Netflix Looks to Bounce Back from PR Nightmare
Netflix is alive again despite a PR debacle in 2012 that nearly sunk the company as a whole when it increased its monthly subscription from a flat $9.99 rate to two separate $7.99 online streaming and DVD rental packages just over a year ago. CEO Reed Hastings calmed the storm by cancelling the upcharge in an attempt to regain its lost subscribers. In an early 2012 interview, Hastings noted that “a full brand recovery, as we said before, will take multiple years.” Although the company’s stock value is up 11% in 2013, Netflix will have many obstacles to overcome in an attempt to stabilize its position as the world’s leading DVD rental and online streaming giant it once was. Stiff competition is one of the many negative points when it comes to restoring the company’s value. Hulu LLC is a major online video website known for its fast and cheap online streaming. Another competitor, Amazon, is the massive online-retail company that entered the video industry in 2011 as part of its major economic recovery which plans to offer a cheaper video rental service than Netflix. Other companies such as HBO GO and youtube add to an increasing list of competition for a company with not much opportunity for lateral movement in the video streaming industry. Along with stiff competition, the cost to add additional content is becoming a major issue for Netflix, in turn, creating a decreasingly narrow profit margin. Companies such as Universal Studios, Disney, and Sony have shunned Netflix all together by not renewing their contracts with Netflix. There are many upsides for a company like Netflix that has a massive portion of the video streaming and DVD rental market. Netflix has approximately 23 million subscribers and hopes to reach 25 million by the end of 2013. A company with such massive brand recognition and a solid base with that many customers creates a very predictable revenue stream. Although the cost to additional media...
Please join StudyMode to read the full document