Netflix Destroys Value
Reed Hastings, CEO of Netflix
Netflix's (NFLX) fall from grace has deemed the company and its management team, led by Reed Hastings, as one of the worst of 2011.
After running up nearly 70% in the first half of the year, the video-rental giant made
The company's precipitous decline started with management's decision to raise prices on its most popular one DVD-by-mail and unlimited streaming package by 60%. The increase was spurned by subscribers, who criticized the company for the way it approached raising prices. To make matters worse, shortly after the price hike, Netflix revealed that it was unable to reach an agreement with Liberty Starz to renew its streaming content deals. That means Starz movies and television shows will be pulled from the service come February. This escalated consumer ire, with subscribers complaining that they didn't want to pay more for less content. In the throes of customer and Wall Street dissatisfaction and grasping at straws, Netflix made a surprise announcement in September that it planned to separate its DVD-by-mail and streaming services into two businesses. The streaming service would remain under the Netflix banner and the DVD segment would become a new business called "Qwikster." Subscribers took to the message boards again, voicing concern that the separation of the two services would make it more complicated for users of both to organize and watch content.
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