Will Netflix Survive in the Face of Increasing Competition?

By: Chris Crum - September 24, 2011

It was only a few months ago, when Netflix seemed nearly untouchable in its space you hardly heard anything negative from members about the experience the company was providing. Oh, how the times have changed and changed quickly.

Netflix member? Will you stick with it? Comment here.

It started even before Netflix announced its controversial pricing plans. Netflix launched a redesign, and people were up in arms over that. Little did they know that they would soon have to pay 60% more to keep the dvd-by-mail and streaming service combination they had enjoyed for so long. You probably know that story. While there were certainly plenty defending Netflix’s decision, there were considerably more visible negative comments on the move.

Not long after that, it was revealed that Netflix would be losing Starz content as part of its streaming offering. This is a huge blow to users, as this particular partnership has been a key provider of many of the newer movie titles including from Disney and Sony.

Then there was talk about Netflix cracking down on multiple streams per account, though Netflix said, “No Netflix member is limited to less than two concurrent streams.”

About a week later, Netflix lowered its subscriber projections and its stock plummeted.

Then, a few days after that, the company made the big announcement that it was just separating its DVD business entirely, making it a separate company called Qwikster. Users who want both services would now have to have two separate accounts with different companies. Some have speculated that Netflix separated the DVD business so it can sell it, and that may very well be the case.

Some think the whole thing presents an opportunity for Amazon to kill Netflix (and that Amazon should buy Hulu to aid that quest).

Then there’s Blockbuster, which was recently acquired by DISH Network. DISH announced Blockbuster Movie Pass, which includes: access to over 100,000 DVD movies, TV shows and games by mail (with no additional charge for Blu-ray), 3,000 streaming titles to the TCV, over 4,000 streaming movies to the PC, hundreds of on-demand TV shows, over 3,000 games by mail for Xbox, Xbox 360, PS2, PS3 and Wii, unlimited exchanges of DVDs and games at participating Blockbuster stores. It also includes over 20 premium channels like MGM, Epix, Sony Movie Channel, PixL, etc.

This becomes available to DISH Network customers starting October 1 at plans starting at $10 per month. That’s going to give Netflix and Qwikster a run for their money, not to mention cable companies and DirecTV.

Netflix did announce a new integration to go along with Facebook’s new Open Graph. CEO Reed Hastings talked about it at f8 – specifically about how much better it was to get advice on what to watch from friends than from the Netflix algorithm.

“Facebook has always made it easy to discover great things through your friends,” said Netflix’s Tom Willerer. “We want to make streaming from Netflix a more social experience and through the new optional Facebook connection, Netflix makes it possible for you to connect with your friends over TV series and movies online.”

“The Netflix/Facebook integration empowers you as a Netflix member to share what you watch from Netflix with your friends on Facebook and to discover what your friends are watching both on Facebook and within the Netflix user interface,” he added. “This makes it easier and more fun to find new television series and movies to watch.”

The new Netflix Facebook integration will be available for the month’s over, the company said. Of course, that doesn’t apply if you live in the United States – where Netflix has existed since its inception before finally going international about a year ago.

The company says a U.S. privacy law prohibits them from offering it here, but the company is calling upon customers to write to Congress about it so they can share movie suggestions from Netflix with their friends on Facebook.

I bet Netflix customers are champing at the bit to help.

Does Netflix have what it takes to maintain its leadership position in the movie space or do you see competitors swooping in and taking advantage of recent moves from the company? Let us know what you think in the comments.

Chris Crum

About the Author

Chris CrumChris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

View all posts by Chris Crum
  • Joseph

    Will Netflix survive , I think the answer that yes it will.
    But the better question would be what sort of Revenue and Income numbers are we going to see come the end of Q3 next year after Netflix has completed their transition to a company that offers only B level movies and non current television programing. For many Netflix customers they opted for the service to watch great quality movies and to stream some of the latest movies being released via disk. With the move to focusing on television content that is available via stream from 1/2 a dozen Netflix competitors it can be assumed they are going to lose some market share even given the integration with Facebook.

    • http://www.webpronews.com/ Chris Crum

      I certainly signed up for the dvd selection once upon a time, and the streaming was just an added perk. It’s not so much about the format (streaming vs. disc) as it is selection.

  • Sandy S

    I have already cancelled both the DVD and streaming plans as of Monday due to Reed Hastings latest Netflix flub.

  • Gina

    I’m going to cancel this weekend (I want to empty my queue and get the DVDs in the mail first). I’m not using it like a used to – there’s just not enough new content. I’m going to join Amazon Prime. I shop there anyway, so I’m getting more for my money. Plus, I think one of the big guys – like Amazon or Apple, will win the money fight for content. They just have more weight and assets to go up against the studios.

  • Danny Neckel

    Here is a comparison of Netflix and Blockbuster now that the rates have changed: http://smartmediagroup.com/how-netflix-stumble-benefits-moviegoers-and-advertisers/

  • http://www.weswareonline.com wes

    Assuming the catch with the Dish Network deal is that you already have to subscribe to their TV service. I currently use Netflix as my only means of TV entertaiment (get my news and such from the Internet). I still think Netflix is an economical service, even with the price increase. Sticking with it for now.

  • johnson

    I empty my queue and return my last two dvds today. Once i get my notice via email that they gotten my dvds, Im going to cancel netflix and sign up with blockbusters.

  • Fezz

    It will stand the storm. There are those of us who have been there from day one and will stay regardless…

  • http://www.sparkellyspuppypalace.com Sheatina

    Well, I would like to know what the alternative is? We do not have dish and the whole reason we got netflix is so we won’t have to pay for dish. We do not have access to cable. I am so sorry that netflix seems to be going downhill and we may have to just stop the service and start renting from the local video store again. I don’t see much else available for streaming movies to the TV. Thanks and have a blessed day all.

  • John Buxbaum

    I bailed on the dvd part of my membership, and I’ll stick with the streaming as long as I have no option on my Xbox. If another comparable streaming provider arrives for the Xbox I might change. It is very disappointing what they did. The price point they were at was sustainable by the average subscriber, balancing value for money, and it was a growth point for them. However in the best liberal mentality that seeks to grab as much money from people possible in the short term they raised their prices. Backfire….

  • Jennifer Hess

    Hell NO I am not staying with it. The price change for bad quality online streaming PLUS the fact that I have been getting tons of DAMAGED DVD’s and then I have to wait for another one? Forget that I am already looking for another alternative!

  • /// ted

    Netflix got greedy; I say “Let ’em dangle!”
    F8? (Facebook) ? The world’s largest backyard fence …over which “everyone” can gossip / lie / ego-trip with anyone who will listen & owns a keyBORED. lol

    • Michelle

      I agree, Netflix pretty much had the market locked up until they lost site of their customers, made changes to the website that are very non-user friendly (to be nice) not to mention the price increase. Now they are doing away with mailing dvd’s all together, so what was the point of shafting customers with a price hike to begin with? Thing they got a little derailed regarding who keeps them in business.

  • http://www.myaffiliateblaster.com Ricky

    It depends netflix doesn’t have a lot of new content as is, and with them losing sony, I am curious to what they will do fill that void, the jurys still out for me on this one for now.

  • swim

    We just put our account on hold. We’re planning to try out Amazon’s service. Might even look into dish. We have been disappointed by damaged DVDs in recent months and problems with some (not all) streaming movies. When the price announcement came out we were annoyed like many others. I HOPE the competition takes this as their opportunity to be better not just in price, but examine how Netflix used to have their site designed and their features (i.e. rollovers with movie descriptions). Netflix still has everyone beat in user interface design.

  • http://www.change.org/petitions/netflix-make-films-accessible-for-the-deaf-hoh Sebastian St.Troy

    I used to be a Netflix subscriber until I developed hearing issues. Now I have ditched Netflix and actively encourage others to as well, mainly because of their disregard for their Deaf and Hearing impaired customers by not including captioning (subtitles) on all of their content.

    Even after many attempts to communicate with Netflix about this issue, they refuse to respond. Some months back I started the Netflix Petition, which now has over 6,000 signatures: http://www.change.org/petitions/netflix-make-films-accessible-for-the-deaf-hoh

    With Reed Hastings, CEO of Netflix, now on the board of Facebook, it seems he’ll be assisting in bringing down both Netflix and Facebook.

    The answer is… Consumers have a choice – either support or NOT support a business. If any service continues to change in a manner that doesn’t satisfy it’s customers then the customers should no longer support that business, even if it means they have to do without until other options become available.

    • Ryan Kempf

      yes great point I am have a Physical disability and I know all to well the lack of accommodations sometimes

  • http://www.change.org/petitions/netflix-make-films-accessible-for-the-deaf-hoh Sebastian St.Troy

    Additionally, Netflix subscribers should READ the Netflix Terms of Use Agreement, which was changed on September 5, 2011, Netflix altered their TERMS OF USE:

    “These Terms of Use provide that all disputes between you and Netflix will be resolved by BINDING ARBITRATION. YOU AGREE TO GIVE UP YOUR RIGHT TO GO TO COURT to assert or defend your rights”

  • Derek

    We joined as streaming-only last year and were never members of Netflix DVD-by-mail. No price increase for us, but I understand that Netflix botched their change with customers who had both, requiring you cancel Netflix completely if you wanted to drop the mail option and keep the streaming only option. I have looked at VUDU, BlockBuster, and Amazon.com’s streaming services and two of their average movies cost as much as one entire month of 7/24 Netflix streaming. That is an undeniable and overwhelming advantage for Netflix. Even Hulu is not competitive in offerings. I am only upset with Starz/Sony who were not happy with $300 million a year, opting to leave Netflix because Netflix was NOT willing to charge for Starz/Sony titles per view, like VUDU, Blockbuster, and Amazon.com. That was a very wise decision by Netflix. I expect Netflix will put the $300 million per year to good use buying premium movies/content.

  • http://www.cardjett.com Glenn Kinney

    Seems to me that the streaming portion still beats the high price of cable..dvds will be dead soon anyway.

  • Sarah Richards

    I’ve been a Netflix subscriber for years. I’m ok with going to streaming only, I don’t bother with DVD’s anymore. I looked at Starz website and it was too convoluted to figure out how to stream a movie through them. I much prefer the simplicity of Netflix. I don’t know if I’ll bother to watch the Starz movies if they aren’t available through Netflix. If I do watch some (somehow) it won’t be as many of them if I have to pay extra and pay for each one, and I surely won’t join a “cable-like” subscription service wherein I have to watch at a certain time of day.

  • Craig

    I also have been a Netfix member for many years. Unlike others, I’ve never been impressed with the selection in their streaming media offerings and have opted to mostly use their DVD/Blu-ray service. The loss of Starz also means the loss of quite a bit of the best movies with the streaming service. I understand Starz represents Disney, Sony, Columbia, Tristar and other studios, so it doesn’t just mean that a few Starz movies will drop out.

    DVDs may be dying, but Blu-ray is not. A very large percentage of people in the USA have ISPs with poor quality Internet connects, which limits their ability to enjoy streaming movies uninterrupted. Blu-ray will be around for a while.

    I did cancel the streaming media part of the subscription. If they screw up their DVD service when it moves to the new company, I will dump that, as well.

  • Rick Willard

    I don’t mind losing the DVD portion. Selection is really not very good. Like the streaming offerings a lot. Using AppleTV and like it as way to access NetFlix. AppleTV is excellent, too.
    Have the ability to buy movies with AT&T now, will do that instead.
    DVD’s are going to die. I think that NetFlix was very smart in breaking to two up and will stay with the streaming for now.

  • http://billieraven.com Billie

    Long-Time Netflix member.
    I am, of course, dismayed at this turn of events. I considered going ‘streaming only’ but the SELECTION is so much smaller, so much ‘dumber’ that I have been reluctant to give up the DVDs.
    I also have experienced the high number of damaged DVDs and with the threat looming of loss of postal deliveries altogether, I am sure we all will be stuck with streaming-only soon enough.
    I have Directv & a contract so no option of going with DISH which I wouldn’t want to anyway.
    So, here we all are, pawns in the game.

  • http://www.it-training-certification.com rocky dune

    I dropped Netflix altogether due to increased prices and poor selection of streaming video movies. 95% of movies I liked were not available for streaming. Frustrated!

  • Tony Hupmat

    I have already terminated my subscription. We used steaming (once a week) and maybe received 1 BR DVD every two months. I can’t justify the pricing for 6 BR DVD’s a year. Quit the steaming because NetFlix frankly P—-ed me off. Had been a Netflix customer for many years.

    In my opinion it was a brilliant move my management to destroy an Icon of the industry.

  • Doug

    Think Netflix has gone the route of so many companies that grow — it wants to maximize profits. Understandable, but as a consumer we have choices in this country as long as the politicans stay out of this one! Let the marketplace decide. We are seriously considering switching back to DISH which we dropped because Netflix and Hulu satistifed our needs in viewing. We had no TV connection, but the desire for more profits from Netflix will perhaps be their downfall. And with Amazon making plans to offer more they become a bigger player. Love seeing the marketplace work itself out. Capitalism at it’s best!

    • http://www.MikeArchbold.com Michael


  • http://www.ellefagan.com Elle Smith Fagan

    I am “venus in taurus” astologically speaking – I am in my element when the moment demands loyalty, so I am trying to stay with Netflix but if they give less and charge more that’s not nice, and I won’t be able to “hang in”.

    The whole point of Netflix for me was the “one-stop-shopping” for video…worth price. I have been a member since they began. NOT happy.


  • http://www.ellefagan.com Elle Smith Fagan

    I think Reed Hastings is having biz fun being Rhett Butler and swashbuckling along, relishing the wild ride in the stock market at our expense.

    But if you give less and demand more , you’ll lose in the end….I expected him to offer free gifts and benefits to old customers like me to compensate us for our inconvenience…but, no.

    So he can talk to himself soon if he does not do a more gracious job of it.

  • Alex

    After being a member since it inception … Netflix turned their back to loyal members. they dropped.their selection with the loss of starz content, raised prices, lowered service speed. I dont know why I havent canceled yet… But will definitely cancel this service as noone enjoys being ripped off.

  • http://www.MikeArchbold.com Michael

    I love Netflix but this may be difficultmto recover from. I hope they step up for their loyal client base.

  • http://www.CaptainCyberzone.com CaptainCyberzone

    Netflix made a bad business decision. (I’ve heard) … Certain of their content suppliers wanted a new payment deal, they want a cut of the action similar the cable TV content suppliers (like HBO, ESPN, etc.). In order for Netflix to work the deal they split into two and raised prices. It hurt them, for how long …???
    But all things are relative and in time Netflix will go the way of the cave drawings, the buggy whip, Mom & Pop video store, BlockBuster … greed, bad business decisions, technology and unforeseen happenings & forces have always come into play … roll the dice, it’s just a matter of time.

  • Angelo Pavone

    Blockbuster Video actually has a better dvd by mail program then netflix. Free blu-ray upgrade, new releases 28 days ealier, and if you watch your movie you can return it to your local blockbuster and get a new movie as many time as you want.
    So now the question is how is there unlimited streaming going to be and how much. A lower price with more content will destroy netfilx.

  • no qwikstars

    I have dropped streaming and will not be doing qwikstars.com

    Stick a fork in it, Netflix is done.

  • M

    Already dropped their dvd service, but Netflix is the only company I know of that offers streaming to my Wii and PS3. If I could find another company for that I’d completely drop Netflix in a heartbeat. Unhappy with the way they treat their customers.

  • http://www.otwpro.com/oneofthosewomen Cynthia Williams

    I must have missed the memo but I didn’t miss the price increase. i think I will be dropping the DVD service can go to the Redbox and watch when I want and get them on the spot. I will keep the streaming until I finish the 24 series.

  • Marvin Parker

    I probably will.. but I would choose maybe one of it’s services. I definitely would start investigating other alternatives as to receiving movies via mail or streaming.

    I think it’s ridiculous to expect to retain your customer base in light of such a drastic price increase. I have been a member of Netflix for years and really had no complaints until NOW!

    Well hopefully they (Netflix) will come to their senses and offer another option for their many loyal customers.

  • Ram

    Netflix has peaked. They can’t go anywhere but down. They should take advantage of their numbers and expand into other businesses like their own eBay, which is badly needed.

  • Bill

    The 29th is my last day with Netflix after all these years … But I’m a Dish customer already! … Bonus!!, back to 10.00 a month for me :)

  • http://NOYB Sa Sheffield

    The CEO is a fool and we are going to show them who pays the bill.

  • http://www.webbysteph.com Stephany Jones

    I was a faithful Netflix customer until I realized they have no appreciation for their customers. I have been thinking about switching to Blockbuster and now with this new addition of titles, I just might.

  • Dark Helmet

    Frankly I don’t care what my friends or anyone else on facebook might be watching. Although not perfect I liked the algorithm methodology used by what was once Netflix. It doesn’t care what facebook users watch either, just what I like based on my ratings for movies and TV shows.

    I am currently enjoying several TV series I never watched when they were first broadcast and I get DVD’s of old VHS movies and series I own but can no longer use. The commercial free and on demand aspects of the service make it worthwhile to me…for the present.

    As the service continues to deteriorate, however, and Netflix runs out of content I want I will cancel. If a service offering similar value for me comes along sooner I will definitely switch. I have as much use for Netflix as it has for me, little to none.

  • Jamie Briggs

    It’s still a no brainer to get the Netflix Downloadable service, IMO. It would have cost me around $500 if I tried to watch all those episodes of Lost, 24, Damages, Mad Men, etc. by buying them on Apple or Amazon.

    I just wonder how they are going to handle the whole Qwikster thing. It could be a real disaster if it forces people to manually subscribe to the new service instead of automatically transferring their old account.

  • http://www.emeraldgoals.com Esdee

    For now, my Netflix subscription is on hold. I like HuluPlus (not a great inventory yet) streaming for same price as Netflix. HuluPlus streams much better with my wacky rural satellite internet.

  • http://www.creativeblox.com rick

    i canceled the day i got the price increase notice. Watch more hulu, more itunes and go to blockbuster again. I got a 1 month membership there for unlimited movies 1 at a time for $8. plus each time i get a movie i get a coupon for a free 99 movie. plus games. its too bad about netflix. it was convenient. thats about all i could say.

  • Neo

    Goodbye Netflix. And good riddance. Arrogant arses.

  • steph

    I didnt know there was a price increase. havent seen it yet. taking away what little good movies they had & jacking the $ up i will def dump netflix! checking out other streaming opt is a must for all netflix users now.

  • Frank

    I’ve pretty much given up on Netflix and am trying some of the free trials on AfterNetflix.com.

  • Lopes

    I will keep the streaming to my son watch kids videos. Already drop DVD’s delivery.

  • Joe H

    This whole issue is still about price, I have checked all these other options and NetFlix streaming on my Roku box beats them all hands down. The amount of movies and TV shows we streamed last month comes to $0.08, at 8 cents per movie or TV episode there is nothing else out that even comes close. As far as the amount of people that still use Netflix last count was about 22 million. I think the one factor missed here is the Roku box, we stream Netflix, 2 news channels, 3 other free movie channels and as of today Roku added Disney. My complete TV bill is $14.00 per month what a savings compared to any other service. Remember Starz left Netflix because they wanted to charge additional money for there channel just like on cable or sattelite TV I say goodbye Starz.

  • http://my-gem.net John

    Simple put. Netflix will die if they continue to go in the direction they are heading now.

  • Quiller

    i currently have NetFlix. I usually only watch streaming video on my computer in my small home office. I am thinking of giving up NetFlix because I can now get a similar movie service from my Optimum Online service for only $9.99 a month and I’ll be able to watch it on my larger TV’s instead. I’m not so crazy about returning dvd’s that might get lost in the mail during their return.

  • marvin nubwaxer

    I’ll stick with downloading my media a la carte. Pirated media suits me fine and I’m paying $40/month for spotty internet service from AT&T. Even the ads on Hulu are getting a little overbearing now.

  • Jimmy K

    As a long time member of Netflix, I was truly dissapointed with the service after I chose to relocate in Costa Rica. Seems that an online service would be usable from any place there is internet, but not here nor many other countries I found out.
    Then the news came about increase in pricing, so I just cancelled my membership.
    Not much more to say other than when the ship is sinking, bail!

  • Paul Wharton
  • Sean

    No I will drop NetFlix, they raised their price and lost STARZ, that is who provided the Disney movies to them so my daughter could watch on her WII, plus you mail a DVD back and it takes 4 days or more for the next one to arrive. Not worth it when everyone is installing kiosks at Walgreens and grocery stores with dollar movies.

  • Alexander

    I find it funny that when Netflix added the streaming service to their DVD service, that there wasn’t an uproar of praise for the company for not charging more. Now that the company has split its service so it can get paid for each one, people want to complain. These are the same people that want Netflix to provide more content for no additional money. If they don’t get paid how are they going to pay STARZ and the like on Netflix? Please. Netflix is still a lot cheaper than buying TV shows outright, and frankly the other services don’t offer anything more for any less. HULU PLUS is garbage.

  • Alexander

    I almost forgot, go ahead and buy your $0.99 movies (not a bad deal), but don’t be late. Those late fees add up quickly if you forget to return those movies. It is just like when you have the cheapest texting plan with your phone company and you wind up going over. It could actually cost you more than if you just upgraded to an unlimited texting plan. My bestfriend was upset about Netflix and cancelled. Then he rented THE REEF for $0.99. Two weeks later he found the movie in his Gym bag. Turns out he put the movie on the side pouch and thought he dropped it off at the post before he went to the gym weeks ago. The movie had been in his bag all that time and now he had to pay $13 extra. So $14 total for a movie he could have watched on his $8 netflix streaming? $0.99 for a movie is Great if you return them right away. Not so much if you are the type of person that forgets.

  • Lori

    Funny, because until the lastest email from Reed Hastings, I was happy. But his explanation was concerning, as it was all about Netflix and Reed, and not about the consumer and customer. Honestly, I could care less that my friends and family can recommend movies online. I talk to them, they tell me what they like, or what they think I’ll like. I don’t need a tool for that.

    I’m thinking there are more service cuts and price hikes to come from Netflix, leading me to conclude Netflix is in trouble. So now, I went from “not looking” for a new provider, through “open to options” and right to “actively reviewing my alternatives”.

    I loved Netflix. Makes me sad.

  • http://www.modeltrainhobbyist.com Lionel Bachmann @ Model Trains

    I’ve seen people go from loving Netflix to hating and canceling it within a couple of months. I’m not sure if it says something about what Netflix is doing, or if it says something about the loyalty of it’s subscribers. Regardless, being in business is keeping the customer happy. Netflix started on DVDs by mail, and now they want to split it into it’s own company? Not only that, but didn’t take the time to see if the name was available on Twitter, sloppy. I agree, I think Netflix is going to sell Qwikster. We will see if Netflix continues to disappoint its customers come Oct. 1.

  • Brad

    Greed, plain and simple greed. Welcome to the new America. This guy, Reed Hastings is a clown and has not a clue on running a company. Jacking up prices time and time again when the country is out of work, bait and switch, one royal screw-up after another and all the while telling you it’s for your own good. He should run for office. He’d fit right in with the rest of the jack wagon tools in Washington today. You go Reed! You’re getting closer to the unemployment line by the day.