Netflix is an American provider of on-demand Internet launching media and flat rate DVDs throughout the United States, Canada, and Latin America. Netflix officially hit the market in 1997 and is headquartered in Los Gatos, California. The beginning of the company's subscription service came in 1999 and by 2009 it was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. A humongous feat indeed but two years later they now face some trouble.
Furthermore, shares within Netflix have plunged a total of fifty-two percent due to its significant price hike. Netflix was at one time Wall Street's favorite momentum tech stock but now if they do not watch out and adapt they are being considered the next AOL. What do they mean when they say Netflix will be the next AOL? People are simply referring to the fact that Netflix is committing the same mistakes AOL did by suddenly jacking prices causing customer satisfaction to completely deteriorate. Along with price increase, identity is starting to play a part in the issues for Netflix. AOL went "all-in" in trying to repaint their image from a basic and boring Internet company to a cool and hip provider. The only problem for Netflix is that they do not know what they want their new image to be. It is hard for a company to make a comeback and reinvent themselves when just the other week they announced they lost 800,000 subscribers from last quarter. Netflix needs to find a way to counteract these price hikes while at the same time providing the movies and show titles the customers want in order for their company to resurrect. I believe such a decline in profit has occurred due to a poor customer relationship management system. If Netflix actually used information about customers to gain insights into their needs and behaviors then they could provide the proper shows and movies with a respected fee for the customers.
Netflix still has a lot going for them even though it is in a bit of a struggle. There are pros and cons to this drastic loss of customers. The cons are certainly numerous considering the amount of money they are losing from so many subscribers leaving, the dissatisfaction of customers, and criticisms. However, this should act as a wake-up call for Netflix and that certainly is a pro. Perhaps it is better that this happened sooner rather than later thus providing Netflix with time to adapt. Times are changing and Netflix needs to realize that. They are a company with high differentiation considering how few companies there are that rival Netflix. For example, look how quickly Netflix ran Blockbuster out of business. With proper focus and dedication I believe Netflix can rebound from this humongous share drop and revive themselves as the powerhouse that they were.