As of last Thursday, it has now been one year since Netflix launched its much-hated price hike, a move that many thought would destroy the company. In honor of the anniversary, let’s review the developments of the past year:
July 2011: Netflix announces its plan to raise prices by 60% for subscribers who want to rent DVDs by mail and watch streaming video. The company also decides to divide the two options into separate plans, so that subscribers must either choose one for $7.99 per month or both for $15.98.
September 2011: The price increases go into effect. After outrage from customers, Netflix CEO Reed Hasting apologizes for the changes, but keeps the price hike intact. The announcement of Qwikster – the new, separated DVD-by-mail service – sparks further outrage.
October 2011: Netflix backs down from its plan to split the two services, and shortly after discloses that it lost 800,000 subscribers in the United States during the July-September quarter.
December 2011: At an investors' conference in New York, Hastings laments Netflix's missteps, but predicts that the company will continue to lead the way as the entertainment industry evolves
January 2012: Good news for Netflix! The company regains nearly as many U.S. customers as it lost, and announces that customers had streamed over 2 billion hours of video in the fourth quarter of 2012.
February 2012: Netflix tries to differentiate itself from its competitors by releasing its first original television series, Lilyhammer. Netflix also obtains the right to show films from The Weinstein Co. before they are released to major pay-TV channels like HBO.
July 2012: Netflix’s subscriber growth accelerates during the first half of 2012, indicating that streaming video is becoming more popular and the company is recovering from the price-hike setback. Though things are looking up, Netflix stock remains over 70% below its peak price from a year ago.
So what’s next for Netflix? On the positive side, Netflix’s video library is now watched more than most television networks, and the company is continuing to invest in original and exclusive content.
But on the downside, Netflix faces fierce competition both domestically and abroad, and analysts fear that customers no longer look at Netflix with the love they once did. "I don't think anyone is ready to give Netflix the benefit of the doubt at this point," Aaron Kessler, an analyst with Raymond James, told the Associated Press in April.
