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Wednesday July 25, 2007 10:58 am
Netflix Stock Plummets



If you are a Netflix devotee, you may have noticed that the site was down for over 12 hours this week, but what you may not be aware of is the fact that their stock price hit the lowest it has in over two years. Lowering monthly fees by $1.00 and thereby losing profits is one of the company’s attempts to compete with the mega-giant Blockbuster. Yesterday their stock dropped to $15.62 then rebounded to $16.10 (a loss of 6.8%) as an indication of stockholders’ distress. Statistics also indicate that last month they had a decrease of 55,000 subscribers since April. They may lose even more profit as they invest in new tech to allow online movies that can be viewed on TV via high-speed Internet connections.
The company has had its share of problems since Blockbuster offered the option to swap DVDs at their stores instead of waiting for the mail. We love Netflix for its originality and are not thrilled with the fact that they may be knocked down because of that glorious concept known as competition. We have watched our neighbor video stores crumble because of Blockbuster’s large scale takeover efforts and hope that the beleaguered rival can take a bite back and retain its standing.
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| MSNBC
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- blockbuster, blockbuster, business, netflix, stock, wall street
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Comments:
I can’t stand Blockbuster. They rape you over the smallest things. Like of course being late. They had creditors chase me down over a two day late fee that wasn’t payed. They threatened to mark my credit rating over a couple of bucks. Threatening customers is not a good way to keep them coming back. My favorite movie rental store Hollywood Video has closed down in our neighborhood. They at least were a little more forgiving to their customers in regards to late fees. Since Hollywood Video closed its doors in out neighborhood we have decided to get all of our movie rentals from Net Flicks. With my sour history from Blockbuster, and their credit chasing freaks I desperately hope that Net Flicks stands tall through this assault from Blockbuster. I can’t stand Blockbuster. Maybe they should change their name to ballbusters.
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Netflix’s stock did get hit by the price cuts, but I wouldn’t worry too much about them going out of business. Right now they are sitting on close to $400 million in cash and even after the price cuts will still be making profits (albeit a lot smaller) I think Netflix has a lot more lasting power than Blockbuster does and while the price cut may have been bad for people trying to make a quick buck on their earnings announcement, in the long run, it will be good for shareholders. Eventually, Blockbuster won’t be able to absorb their losses and they’ll be force to raise prices again.
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You can’t argue with the convenience Blockbuster offers, but their selection still leaves much to be desired. If I need a specific film, especially a new release, I find I’ll spend more time and energy trying to obtain it from Blockbuster (either in-store or online) than I do just waiting patiently for the mail and Netflix.
Not only that, but Blockbuster’s Blu Ray loyalty has excluded thousands (including myself) from the convenience of renting HD in-store.
Once the novelty and brand leverage wear off, Blockbuster will no longer be a threat.
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I don’t mind blockbuster and the added convenience of the store drop off/pickup more movies is great. Very smart on their part and also helps bring back late fees when people grab new movies when dropping off.
One thing I think both companies should really consider and might be enough to give one a big advantage would be to offer games and movies. Sure, gamefly does pretty well with games but I personally would love to be able to get games and movies as I want from one company for one price rather than have an account at both. Whoever offers competitive pricing with plans that include a couple games and couple movies out at the same time would do very well in my opinion…or at the very least would have me as a customer lol.
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Who are the monkeys who keep giving business to Blockbuster? That place sucks. Their policies are a total mess, they have Draconian policies for their employees, and their selection is a joke.
They’ve already taken out a lot of competition and act like a monopoly. I guess the sheep who continue to spend money there deserve what they get.
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