The Resurrection of the Golden Goose
A few months ago, the future of Netflx looked quite bleak after a serious of pricing mistakes and the creation and destruction of a separate company for streaming videos without the mail component.
To the credit of Netflix and its CEO Reed Hastings, Netflix has made a recovery, but more important, the company has articulated a sensible business model. In 4th quarter 2011 it added 610,000 U.S. subscribers thus reversing the abandonment of the service by more than that number of customers in the wake of its pricing problems. It’s subscriber total is still under its peak 24.59 million, which it achieved in 2nd quarter 2011. It also recorded a dip in profits, which it attributed to international expansion costs. But, clearly the company is on the road back.
More importantly, Netflix has figured out that mail service does not represent the company’s future. Instead it intends to concentrated on its streaming services and seeks to evolve into an online competitor of cable networks. It seeks to diversify overseas and added 380,000 international subscribers in 4th quarter 2011.
Clearly, Netflix seems headed on the road back.