Netflix CEO Reed Hastings was The Man last year. Among other accolades, he was Fortune’s 2010 Business Person of the Year. He was making the push to take Netflix global which is a very worthy, albeit expensive goal.
Then in July, Netflix announced a massive price increase and a split between the streaming and DVD/Blu-Ray options. Netflix (either option or both) is still a great deal but come on 40-60% increases across the board? They expected and braced for a hit in subscribers. Hastings Folly cost Netflix over 800,000 subscribers – obviously far more than they had anticipated.
Netflix’ bungled attempts at communication came off as arrogant. Perhaps that’s because underneath the prose, the message boiled down to “you will take what we give you and like it”. Even after the uproar they didn’t backtrack except to declare that discs would not be spun off into a separate entity.
This brings us to today. As an article on Gawker noted, buried in a NetflixSEC filing is “as a result of the relatively flat consolidated revenues and previously announced increased investment in our International segment, we (Netflix) expect to incur consolidated net losses for the year ending December 31, 2012.”
Yikes – no profit in 2012 for a company that had such a meteoric rise. I hope this doesn’t bode ill for next year’s content purchases. On the other hand with Hollywood accounting, no movie ever makes money so who knows.