Friday, September 16, 2011

TechCrunch 90210

Eye-popping melodrama is playing out publicly on TechCrunch right now. Writer Paul Carr just resigned in one of the most remarkable resignation letters you will ever read (click here) -- and, that's the point, it is all for the world to see. New Editor Erick Schonfeld responds -- likewise in full public view (click here).

As my wife reminds me, Paul's resignation manifesto reminds me of that classic stunt pulled by the JetBlue flight attendant who announced his resignation, grabbed a beer, opened the cabin door and slid down the chute onto the tarmac for all the world to see. The limelight followed.

Same will happen here. Paul reminds us in his resignation post that he is primarily a writer of novels. And, he himself concedes that the last couple weeks have given him plenty of fodder.

You can bet that this public resignation -- which is opening mouths around the tech world (including mine) -- ain't gonna hurt his future book sales ...

Nice play, Shakespeare!

Netflix Needs a Net Fix Fast!

Have you seen Netflix's stock price lately? As the market opens today, it sits at just about $170. Ahh, it seems like just yesterday that its stock traded above $300 per share. And, that's because it was just about yesterday! July in fact!

What has happened?

First, price experimentation. The company was recently embroiled in Netflix-gate -- i.e., doing something very understandable, but rejected by many -- a price hike. Here is my blog post about the company's controversial moves (which I praised at the time as part of natural digital media evolution).

Second, one of the company's primary suppliers of premium video content -- Starz -- publicly humiliated the company by telling the world that it had broken off contract extension negotiations. As I wrote at the time, I wouldn't be surprised if the two parties ultimately come together -- i.e., that Starz is simply playing Netflix with the oldest trick in the book -- but for now, investors are justifiably spooked. Even if Netflix is able to get Starz to accept its ring, it will be at a high price ... very high. And, that is just one content supplier. What happens next?

Third, the company just announced its subsequent quarterly results -- and they ain't particularly pretty. For the first time ever, Netflix is losing customers -- and at a faster pace than even Netflix ever expected. Sure, the company apparently knew that its price experimentation would cause some angst -- but, certainly not to the level it has seen.

So, what's Netflix to do in the face of these challenges? My advice -- generally stay the course (with your new pricing), but do a much better job reaching out to its customers (like me) explaining what it has done and why it has done it. Also, give us a better idea of where you are taking the service. Are you committed to giving us all more and more A grade premium movie and television content? And, make us feel really good again -- give us special offers.

Bottom line -- don't be afraid to continue to turn the knobs and pull the levers on pricing to dial it all in. Your customers can't expect you to never change your pricing -- the new world order is simply too new. But, help them fully understand any changes before you hit them with them.

However, in the long run, what is Netflix's ultimate prognosis? I wrote about this a long time ago -- and I predicted a significant "coming down to earth" in its stock (much like the fireball I saw and wrote about earlier in the week). In the short term, I continue to be skeptical of the company's overall inability to justify its recent lofty stock price.

But, remember, we are early early early in this brave new multi-screen video world -- video on demand, anytime, anywhere ....

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