Netflix Might Be in Big Trouble (BLOG)

COMMENTARY | The ongoing saga that is the Netflix price hike has not turned into a film with a happy ending, at least not yet. In fact, this story seems to have all the makings of a tragedy. Netflix changed their outlook on how many subscribers they will lose to nearly one million, which caused their stock to drop almost 20 percent. Apparently, the folks on Wall Street are subscribers to the popular service as well. Unless Netflix makes some changes, those subscriber totals are not going to get any bigger or better.

Netflix seems to be caught in bit of a difficult situation. The streaming library that the company offers is spotty at best, sure there is some quality but it is not top rate. Starz recently pulled out of talks to renew their agreement to allow Netflix to offer their programs, which could lead to more customer defections.

The other side, similar to the Starz problem, is that Hollywood Studios want more money for their shows as well. The only way Netflix can raise the funds to acquire better shows is to increase prices, and the two tiered pricing plan is not exactly being well received.

Sure, Netflix is holding subscribers for now, but the silence of the company is what is disturbing. If they were to announce some sort of improvement to the streaming catalog, maybe some fears would be extinguished. However, the company has remained silent, which could mean there are no plans to improve anything. How many customers are sticking around until the next big thing comes along?

Redbox kiosks are going to be getting a bit more of a workout, and other streaming options are bound to be explored by customers. If Google does purchase Hulu, that puts a competitor with a lot of money to spend on content into the game. Netflix had their time in the sun, and perhaps it is time for a new company to take streaming video to the next level.

The cat is pretty much out of the bag for Netflix. Unless improvements are made, they can likely anticipate shedding paying customers for the next few months. Even HBO and HBOGO are experiencing success. The point is that consumers want content at a favorable price, and they are willing to go elsewhere to get it. Up until now choices were limited, but all of that can change very quickly. So can the stock price of a company.