Netflix Business Risks
Netflix Business Risk
Maria C. Martinez
FIN-317-4929
January 21, 2013
Professor Russ
For a low monthly price Netflix allows their customers not only to streamline videos on their mobile devices and computers but also choose from a wide variety of DVD’s. This allows for the consumer to watch as much which is beneficial for someone that has a busy schedule and would like to go back and catch up where they left off. As with every business there are risks associated with the everyday operations and I will go into detail as to what the risks are that Netflix has encountered.
Business Risk
I was a Netflix customer back in 2010 and I was pleased with the low monthly rate associated with a Netflix membership. This option was wonderful with a houseful of children that had different likes in what they watched everyone was pleased. As I carefully monitored my monthly bank statements the low price was at a constant rate up until the middle of July 2011. My monthly fee of $8.50 went up to $16.00 which nearly doubled.
More than doubled. I made the honest mistake of not taking into consideration the economic downturn and what risks were associated with such a good deal. As the saying goes, if it is too good to be true it must be. With a household of 7 I had to outweigh the pros and cons of paying an additional $8.00 a month. While comparing the previous membership price along with the new membership price there was no return on the company’s part. I was still able to view movies via streaming online as well as DVD’s in the mail. So why did the the price jump? Pogue (2011) states, “This, as you can imagine, is not a popular decision. This isn’t a cost-of-living increase. This isn’t inflation. It’s a 60 percent overnight price increase — that gives you nothing new in return.” Not only was I the only irate customer. Netflix felt this chain of reaction across the globe, the consequence of a 60% price increased caused Netflix to lose 800,000 customers in their third
Maria C. Martinez
FIN-317-4929
January 21, 2013
Professor Russ
For a low monthly price Netflix allows their customers not only to streamline videos on their mobile devices and computers but also choose from a wide variety of DVD’s. This allows for the consumer to watch as much which is beneficial for someone that has a busy schedule and would like to go back and catch up where they left off. As with every business there are risks associated with the everyday operations and I will go into detail as to what the risks are that Netflix has encountered.
Business Risk
I was a Netflix customer back in 2010 and I was pleased with the low monthly rate associated with a Netflix membership. This option was wonderful with a houseful of children that had different likes in what they watched everyone was pleased. As I carefully monitored my monthly bank statements the low price was at a constant rate up until the middle of July 2011. My monthly fee of $8.50 went up to $16.00 which nearly doubled.
More than doubled. I made the honest mistake of not taking into consideration the economic downturn and what risks were associated with such a good deal. As the saying goes, if it is too good to be true it must be. With a household of 7 I had to outweigh the pros and cons of paying an additional $8.00 a month. While comparing the previous membership price along with the new membership price there was no return on the company’s part. I was still able to view movies via streaming online as well as DVD’s in the mail. So why did the the price jump? Pogue (2011) states, “This, as you can imagine, is not a popular decision. This isn’t a cost-of-living increase. This isn’t inflation. It’s a 60 percent overnight price increase — that gives you nothing new in return.” Not only was I the only irate customer. Netflix felt this chain of reaction across the globe, the consequence of a 60% price increased caused Netflix to lose 800,000 customers in their third
References: Blodget, H. (2011). With all respect to Reed Hastings, the Netflix-Qwikster split bad for customers. Retrieved from http://finance.yahoo.com/blogs/daily-ticker/respect-reed-hastings-netflix-qwikster-split-bad-customers-160148340.html Hurley, D. (2012). Could Netflix bounce in 2013? Retrieved from http://www.wealthlift.com/blog/netflix-bounce-2013/ Pogue, D. (2011). Why Netflix raised its prices. Retrieved from http://pogue.blogs.nytimes.com/2011/07/14/why-netflix-raised-its-prices/