Netflix Site, Stocks Go Down
July 25, 2007
Netflix, the largest national renter of both HD DVD and Blu-ray disc titles in the United States, experienced some still-unresolved technical difficulties this week with its Web site—where it conducts its disc rental business with subscribers.
Prior to the Web site problem, Netflix watched its stocks plummet this week to their lowest level in two years after it announced its customer base had shrunk for the first time in its history. Still, its roughly 6 million subs are about double the online subs of its competitor, Blockbuster Video.
On Monday night and for most of Tuesday this week, Netflix posted an online apology to its subscribers who may have been trying to get into its Web site, but it did not offer any explanation. For part of Tuesday, a Web site announcement said it would be back up for business by 1 p.m. PDT, but this was later changed to 4 p.m. PDT. By early Tuesday evening EDT, mention of a time reference for re-establishing itself disappeared altogether. The Web site finally went back up Tuesday night, although (as of midday Wednesday,) the DVD renter still provided no specific explanation for the problems to customers or the media.
For the past couple of years, Blockbuster Video had played catch up to Netflix, as the latter had been eroding some of the chain store’s on-site rental business. Netflix began operations with a combination of allowing subs to queue up their DVD preferences online and then await what is frequently one-day shipping via the U.S. Postal Service.
Blockbuster (which recently announced that most of its outlets would only carry Blu-ray titles but not HD DVD) soon began imitating Netflix’s business model by using online queue-list services and mail delivery—plus its existing retail outlets as an added inducement. Now Netflix finds itself in a role reversal and playing catch up to Blockbuster to stop the trend of dwindling subs, according to the Associated Press.
To help stop the hemorrhaging, Netflix recently announced a $1 price monthly reduction for its subs for two of its most popular business plans.