retail news in context, analysis with attitude

by Kevin Coupe

Netflix, as part of its financial report issued yesterday, said that its streaming customers were "up by 2.05 million customers in the United States, from 25.1 million in the third quarter" — was its biggest in nearly three years, and helped the company report net income of $7.9 million, surprising many analysts who had predicted a loss."

The New York Times story notes that "the results reflected just how far Netflix has come since the turbulence of mid-2011, when its botched execution of a new pricing plan for its services — streaming and DVDs by mail — resulted in an online flogging by angry customers ... Netflix’s fourth-quarter success was a convenient reminder to the entertainment and technology industries that consumers increasingly want on-demand access to television shows and movies. Streaming services by Amazon, Hulu and Redbox are all competing on the same playing field, but for now Netflix remains the biggest such service, and thus a pioneer for all the others."

It is just this week, remember, that Dish Network-owned Blockbuster said that it will close more than 300 of its stores in the US, and already this year its UK division has filed for the British equivalent of bankruptcy protection.

And the competition is only going to get more intense as these companies seek ways of furthering their brand equity. In the case of Netflix, that means coming out with original content - the new series "House of Cards" and the revival of "Arrested Development," for example - as a way of differentiating themselves.

There is no question that Netflix misjudged the pricing market at one point, but it appears to have survived the misstep and now is focusing on consumer-centric innovation.

Good lesson.
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