Why Netflix is in trouble

Posted by David Konow

I find the history of home entertainment absolutely fascinating. Ever since my family got its first VCR, the fact that you could watch a movie at home was simply amazing to me.



Of course, considering how long we've lived with home entertainment it's very easy to take it for granted these days, like before we lived without the Internet.

Why Netflix is in troubleI can still recall when VHS finally officially died in 2006, and I still haven't made the jump to Blu-ray.

Apparently, a lot of other people haven't either, because we're still waiting for a format change that will revolutionize the industry, and perhaps this is one of the reasons NetFlix is in free fall right now.
 
I also remember doing a story with the help of NetFlix early this year, which makes the company's downfall a trip to comprehend. However, as with many things in this dismal economy, an overnight collapse can be very shocking, but not surprising.

Reporting on NetFlix losing 800,000 subscribers, FoxNews wondered, "Is this the end of the road for the DVD rental business?," and a source told the site, "The future is clearly streaming now - it's only a matter of time before all disk-based media becomes obsolete. It'll die in cities first and die more slowly the farther you get away from high speed network connectivity."
 
The troubles with NetFlix started this summer when they upped their prices, and set up separate DVD and streaming business with Qwikster, which obviously didn't fly. 

As a consultant told the L.A. Times, "If they stop making mistakes, this is fixable. The saving grace is that unlike a lot of other companies that get into that situation, there isn't a competitor eating Netflix's lunch. "

Meanwhile, Netflix CEO Reed Hastings told the Times, "The focus for us is in building back our reputation and brand strength, but that's not through grand gestures. It's the same type of steps we have been using for the past 10 years."
 
Clearly, the big key for this generation is access. People want to watch what they want when they want, even if the screen is small. Technology will always be progressive, and companies will have to move with it to survive. But at the same time, it feels like this is a transitional period where the next format hasn't come along, and no one knows what the next saving grace or magic bullet will be.