Former Netflix (NFLX) CEO Said Company Didn't 'Screw Up'
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Former Netflix (Nasdaq: NFLX) CEO Marc Randolph issued a blog post late Monday with his thoughts about recent moves by Netflix which, on the top, seemed aimed solely at losing subs.
He doesn't think that is true, however.
Randolph issues a back story about the founding and early days of Netflix in 1998. He notes that all the luxury features that we know today -- Queue, Unlimited Rentals, and the No-Due-Dates-No-Late-Fees -- were still a while off. Not only did Netflix rent DVDs, Randolph said, but they sold them too.
Which is where 95 percent of their revenue stream came from.
Foresight of Amazon (Nasdaq: AMZN), Wal-Mart (NYSE: WMT), and others entering the DVD sales business caused them to shift their focus back to renting, because, as Randoph puts it: "by trying to run a business that did two things well, we inevitably were forced to make an endless series of compromises that resulted in us doing neither of them well."
Randolph goes on to highlight several benefits of focusing on streaming: increased conversion rates, lower acquisition costs, and more.
He also alludes to the lion's share of Netflix customers probably not being enthusiastic about cutting off the DVD business, nor were those who rented ala carte going gangbusters about scrapping that for an all-you-can-rent program.
You can check out the rest of the post here, but the message is clear. This isn't the first time that Netflix has refocused on a new avenue that was unpopular with the masses. It may not be the last either. But, Randolph infers that Netflix has the special blend of talent and laser focus to be able to make a clean, effective switch.
Let's see if investors agree.
Shares of Netflix fell 3.6 percent Tuesday.
He doesn't think that is true, however.
Randolph issues a back story about the founding and early days of Netflix in 1998. He notes that all the luxury features that we know today -- Queue, Unlimited Rentals, and the No-Due-Dates-No-Late-Fees -- were still a while off. Not only did Netflix rent DVDs, Randolph said, but they sold them too.
Which is where 95 percent of their revenue stream came from.
Foresight of Amazon (Nasdaq: AMZN), Wal-Mart (NYSE: WMT), and others entering the DVD sales business caused them to shift their focus back to renting, because, as Randoph puts it: "by trying to run a business that did two things well, we inevitably were forced to make an endless series of compromises that resulted in us doing neither of them well."
Randolph goes on to highlight several benefits of focusing on streaming: increased conversion rates, lower acquisition costs, and more.
He also alludes to the lion's share of Netflix customers probably not being enthusiastic about cutting off the DVD business, nor were those who rented ala carte going gangbusters about scrapping that for an all-you-can-rent program.
You can check out the rest of the post here, but the message is clear. This isn't the first time that Netflix has refocused on a new avenue that was unpopular with the masses. It may not be the last either. But, Randolph infers that Netflix has the special blend of talent and laser focus to be able to make a clean, effective switch.
Let's see if investors agree.
Shares of Netflix fell 3.6 percent Tuesday.
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