After another round of bad news, Netflix seems to be switching gears once again, and is perhaps sending a message to customers and investors that it is unsure of its own identity.
On Oct. 24, CEO Reed Hastings announced that Netflix had lost 800,000 customers in the third quarter of 2011, and that it expects to suffer even more profit losses in the coming quarters. As a result, investors fled Netflix's stock in droves, leading to an overnight share price drop of 37%.
Looking to pick itself back up, Netflix posted a new content strategy in a letter to shareholders, announcing that it will become a pay-TV channel with exclusive, selective content similar to HBO, reported All Things Digital. The company seems to be pinning its hopes on the belief that, just as viewers subscribe to HBO to get access to the premium cable channel’s exclusive content, they will do the same for Netflix.
This is just the latest example of Netflix reshaping its business model quickly in response to criticism. In the past month the company aborted its plan to split off its streaming and DVD-by-mail services, which itself was a response to heavy criticism of its new pricing options. It's difficult to bring customers and investors along for the ride when the destination keeps changing.