Netflix maintains its lead even after its marketing blunders last year (7 Viewers)

TheForce

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Over the past several weeks the company continued to slowly recover from the disastrous hit they took last year with rate increase and a failed plan to split the rental and streaming branches of the company.

Netflix Shares Rise On NPD Study >NFLX
12:07p ET January 19, 2012 (Dow Jones)
Netflix Shares Rise On NPD Study >NFLX

Shares of online video rental provider Netflix Inc. (NFLX) were up 4.8% Thursday after the NPD Group said the company remains dominant in paid video-on-demand service, despite its missteps in 2011.
The research firm said "nearly one in three paid movie rentals (31%) now come from paid video-on-demand options. Netflix is the dominant provider of paid digital movie rentals, posting a 55% share in the fourth quarter of 2011, though Netflix's share is down somewhat from the company's peak of 59% in Q2 and Q3 2011."
Overall, NPD said U.S. consumer rentals of DVD and Blu-ray discs declined by 11% last year, as more people adopt the ability to stream TV shows and movies.
The demise of many brick-and-mortar DVD rental stores has benefited Coinstar Inc.'s (CSTR) Redbox, which saw its share of disc rentals rise to 37% in 2011 from 25% in 2010, according to NPD data.
Shares recently traded up 4.8% to $103.30.
 

Teehar

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Over the past several weeks the company continued to slowly recover from the disastrous hit they took last year with rate increase and a failed plan to split the rental and streaming branches of the company.

Pretty amazing...They also made the wall street journal 10 most hated companies coming in at 10th.It was a very bad business move either way.
 

TheForce

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I should've bought at $66-70......

Oh well, still 50% down on my current holdings.


Yeah, I did pretty good the first half of the year but decided to dump 2/3 of my holdings before the end of the year to offset the cap gains. My average price is still at $230 so it will be awhile before I break even.


They also made the wall street journal 10 most hated companies coming in at 10th
I still feel the company got hammered unfairly in the press. The business is still very solid but they are no longer a favorite target for high earnings growth even though they may still produce those results.
 

TheForce

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I still value their service & will be loyal for now.

For me it's not about loyalty. Its about what is the best bang for the buck. None of the others come close to the bargain deal that Netflix offers, either mail DVD or streaming. The only problem I have with Netflix ( and it is a minor issue) is they are advertising 3D Blu Ray titles yet what they send are 2D Blu-Ray. I have an official complaint into them now for false advertising, accusing them of baiting tactics to claim equal service to Blockbuster which does have and sends out 3D BluRay titles.

Notice-While not a fanboy of either Blockbuster or Netflix, I have both accounts and own stock in Netflix. I am a fanboy of 3D.
 

TheForce

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They got a lawsuit against them now, and the filers are trying for Class-action status.:

Royal Oak's retirement system files class-action lawsuit against Netflix | MLive.com

This won't go anywhere. It is a fishing expedition using the courts as a fishing pole.
According to the article the grounds stated are inaccurate. All the lawyer needs to do is read his damn end of year 2010 stock holder report from Netflix where Hastings announced 6 months in advance to stockholders that a rate hike was in the plans and that the mail and streaming businesses would be separated. That the DVD end of the business had increasing costs and fewer gross sales with the streaming business expanding and that in 2011 the streaming end of Netflix would exceed the DVD end in margins. The moves made by Netflix were not news to me, only to the media. It was a plan announced well in advance of the execution. From an accounting perspective, the plan still makes sense but now we have the streaming end profits proping up the DVD mail business. Furthermore the article is grossly inaccurate with the claim that Netflix raised rates of streaming and mail DVD by 60%. They only raised rates for the Mail DVD business and the streaming was not increased.

I feel sorry for the retired investors who took a gamble and lost. Heck, I lost too last year but I can't blame anyone for my decision to buy Netflix and hold it losing everything I gained in the first half of the year. I take full responsibility for MY decisions. These retired investors made 3 mistakes. 1. They had all their eggs in one basket. 2. They didn't read their stock holder reports. 3. They are quite mistaken if they think they can risk their money and make the gains if they sold when Netflix hit highs of $300 but if they held, when the stock tanked to $68, then decided to sell and lost, they would be able to protect their losses by suing the company for a bad marketing decision. I think they stand a better chance of suing the press for reporting a negative story.


Currently there is one type of investor law suit that will hold up in court and that is where a broker manages your money and does an unprofessional job or makes claims that he can't back up. You can sue your broker for professional mal practice. Otherwise, lets see if there were any SEC violations in the Netflix stock tumble. Lets see if any insiders shorted the stock and walked away gazillionaires in the wake of these management decisions. I seriously doubt this.
 

TheForce

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Netflix reported earnings of $.73 today that beat estimates of $.55. This resulted in an after hours pop of $13 a share or 12% in the after hours trading. The better than expected earnings were as a result of better than expected subscriber growth in streaming content that overshadowed continued losses in the DVD mail business. This also improved net profits as streaming subscriber continues to have better margins than mail order. Netflix also announced they will not continue expansion of overseas services until present overseas business begins to show a profit. The number foreign of streaming subscribers continues to grow at faster than estimates with Latin America in the lead. Netflix will concentrate present cash on new content licensing so they can maintain their lead in the streaming industry.

I still maintain a small position in Netflix but sold off at a loss for 2011 for tax purposes. I may have to change my mind on jumping back in if the market changes it's negative attitude about Netflix. CNBC and other news agencies continue to badmouth the company for the decisions made last summer. IMO, these news people probably lost major amounts of money when Netflix miscalculated the public reaction to their moves and are still very bitter over it.
 

Teehar

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If they won't muck around with the $8 per month pricing for streaming they should continue to do well.Hopefully they learned a valuable lesson from the price increases on dvd by mail.
 

TheForce

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If they won't muck around with the $8 per month pricing for streaming they should continue to do well.Hopefully they learned a valuable lesson from the price increases on dvd by mail.

Yes, that people have no math smarts and they will emotionally cut off their nose to spite their face. But just earlier this week a stock analyst who is bearish on Netflix, banking on a future stock price of $45 a share offered this advice to Netflix- Considering you are about to incur huge increases in content licensing costs and you are about to lose Starz in a couple weeks, you should raise your rates for streaming subscribers like you did for DVD mail subscribers and put that money toward paying starz what they want. Personally, I'm afraid that Netflix will have a big loss of streaming subscribers when they realize that starz content is gone and what starz content included. BUT, if they raised the streaming subscription to $16 a month as suggested, the company would indeed go under after the press would castrate them for the move. People would rather switch to a new subscriber who would charge them $25 per month, than accept a rate INCREASE to $16 per month for Netflix streaming.

Another analyst offered that if Netflix can get a deal on starz in the 11th hour and maintain rates as they now are, the stock will go to $220 a share ( double) by the end of the year. If they can't and lose more subscribers, they could suffer the a loss of the recent gains made by improving streaming ( higher margins) subscriber. The key here is really not the rates but the quality and quantity of the content but most subscribers won't admit that. They judge by the money.
 

Bruce

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I don't understand why everyone thinks losing Starz is that big of a deal, thanks to their deal with Epix they will have a lot of the biggests hits on Netflix this year-

Mission Impossible - Ghost Protocol
Thor
Captain America
Rango
Paranormal Activity 3
Hugo
Adventures of Tintin
Super 8
Immortals

And the second biggest movie of 2011
Transformers:
Dark of the Moon

And having the Epix movies is a great thing for Netflix since at least two of the biggest cable/Sat. Providers-Comcast and DirecTV don't have Epix while everyone carries Starz.

And this, Universal and Fox's contracts for new movies on HBO is up this year and Starz's contracts with Disney and Sony is also up this year, Netflix just grab up Dreamworks Animation and they could be looking at other studios.
 
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TheForce

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It all depends on how the press handles it. The press can have a huge influence on a company's image and stock price. If it is a non-story, the net result will be a slow loss of subscribers as they discover a loss of favored content. Nobody says, I want to subscribe to Netflix because they refused to pay starz requested price. But the opposite is quite true. If you like a program that is on Netflix and they lose it, it could mean losing you as a subscriber.

So what is a story and a non-story? Currently, the the press continues to remind everyone of the rate increase and splitting the company which never happened as well as the pending loss of starz these stories live on in infamy. The only positive Netflix story is the stock is way up but the press then goes on to remind everyone that this boost in stock price is artificial and you are advised to avoid it. Even Jim Cramer said the Company is broken and he can't figure out any good reason to invest in the company. The facts are in the numbers which at the end of the year shows only 150,000 net loss in DVD mail subscribers over a 6 month period. That trend is now reversed over the past 2 months as people are coming to their senses on what Netflix is really worth to them. This is not even being reported. The press hates Netflix.
 

yaz96

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Loosing the starz deal with cost them a bunch of disney family films. It may affect familys.

Hardly.....

How do you know they don't have a deal with Disney for those films?

Netflix pays Disney to have them, just like Starz does.

And how many films is this you are talking about? Or do you even know?
 

mike123abc

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Netflix will have to make deals to provide the content demanded by their customers. I am sure that they know exactly which movies people like to stream and will do whatever it takes to get those movies to avoid losing customers. If they do not reach a deal with Starz they may go to the studios. It would not be much of a business model if they lost a bunch of the popular movies because of contract disputes. They will find a way around Starz.
 

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