Netflix Bounces Back As Old Customers Return

1 min read

Netflix LogoNetflix looks to be finding its feet once more after the precipitous fall which came when it decided to annoy many of its customers in the middle of last year. Some of those patrons are now returning, but the recovery is far from complete.

Netflix Stumbles

As you may recall Netflix had a rather tricky second half of 2011. Mainly by its own hand. It made several bad decisions (at least from the point of view of a vocal minority among its customer base) that led to people and investors both jumping ship. The share price dropped, the brand lost its sheen, and many people felt the company had committed a kind of professional suicide.

The main reason for this was Netflix’ desire to move away from the DVD side of its business. First it separated the two in terms of price, asking people to pay $7.99 for each rather than the $9.99 that used to get them both. Then they spun the DVD business off entirely, launching Qwikster. For a brief period, at least.

The prices stayed firm but Qwikster was quickly killed. And now, almost a year on since the company started messing up, things look to be getting back to normal.

Customers Return To The Fold

Judging by comments made by Netflix CFO David Wells, things are picking up. According to CNET, the following is a snippet of the speech Wells recently made at the J.P. Morgan Technology Media and Telecom conference:

I think we’re feeling really good about the brand, the progression that we had from last year. We think there’s room to grow, but the improvements in retention and our growth in Q1 and Q2 since Q3 and Q4 of last year make us feel pretty good. Rejoined or folks rejoining the service still remain about a third of our new subscribers that are coming in. So that is an encouraging stat. We think, we’ve said before that the brand hit will take years to recover from and I think that’s still true, with the bulk of the recovery coming in the full year and I think we still feel that way.

This suggests those inside the company are remaining positive about the future but realize they’re at the start of a long climb back into people’s hearts and minds. The brand took a sizable hit but not sizable enough to kill it. The fact that lapsed subscribers are coming back has to be a good sign.

But The Share Price?

So, customers are returning to the fold once more, but Netflix’ share price shows no sign of returning to the levels it was at before last year’s spectacular collapse. That’s not to say they never will though. I would still buy shares in the company if I was investing for the longterm.