Tag Archives: stock

My thouhghts on Netflix

I have been speculating about the future of Netflix for the past couple months and I have been reasonably accurate.  I had predicted the fall of Netflix about 7 months ago but everyone kind of brushed me off.

Anyway, I don’t think they’re completely doomed just in need of a big change. In fact, when they decided to spin off their DVD business to Qwickster I was sure they were actively pursuing acquisition.  Now that they have closed Qwickster I am left confused and just curious if there is any strategy in place.    Anyway, let me explain my assessment.

Think about it this way.  Netflix was a pioneer and was surprisingly successful as a very small player in a huge market.  I don’t think Netflix purposefully targeted such a big industry, instead I think they were just jazzed about being innovative and forward thinking.   The fact that they offered a complete TV solution with DVD and streaming was a very attractive offering,.  When they broke the combo service apart I think they fundamentally undermined their own value proposition.

Regardless of their success their industry was/is attracting a lot of attention(as it should have). What they eventually found is that they’re were up against the likes of Google, Apple, Amazon, ABC, FOX, CBS, TimeWarner, Cox, etc.  You get the idea, it’s a big player industry!

Being in the ring with such big players presents a lot of problems.  First, Netflix doesn’t have the cash (~330m) to go toe-to-toe with any of these companies.  In an industry were demands are increasing and studios are hiking prices up this is a huge disadvantage.  Secondly, if Netflix stock price continues to drop they might attract the attention of the hawks.  As these big players charge ahead into streaming TV their will be a lot of cash to play with which might mean goodbye Netflix (acquisition).

Well, all of that being said that, the announcement that they are killing Qwickster seems to contradict my assessment.  On the other hand, dropping the Qwickster brand may have been a defensive move to avoid the hawks.  Who knows what will happen from here?

iStockPhoto – ripping off customers by raising prices!

I’ve been a loyal customer to iStockphoto now for about 2 years and today after logging in to purchase an image I realized that I was now paying over $15 per image.  Just about two years ago they promoted $1 images which were very sufficient for the level of web design I was doing.  Over the course of the last 12 months they have altered their buiness in a few different ways.

  1. Reduced the sizes of the images – 1 credit now gets you a ~200 pixel image
  2. Increased the cost of their credits – It used to be $1 for 1 credit now they have altered their pricing to starts at 10 credits for $14 ($1.40/credit)
  3. Increased the cost of the images – Vector images used to be 3 credits, now they are 15.  ExtraLarge images were 5 credits, now they are 15.

As a response to their price increase I wrote them a kind letter to cover my opinion on the matter:

Dear iStockPhoto,

This will be the last time I spend any money with your company.  I don’t have a large budget but you have made sure that my budget continues to afford me less and less each month.  I have been a loyal customer for over 2 years and I watched your prices rise on two fronts.  Not only are you giving fewer credits per dollar you are increasing the cost of the images.  It might not hurt you but my $100/month is going elsewhere.  Thanks to your attempt to screw your customers I feel this will be a recurring reaction.

Best of luck,
Damien Howley