Netflix loses 800,000 customers and $12 billion in 90 days

In Defense of Reed Hastings | TechCrunch

“One supporter of today’s radically transparent marketplace is Dov Seidman, the CEO of the consultancy firm LRN. As Seidman told me when he appeared on my TechcrunchTV show last weekend, this transparency will force companies to behave more ethically thereby creating both a fairer and more efficient economy.

But what Seidman and many of the other apologists for radical transparency miss is the destructive economic cost of all this openness. Today’s customer-centric Internet may be radically transparent, but it isn’t either radically fair or radically efficient. The problem is that power has shifted so dramatically from the producer to the consumer that it is becoming harder and harder to build viable, long-term companies in today’s fast moving and increasingly unforgiving digital economy.

Take, for example, Reed Hasting’s Netflix, which, in 90 nightmarish days, has been transformed from one of Silicon Valley’s most impressive paragons of innovation into a company on the verge of a nervous breakdown. Just last March, MG Siegler was rightly gushing  that Neflix was about to “shift” the entire cable television industry with its strategy of streaming originally produced content. But six months later, having increased its price by 60% for some customers earlier this summer, followed by a poorly communicated attempt to split the company into an analog and digital operation, Netflix has lost 800,000 customers and $12 billion in market value in 90 days – including a stunning $2.3 billion in one black day earlier last week.”