Netflix Seen Vacillating On Offering Game Rentals

Tweet

It’s another sad day for Netflix as, following yesterday’s word of a foothold imminent in European markets via the UK and Ireland, Netflix stock takes a beating, and perhaps saddest of all (at least for the console gaming market) word emerges that Netflix may well not rent out games after all.

Following the disturbing announcement that Netflix shares took a beating representing one third of their stock price suddenly gone yesterday, which was likely spurred on by the further announcement that Netflix somewhere around 800,000 subscribers  in the last quarter, Netflix further went on to freak shareholders out by disclosing that the expansion into the UK and Ireland would likely mean that the next two quarters will be without profit as well. But following the completion of the UK / Ireland expansion, Netflix looks to halt expansion activities altogether and circle the metaphorical wagons around its balance sheet. But then came the real blow, as CEO Reed Hastings said that Netflix is “yet to decide whether or not to offer video game discs” for rental, a decision that will no doubt leave users everywhere disappointed. I certainly was.

This sets Netflix up into something of a bad position, overall. They’re losing subscribers at a pretty good clip, and with that loss comes an attendant loss in available cash. A lack of available cash means they’ll have less to bargain with to get new content providers in the door (which is exactly why, at least on the surface, Netflix lost Starz, and with them a substantial portion of their available streaming titles starting in February), and in turn, less to offer in streaming which is where a lot of Netflix’s customers go. Turns out only seven percent of Netflix’s new customers sign on for a DVD rental package. And with Netflix visibly vacillating on whether or not to offer games, that’s one edge Netflix may not offer, which means another segment of customers who will go elsewhere.

Admittedly, right now, I’m not what you’d call optimistic about Netflix’s chances, and me a Netflix subscriber for the last three years, no less. But what do you guys think here? Am I overreacting? What could save Netflix from its downward spiral? No matter what you think, the comments section is waiting below, so head on down and tell us what you think!