Analyst Michael Pachter Says Netflix is Broken - 11 Million Lost Hybrid Subscribers by 2012

Posted Fri Dec 2, 2011 at 10:20 AM PST by Dick Ward

Of those 11 million, he predicts that seven million will downgrade their plans and the rest will leave Netflix completely.

Right now, the future of Netflix is unclear. Things could go one of two very different ways for the company thanks to an incredibly aggressive plan for growth. Netflix is expanding to other countries, acquiring new contentw, and doing everything it can to get new customers, but that may be at the root of the problem.

"In our view," writes Michael Pachter of Wedbush Securities, "the company’s business model was broken when it raised prices for its hybrid customers, and continued customer defections will require it to invest ever-increasing amounts in marketing."

Pachter suggests that Netflix will lose 11 million hybrid accounts, meaning accounts that subscribe for both disc delivery and streaming. He says that four million will leave the service and the rest will downgrade to just streaming or just discs. This loss is just the beginning of what Pachter says will be a big loss for Netflix.

Source: Home Media Magazine

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Tags: Michael Pachter, Industry Trends, Predictions, Netflix (all tags)