Less than three months ago, Netflix had the tiger by the tail. But now, the tiger has turned and the streaming video and Qwikster DVD service is getting eaten one big bite at a time as it tries to move fast and get away while there's still time to recover.
Netflix's growth halted in July after the company stunned customers with a 60 percent price hike on streaming video and DVD-by-mail services. The high-flying company was adding thousands of new customers each week, but the way the hike was handled, which CEO Reed Hastings has now apologized for, caused customer defections and halted new additions.
Outrage was behind a move by Netflix to rename its DVD business Qwikster. And as Netflix has been rocked by customer dissatisfaction after its price hike and other complaints over slim content in its streaming video division, competitors have been ratcheting up the bar.
Wal-Mart added its Vudu a la carte DVD streaming service to its main online Web site, and other competitors including Amazon Prime, Apple TV, and Hulu Plus have been growing with different offerings. Now comes the latest Blockbuster, the brick-and-mortar video rental service that Netflix effectively forced into bankruptcy with its DVD-by-mail and streaming video low price package (before the 60 percent price hike) is now hoping to get the last laugh on Netflix.
Dish Network bought Netflix out of bankruptcy court five years ago, and now the DVD company with the suspect reputation is reportedly preparing to make a bold move unveiling an Internet video service today that could give more Netflix customers a reason to abandon the company.
Dish and Blockbuster are hoping that Blockbuster's new streaming video service -- expected to be announced today in a media event billed as a stream come true will reposition Blockbuster as a strong competitor to Netflix, taking advantage of high customer dissatisfaction and what some have labeled company turmoil.
But even as Netflix stock has dropped almost 60 percent since the price hike and Hastings felt compelled to apologize amid customer dissatisfaction, many think the company's erratic behavior as of late isn't a sign that the company is giong to wither ami competition from Blockbuster and others.
Netflix apparently understands that the future is in digital delivery, and plans for ambitious global growth hinge upon that very thing.
You've got to give (Hastings) credit, Paul Saffo, a managing director at Discern Analytics, told BusinessWeek. He knows Netflix absolutely has to flee into the future with digital delivery. The problem is, not all customers have come to that yet.
But while all customers haven't gotten there yet, Blockbuster is apparently ready to do so.