Call me a contrarian, but I say Netflix is on the right track

Reed hastings
As you've probably noticed, movie and TV fans are up in arms over Netflix's steep recent price hike as well as its decision to spin off its DVD rental-by-mail service, creating a new business operating under the (already much-ridiculed) name of Qwikster. Customers are ticked off with the new price structure --announced two months ago -- which could add as much as 60% to the monthly bill of people who watch both DVDs and streaming video.

Netflix chief Reed Hastings is in such hot water that he's had to put up a blog post (and a YouTube video) apologizing for the way the announcement was handled. As my colleague Ben Fritz notes in a front-page story in Tuesday's paper, Hasting's remarks resulted in 17,000 comments, the vast majority of them distinctly negative.

So is this a disaster for Netflix, as most of the media coverage in the past couple of days has implied? (The headline to the story in our print edition was: "Once High-Flying Netflix Is Sinking.") Call me a contrarian, but I don't think so. 

There's no doubt that Netflix made a PR blunder in the way it handled the announcements, not to mention the way it abruptly announced such a steep price hike for its product. It was obvious Netflix would have to raise prices, largely because its studio suppliers are squeezing the company. With Netflix's relatively inexpensive access to streaming video of films and TV shows, studios are worried that the company might get so big -- it's already at an impressive 23 million

Media Patrick Goldstein
09/20/2011 14:11

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