Comments on: After Crushing the Movie Rental Business Model, Netflix Crushes Itself http://businessmodelinstitute.com/after-crushing-the-movie-rental-business-model-netflix-crushes-itself/ The Premier Business Model Blog Mon, 02 Dec 2013 19:07:27 +0000 hourly 1 http://wordpress.org/?v=4.0.1 By: It’s time to throw in the towel on Apple | PandoDailyhttp://businessmodelinstitute.com/after-crushing-the-movie-rental-business-model-netflix-crushes-itself/comment-page-1/#comment-1081 Sat, 26 Jan 2013 00:36:32 +0000 http://businessmodelinstitute.com/?p=1256#comment-1081 […] talking about a company whose distribution model is more brilliant than Amazon’s. It has a visionary leader who is like Teflon to his critics. Plus, everyone loves […]

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By: NosMhttp://businessmodelinstitute.com/after-crushing-the-movie-rental-business-model-netflix-crushes-itself/comment-page-1/#comment-476 Tue, 31 Jan 2012 18:59:34 +0000 http://businessmodelinstitute.com/?p=1256#comment-476 Netflix changed it’s model and raised pricing, losing many clients in the interim – TRUE. However, the amount of clients it lost was offset by the revenue increase due to the hiked subscription fees. Yes it lost customers, but it also raised it’s profit margin.

The stock price that is mentioned is pointless from Netflix’s perspective in this case. This stock price does not effect their business model; stock is issued as a way to raise money it does not effect the companies ability to continue being a success/failure.

The stock was bound to come down at some point because it was overvalued and the market could not continue justifying the price that it was trading at. Investor emotion caused the price to rise to a point of being overvalued at its highs, and investor emotion caused it to drop to a point of being undervalued at its lows. Once investors stopped evaluating this company with emotion and starting looking at the profitability of the business model then it quickly returned to a price closer to a fair value.

With that being said I do think you have a great point to your final lesson. It just saddens me that you attempt to back it with using the reaction of a secondary market and not the outcome of actual company cash flows…

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By: Teo Gracahttp://businessmodelinstitute.com/after-crushing-the-movie-rental-business-model-netflix-crushes-itself/comment-page-1/#comment-473 Tue, 31 Jan 2012 12:48:54 +0000 http://businessmodelinstitute.com/?p=1256#comment-473 This is a really basic rule of business – don’t change your business model if it is successful. And absolutely don’t change it without consulting your customers. The CEO of this company should be fired, but then again, it’s common practice these days to elect amateurs to these top positions.

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