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5 Ways Netflix Can Stop the Bleeding

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Can Netflix Still Deliver

Mashable OP-ED: This post reflects the opinions of the author and not necessarily those of Mashable as a publication.

Netflix’s worst decisions are likely behind it, but that has not stopped the bleeding. In the last 12 hours, the DVD shipping and online content streaming service has seen its stock tumble 37%.

The company knows it messed up. Its third-quarter earnings letter to stockholders put it in pretty stark terms: “We compounded the problem with our lack of explanation about the rising cost of the expansion of streaming content, and steady DVD costs, so that … many perceived us as greedy.â€

It’s true, a million customers who loved Netflix for its excellent customer service and effortless streaming video service turned on it when the company unexpectedly doubled its fees. It wasn’t greed that drove Netflix, though. It was desperation. Without that cash infusion, Netflix would not be able to make the all-important deals with movie studios and deliver fresh movies to its streaming service, which also happens to be Netflix’s best bet for the future.

Some have called Netflix’s recent travails merely a blip in an otherwise successful run. Others think Netflix current decline (which has now lasted for months) is unstoppable. I remain undecided, but have some ideas about how Netflix could recover.

1) No More Reversals

Make your decisions and stick with them—even the unpopular ones. If you have to increase the price again, prepare the change to roll out over a 12 month period, with small quarterly updates. Don’t apologize. Just explain the change clearly and leave it alone. Do not even mention Qwikster again.

2) Sign One Big Studio Now

All those new TV deals are nice, but Netflix desperately needs some decent feature-length movies in its instant queue. Bring Starz (and its partner Sony) back to the table and make whatever deal they want. Without Starz, Netflix streaming movie selection is simply dreck. Alternatively, lock Warner Bros. or Universal in a 5-year deal. If you can do this, then you should advertise every time an eagerly-anticipated fresh movie or two is available — and do this on commercial TV.

3) Create a Lifetime Membership Option

Make it a special, 3-month-only promotion and price it at $300-to-$500 for all you can eat physical DVDs (up to two in a customer’s possession at a time) and streaming movies. People will sign up for this — you may rebuild that crumbling U.S. user-based — and you’ll get a big cash infusion and, perhaps, finally have the bargaining power to sign a big studio like Sony or Universal.

4) Sell

Being an Independent company is a wonderful thing, until you don’t have the money to achieve all of your goals and your own leadership leads you astray. This is Netflix story and, as far as I’m concerned, it’s prime-time to sell. One, this will offer you the umbrella of a bigger company that will see Netflix as a valuable content distribution arm. Two: If someone like Turner Broadcasting buys you, you’ll instantly gain access to all the content from its various networks (Conan!), including Tuner Movie Classics and its vast library of old films from MGM and others.

Microsoft could make a good suitor. Netflix is already in the Xbox 360 and the upcoming Xbox live update promises more TV and content. Netflix could fit very neatly into Microsoft’s ever-expanding content and entertainment strategy (the 360 does play DVD’s after all).

5) Make Hastings Chairman, only, and Bring in a New CEO

When I recently wrote that Hastings should step down, many OF the comments adroitly pointed out that any leader at Netflix would face the exact same problems. This is, to a certain extent, true. Netflix’s content problem is not Hasting’s fault. I do blame him for the bad decisions, poor communication and wild vacillations, but some things are just beyond his control. Even so, I see immediate benefit in taking the CEO role from Hastings (he’s already chairman and would retain that title). Putting a new face on the company will send a message to shareholders and customers that Netflix is trying to right the ship. If Netflix does nothing and lets Hastings hang around, the stock simply continue to fall and the company may not survive.

More About: DVDs, netflix, streaming content

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