After the highly controversial announcement that Netflix will be splitting its DVD business from its streaming services, the company decided to reverse its decision in the beginning of this week. I am sure many of you who are Netflix customers have received emails similar to the one I got:
Initially, the reversal had a positive impact on the company’s stock price, bringing it up by 9%, but then investors retreated as they feared the move may have been dictated by higher churn rates. As analysts that closely follow the company agree, Netflix is moving in the right direction (as far as long-term strategy is concerned) but the changes it is implementing are a bit too premature and poorly executed.
I still believe Netflix will overcome the temporary glitches and recoup its stock price, but it would take some time for the masses of “customer activists” to see beyond the missteps in execution from the past few months.
Interestingly, after offering so many opinions and repeating over and over the same arguments against Netflix’s decisions last month, most of the mainstream journalists and bloggers are mum about the reversal in strategy. Perhaps they don’t care because this is not newsworthy to them (read: this will not generate the hundreds of angry comments by “consumer activists” that drew so much traffic to their web sites in September).