What did the folks at Netflix think would happen when they made the decision to raise their rates by 60%? Were they expecting that their customers would be dancing in the streets? It makes one wonder if the executives who make the decisions at Netflix failed to look at companies such as Gateway, Yahoo!, and AOL, which were once flying high, yet made poor decisions that cost them customers. When any company misreads the competition and makes its decisions on poor information, it is only a matter of time before the company hits a wall.
This is where Netflix appears to be. Its stock prices have tumbled in value by about the same amount it raised its prices: 58% as of yesterday. There is also one other problem I believe that Netflix is going to face. Though I believe that streaming video is the future, the current offering by Netflix consists of old content. Netflix believes that people will continue to pay $8 a month for the convenience of streaming outdated material to their homes.
I am one of those who uses Netflix for streaming content via two Rokus in my home. I am one of the exceptions to the rule since I enjoy the old movies, some of which I have viewed a few dozen times or more. Though I am currently satisfied with the Netflix streaming service, I also receive free streaming as a prime member at Amazon. If and when Amazon provides the same content, or more compared to Netflix, I will be saying goodbye to Netflix. I believe that the day will come when this could happen.
If the Amazon Kindle Fire sells the projected four to five million units during the last quarter of 2011, as is currently projected, Amazon could be in a position to take a healthy lead in the streaming content arena away from Netflix. Amazon is providing a free, 30-day trial to all Kindle Fire buyers, of its prime services. This would also include free streaming to the Kindle Fire or other devices. This could potentially bring new customers to Amazon, some of whom could be current Netflix customers.