other channels of distribution, legal or not, are becoming more and more convenient as well. For Netflix to flourish, their prices must be low enough to justify the “inconvenience” of downloading through alternate routes such as BitTorrent and Usenet. Personally I believe Netflix’s prospects are dim unless they rethink their business model. Their advancements heavily rely on copyright issues, which is slow and is unlikely to keep pace with how convenient the free means of distribution are becoming.