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  • Netflix: The Beginning of the End

    How many subscribers will Netflix lose because of this new fiasco?

    Every student who has taken introductory economics and received a passing grade cannot help but wonder how can Netflix NADAQ:NFLX) commit the one strategic mistake after another, misjudging and miscalculating consumer behavior.

    Last month, the company tested the loyalty of its subscribers by raising the price of its video and streaming and mail order bundle. Big mistake, as Netflix has no substantial pricing power. Subscribers fled in droves for competing services. From Amazon.Com (AMZN:NASDAQ), Google (NASDAQ:GOOG) and Wal-Mart (NYSE:WMT) shaving close to 40 percent from its stock price.

    Now, Netflix is unbundling its services into two separate services, streaming, and mail order. Big mistake, again, as it erodes further the uniqueness of its offerings, undermining further its pricing power, as it makes easier for subscribers to compare competing offerings for each service.  How many subscribers this time Netflix will lose?

    It is hard to say. What we can say, however, is that Netflix’s fundamental problem is its business model. Like Amazon.com, the company sells something to the end customers. But unlike Amazon.com, Netflix doesn’t own anything. It doesn’t have any production facilities, any warehouses, just a site where it sells somebody else’s products—content developed by Starz, CBS (NYSE:CBS), and the like.

    Read Full Article on Forbes.com

    Good luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Gamechangers


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