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Is Netflix's Qwikster 'the Worst Product Launch Since New Coke'?

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qwikster.com netflix
Qwikster.com, a Netflix Company.
www.qwikster.com

The hits continue to come for online streaming video service Netflix, whose stock price fell by 11% this week, bringing it to a 52-week low, following a month of merciless bloodletting on Wall Street. Fueled by public skepticism over recent price changes and confusion surrounding Qwikster, a corporate spin-off that’s inherited the firm’s DVD- and games-by-mail services, rising competition from Amazon and Wal-Mart has also spurred growing market mistrust.

Overall valuations are down nearly 50% in September, exacerbated by Amazon.com’s recently-announced decision to sell low-cost devices featuring TV/film content and the Kindle Fire tablet with a free month’s subscription to its Prime video download service. Plans to split the firm’s core businesses into two separate brands, which have left fans perplexed, and the expected loss of one million subscribers given recent price hikes have also prompted continued declines. A recent report from BusinessWeek, suggesting that Microsoft intends to add pay television programming from Comcast and Verizon, plus HBO, Bravo and Syfy, to its Xbox Live service appears to have investors spooked as well. All come on the back of recent revelations that Starz and potentially other partners will be pulling content from Netflix’s service, amidst Hollywood and the broadcast industry’s own growing fears of cannibalizing viewers.

The success of Qwikster, a separate service which aims to oversee by-mail rentals of both films and games for the PlayStation 3, Wii and Xbox 360 systems, remains to be proven. Launched as part of a public apology by Netflix CEO Reed Hastings for the firm’s inauspicious handling of its new subscription plan and price changes though, some critics have derided it as “the worst product launch since New Coke.” Whether or not it ultimately has the last laugh at critics’ expense, however, the new venture’s launch timing is uniquely unfortunate. The sudden strategic shifts, price changes, corporate repositioning and upsurge of competition have all combined to create a perfect financial storm for the increasingly beleaguered video provider.

Having fallen over 60% from its $304.79 all-time high on July 13, it’s anyone’s guess how long it will take Netflix to recover, if ever, from the far-reaching public outcry.

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