The year is just about over. And now, it’s time to take a step back to look at some of the winners and losers this year.
But rather than waste time thinking about some of the winners, why not just get right to the biggest loser of 2011: Netflix.
Where to begin? Netflix started the year at the top of the streaming market. Just about everyone I knew was using the streaming service, and judging by the growth of the company’s subscriber figures, just about everyone you knew was using it, as well.
But then something happened. First, the company started running into trouble with content providers who wanted more cash. Companies like HBO started saying that if Netflix wanted its content, the company would need to pay much more than it typically does. Netflix, meanwhile, tried to stay strong and rebuff those claims.
However, behind the scenes, the company was seemingly taking a much different tack. It started to pay more for content and its expenditures attributable to its meteoric rise were skyocketing with it. The time had come for Netflix to do something.
So, the streaming provider announced that it was going to break apart its streaming and DVD-by-mail plans and charge $15.98 a month. Previously, those customers were paying $9.99 per month. Just hours later, customers started complaining. And by the end of the quarter, it was clear that the wheels were falling off as Netflix announced that trouble was afoot with subscribers.
"But Netflix had a plan"But Netflix had a plan. In order to make things a bit more palatable for consumers, the company said that it was going to spin off its DVD-by-mail company into a new firm, called Qwikster. But once again, customers complained. And before long, Netflix realized that too was a bad idea.
Now, Netflix is trying to expand internationally, even though most analysts believe that will cost the company upwards of $300 million, and subscribers, finding better DVD rental options at Redbox and potentially better streaming services with Amazon, are leaving in droves.
Whereas in January, when Netflix’s stock was trading at over $175 a share, the company was a case study in how to run a firm; now, it has become a study in what not to do (its stock has shaved off 60 percent of its value to hover at around $70).
So, what can fix Netflix? Your guess is as good as Reed Hastings’. He has been saying for months now that he has a solution, and that things are going fine, but that doesn’t appear to be the case. In fact, he seems lost.
So, with all that in mind, Netflix has earned my award for the biggest loser of 2011. And although RIM was a close second, Netflix’s drop was unexpected. And it might have been one of the most epic implosions we’ve seen in the technology space in a long, long time.
But that’s my take. What company do you believe was this year’s biggest loser?
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