Netflix has been one of the most successful powers in the world of modern home theater. Before Netflix, for a consumer who loved movies in HD the standard for investment an HD movie was a $19.95 to $35.95 Blu-ray disc, purchased for a movie that may be watched once, twice or three times, but very unlikely to be watched more times than that. Netflix subscribers could get movies sent in 1080p video and 7.1 HD audio right to their mailbox for a fraction of the cost of the purchase of one movie on Blu-ray. The value was spectacular as was the audio and video quality.
Netflix grew like a weed with mainstream customers wanting to watch movies on DVD-Video disc as well as enthusiasts seeking out movies on Blu-ray. Studios were more than willing to sell 1000's of copies of their top movies on Blu-ray to Netflix as a new profit center in their home video departments. Everyone was happy.
Then Netflix realized that they could covert their DVD-Video, mainstream consumers to streaming products, which saved mailing costs and increased profits. A very profitable business saw the chance to be much more profitable very quickly - and a huge mistake was made by Netflix.
Netflix in the past year has started to increase prices, lower Blu-ray offerings and fight with studios while other content providers (CinemaNow, Blockbuster, Redbox, DIRECTV, Dish Network and cable providers) started to ink more favorable content deals than Netflix with the studios. While Netflix wants to desperately reduce their $600,000,000 in U.S. Postal Service costs, they also risk losing what they do best which is to provide the best movies in the best formats money can buy.
Recently, Netflix's executives said that they would split the download and disc mailing business into two separate businesses. What a stunning mistake. Not all movies need the full Blu-ray treatment but many do while others can be easily justified as streaming titles. Netflix is now struggling with a major issue about its own corporate identity at a time when consumers are looking to cut as many $24.95 per month expenses as possible.
Netflix needs to be offering more value for less money, not fewer titles and crappy downloads for more money. Nobody cares about their CEO making apologies, as they want real value and higher performance for less money in this new economy.
Can Netflix's mistakes be reversed? Possibly, but they need to be the leader in streaming 100 percent Blu-ray quality movies in terms of audio and video before Sony, Apple, Roxio and others beat them to the pass. Will Netflix succeed? Not a chance, as their bean counters are worried more about the effect of saving the costs of some stamps as opposed to offering a far better AV experience via streaming than anyone else can deliver. Because of this - Netflix is doomed.