David Paul Morris/Bloomberg NewsNetflix headquarters in Los Gatos, Calif.Sometimes when big juggernauts stumble, we can’t help but murmur a bit of satisfaction. Ah, yes, all high and mighty weren’t you? But now look at you.
I’ve never felt that way about Netflix. Here was a company that all but created its own runway, landed a huge business right down the middle, and, then, when technology changed the subject, pivoted and maintained momentum. Reporters scrambled to write paeans to the company’s nimbleness and ability to see over the hill. Come to think of it, I was one of them. When the company, much admired for its finely honed consumer sensibilities, blew its foot off with an ill-conceived pricing plan last summer, I winced when I read about the fiasco.
Reed Hastings, the frank and earnest head of Netflix, took the heat and said it might take three years for the company to come back from that misjudgment. He is turning out to be more than correct. In earnings announced on Monday, word came that for the first quarter, the company lost $4.6 million, its first loss since 2005. The company also said that its aggressive international expansion was going to take longer than expected. Netflix stock tanked, down over 14 percent on Tuesday.
The company added three million subscribers to its online streaming business, but its DVD-by-mail business, which still kicks up the lion’s share of the revenues will only go down over time.
Two months ago, I went around the house and tried to round up the three disks I had on loan from the service. I only found one, in part because it has been so long since I had actually put a DVD in the player. Like every other legacy media artifact in my house, it has been pushed aside by more immediate digital offerings. My television, like so many others, streams from Netflix and other services, making DVDs seem like a quaint artifact of a bygone era.
I downgraded to the streaming product and dumped the disc account, and in doing so, went from somebody who paid the company $25.99 a month to someone who pays then just $7.99. Certainly, the costs associated with the streaming business are far lower, but as Nicholas Thompson at the New Yorker and others have pointed out, the barrier to entry to that business is low and the competition is high.
I felt a twinge of recognition when I realized that a company that was once a core part of my mediated life was getting shoved to the side. I signed up for AOL in 1993, very early in the company’s life and happily shipped them gobs of money in exchange for dial-up access. Even after broadband crept into my life, inertia kept me in the fold, but at a certain point the retro cachet of having an AOL account was overcome by the fact that there were far better e-mail products out there. I kept the free e-mail account running for a while, but now it is an archive, riddled with spam and old correspondents who have no idea where I am anymore.
I like my Netflix account. My daughter lives on hers, with a television that is off the cable grid in our house and operates on a Wii game box. But other things will come along that will grab her attention and mine. I have lots of streaming products on my television, including Hulu Plus and Apple TV and, of course, there’s the whole backlog on my DVR. I’m not short on viewing options, I’m short on time. Netflix has become just one more player in the gunfight for my attention.
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