Netflix Feels Consumers' Wrath In Bottom Line

Just a few short months ago Netflix was a favorite of consumers and its stock price was soaring. Now, after a series of marketing missteps, both consumers and investors appear to be unhappy.

In July Netflix announced a change to its price structure. The company eliminated its popular $9.99 per month plan that included both streaming video and DVD rentals. It announced that starting Sept. 1, the price would go to $15.98.

Consumer reaction was swift and negative. Complaining consumers viewed it as a huge price increase. There was still a plan under $10 a month, but it only included steaming content over the Internet. The problem with that, according to consumers, is that many of the most popular movies are not available for streaming.

Blue line shows net sentiment

ConsumerAffairs.com analyzed about 4.1 million consumers comments on Twitter, Facebook and other social media and found that Netflix' overall sentiment has plummeted from 61% a year ago to about 21% today.

Pretty annoyed

"I too, am pretty annoyed with their price hike. This is your business, Netflix. How hard is it to actually keep things consistent?" said Hannah of Lynnwood, Wash., in a ConsumerAffairs.com review. "More importantly, how hard is it to get a little progressive and allow streaming for ALL the movies instead? One month a DVD is available for live streaming, then the next, it's back on the DVD list. And I can't ever get through their customer service number to complain," Hannah said.

A few weeks later, Netflix announced what it said was the logic behind its price change. It was splitting the business in two. Netflix would just handle video streaming over the Internet. A new company, Qwikster, would handle DVD rentals.

But it would require going to two different websites and having two separate accounts. Again, consumers howled, and within weeks Netflix announced it had scrapped those plans.

Still angry

But consumers still appear to be angry. A ConsumerAffairs.com computerized analysis of about 4 million consumer comments on Facebook, Twitter and other blogs and social media finds the company's approval rating continuing to plunge -- falling from a 60 percent positive rating a year ago to a dismal 14 percent in mid October.

In reporting its third quarter earnings, Netflix said it lost more customers than it expected and warned investors that subscriptions for its DVD-by-mail service would fall sharply between now and the end of the year. While many investors saw it coming, the reaction on Wall Street was nasty none the less.

Netflix shares, already down more than 60 percent from their July high, dropped 26 percent in Monday's after-hours trading. The company's “market cap,” the value of all its outstanding shares of stock, is down 75 percent from its high.

Netflix began in 1997 with a novel idea. Consumers could rent DVDs by mail instead of having to drive to a store like Blockbuster. The company began streaming content over the Internet in 2007.

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