Netflix to Announce First Financials Since Consumer Backlash
Netflix (NASDAQ:NFLX) is expected to release their 2011 fourth quarter earnings this afternoon. It will be the first financials to be shared since the company increased their prices and attempted to split its DVD and streaming services, which led to major consumer backlash. The New York Times also reports that the company will likely use its media attention to advertise its new original content streaming.
The company has openly acknowledged that the DVD rental-by-mail service that it was once known for is fading. Netflix predicted that they would lose as many as 3.6 million DVD-by-mail subscribers in the fourth quarter. The New York Times quoted Ted Sarandos, Netflix’s chief content officer, during a conference yesterday who said, “The truth is, the DVD business is going to see declines no matter what we do.” One obstacle that Sarandos pointed to in regards to DVD-by-mail services is the increasing time it takes for DVDs to be come available. Netflix recently renegotiated its terms with Warner Bros. which will extend the wait time for rental availability from 28 days to 56 days after the titles go on sale.
Sarandos also defended the company’s attempt to split its DVD and streaming businesses. “In fact, I think there was nothing really that wrong with the plan, it’s just that eventually the public domain turned on it so heavily that it was like, it’s not worth trying to resell this.” He also said he was unsure whether consumers had forgiven the company’s missteps. We should find out when the financials are announced this afternoon.