Netflix's Profits Are Gone
This has been the year of Reed Hastings' fall, and it gets more dramatic by the month. The Netflix CEO just revealed his movie streaming company won't post a quarterly profit in all of 2012. His gruesome horror epic continues, grab the popcorn!
After being named Fortune's "Business Person of the Year" in December, Hastings hiked prices 60 percent on a popular plan in July, and saw cancellations outpace signups by September. He promptly announced a new name for Netflix's DVD service,got a verbal beatdown from his board, and reversed the name change by October. Now, notes Henry Blodget at Business Insider, he's hidden in an SEC filing the news that "as a result of the relatively flat consolidated revenues and previously announced increased investment in our International segment, we expect to incur consolidated net losses for the year ending December 31, 2012."
The big picture problem is that people continue to cancel their Netflix accounts in droves, especially on plans involving DVDs, plans that were subject to the July price increases. These cancellations are "steadily declining," supposedly, but in the meantime Netflix needs to raise $400 million to shore up its balance sheet. It's looking like that new Arrested Development season Netflix announced might actually be a reality show, with Netflix as the Bluth Company and, just spitballing here, Reed Hastings as Lucille.