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Netflix Part 3: "Little Red Envelope" Company Continues to Bleed Red

Netflix Part 3: "Little Red Envelope" Company Continues to Bleed Red
Netflix's 2011 nightmare continues after the release of its Q3 results. Since July when it announced it was splitting its unlimited streaming and unlimited DVD-by-mail plan into two separate services, Netflix stock has been in a free fall. Q3 revenues and profits were up, thanks to a 60% price increase announced over the summer. Subscriptions, however, were down. Netflix lost 800,000 customers in Q3. They predict these losses will continue in Q4. Additionally, Netflix now projects it will lose money in 2012 because declining US revenues will not be large enough to offset costs associated with rolling out the service to the U.K. and Ireland. This gloomy future caused the stock to plummet $40 a share today. All told, Netflix stock is down 74% in just three months. This ill-fated strategy has...

Posted on Tuesday, October 25, 2011 by Chip Levinson
Viewed: 533 times. Comments: (0)

Netflix Part 2: Strategy Reversal after Customer Outcry

Netflix Part 2: Strategy Reversal after Customer Outcry
The story of Netflix continues to evolve on a daily basis. Today Netflix officially killed its extremely unpopular plan to spin off its DVD-by-mail service into a new service named Qwikster. In three short weeks the company has done a complete 180 degree reversal in strategy. Only time will tell how much of the lost sales and shareholder value Netflix will be able to recover. As previously reported, due to a slew of cancellations Netflix had to cut its third quarter guidance by 1 million customers.All of this could probably have been avoided if only Netflix did some market research before drastically changing a wildly successful business model. Brings to mind an age old adage - "if it ain't broke, don't fix it."

Posted on Tuesday, October 11, 2011 by Chip Levinson
Viewed: 405 times. Comments: (0)

Netflix Demonstrates the Value of Market Research

Netflix Demonstrates the Value of Market Research
Netflix stock has been soaring. From January 1, 2009 through July 14, 2011 Netflix stock increased nearly 900%. This past July Netflix announced a major change to its business. It was splitting its unlimited streaming and unlimited DVD-by-mail plan into two plans which will cost 60% more than the current plan. Customers were outraged by this 60% price increase. A survey indicated Netflix will lose 10% - 30% of its customer base as a result of the change. Since the announcement, Netflix stock has plummeted 57% in just two months wiping out nearly $9 billion in market capitalization. A well-designed conjoint study costing approximately $100,000 would have predicted the market's reaction to the new strategy. When debating the value of market research, consider gow a $100,000 investment could ...

Posted on Monday, September 26, 2011 by Chip Levinson
Viewed: 523 times. Comments: (0)

About the Author

Chip Levinson, president of TechWise Research, Chip Levinson, president of TechWise Researchis a senior executive with over 22 years of experience in market research, business development, and product marketing. Throughout his accomplished career the combination of Chip's leadership skills with his commitment to excellence and customer service has helped employers and clients alike become more successful in their marketing endeavors. He has three main areas of expertise:

  • Market Research – Chip has personally designed, managed and analyzed hundreds of custom market research studies regarding computer hardware, software, and other high-tech products.
     
  • Product Marketing – Chip has managed the development and marketing of numerous successful software products, including market simulation tools, web survey software, XML editors, and printer driver software.
     
  • Business Development - Chip has a track record of implementing successful programs targeted at consumers, businesses, resellers, and OEMs.

Chip holds a Bachelor of Science degree in Engineering from the University of Michigan and an MBA in Marketing and Finance from UCLA.To learn more about Chip, visit his Linked In Profile.

 


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