Netflix takes another jab
Shares slip after Amazon strikes a streaming deal with CBS.
By Jeanine Poggi, TheStreet
As part of the agreement, the e-commerce giant will allow its Prime users to stream CBS' television content. The terms of the deal were not disclosed.
Starting this summer, Amazon will add 2,000 episodes, growing its total number of Prime instant videos to more than 8,000 movies and television shows. It will also offer full seasons for 18 popular television series, including The Tudors, Numb3rs, Medium, the complete Star Trek franchise, Frasier and Cheers.
The move comes as Netflix has faced stark criticism from subscribers after a rate hike and outage.
Last week, the movie-rental company announced it is splitting up its popular DVD-by-mail and streaming subscription combo into two packages, which will now cost $16 per month, compared with $9.99.
Netflix experienced an outage over the weekend that lasted eight hours. The company said internal issues were resolved.
However, CNBC reports that Amazon is paying CBS 40% more than Netflix pays for its content from the network.
Shares of Netflix were falling 1.7% to $282.43 in afternoon trading Wednesday.
Netflix is opening itself up to future competition by alienating loyal customers now. If the service was flawless (no broken discs) and the entire contents of its library were available for streaming, it could probably get away with charging $30/mo, but as it is, it's shooting itself in the foot.
For my part, when a company's management shows me disrespect, I feel no compunction about spending my dollars elsewhere, even if service is equal. There are companies I use that cost marginally more, but in whose service i can rely. This Amazon deal is certainly worth looking at and I now have little reason to stay with Netflix OR to return even if they change policies [which would probably only be temporarily].
My guess is that they are in trouble and have done the math for what they will need to do to keep the stock going. After all this is what it is all about now and nothing more. It is a shame that companies have to make this change from being a great company to focusing so much on revenue that they lose sight of why they were great in the first place.
I can afford the price increase, but I am not going to reward their greed. I choose to walk away and find an alternative where I am appreciated as a customer. I think they truly don't understand that the loyalty they built through years has just been destroyed in a day.
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Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
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