Netflix Experiencing Growing Pains

One of the more interesting trends in the world of technology is the fall of Netflix. The popular video streaming service made quite the impression on the tech world over the past few years, but a price hike announced a few months ago has seen subscribers flee the service. Netflix management announced they expect to end September with 600,000 fewer subscribers, which caused the stock to drop nearly 20 percent.

Netflix was once the darling of the tech industry. Their service is available on several devices, which makes them one of the more versatile streaming companies around. However, the price hike, which is around 60 percent for some customers, emphasizes a few cracks in their business model. One of the largest issues subscribers have with Netflix is the catalog that is available for streaming. Most new releases are only available to the company on DVD, and only then after an agreed upon waiting period. That makes their streaming library void of several hits.

Of course, other factors are also working against Netflix. Talks with Starz to continue allowing Netflix to stream their shows faltered. The Starz Play portion of the library was the source for many hit movies. Earlier this year a viewer cap in a contract with Sony caused all of their movies to be pulled from the streaming options, and a similar cap in a contract with Disney is closing in. Content companies have seen the popularity of streaming video skyrocket and want more money to license their contract.

Netflix is caught in a two sided assault. Movie and television studios want a lot more money for their content, and consumers want the ultra-low price. Customers who have stuck with the service might have adopted a waiting posture to see if the “watch instantly” offerings improve.

However, Netflix has not had any real competition just yet. Redbox kiosks have popped up across the country, which means increased competition for the DVD market. Plus, Google is looking to upgrade their online video offerings and might even purchase Hulu (another popular streaming service).

Netflix has not announced any planned improvements in their service, they simply announced customers will have to pay more for the same services. The company likely expected some sort of backlash, but the stakes might be higher than they realize. Increased competition is never good for the more expensive choices, and Netflix will need to make a few improvements before their subscriber base grows in America.

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