How the Decline of Netflix Occurred

By Drew Muller

I remember the first time I saw the thin red envelope. My world was turned completely upside down. “Mom?” I asked in a quavering voice. “Are we too poor to afford movies from BlockBuster?” I was quickly informed that my family was indeed financially stable, and that the envelope was the gateway to the new realm of watching movies. Video stores were a thing of the past.

Netflix was all the rage. Subscribers could rent as many movies as they could watch and mail them back whenever they wanted with no extra fees—all for one monthly cost.

But things have changed. Once the masthead for viewing and renting movies and TV shows online, Netflix is now struggling to stay afloat in the rapidly changing industry as a result of some questionable business decisions. In other words, the company is like a Real Housewife of Silicon Valley: a hot mess.

This past summer, Netflix announced that it would begin offering its streaming TV and movie service in Central America, South America and the Caribbean before the end of the year.CEO Reed Hastings might have thought it was a brilliant idea, but let’s think about it.

Countries like Venezuela have fragile infrastructures, in turn causing corporate insecurity. Add unreliable Internet connectivity to the mix, and Netflix is stuck with a wasted venture. Oh, and Mexico already has its own “streaming service” -- street corner bootlegging. Though instant streaming might be more appealing than having to walk to the street corners and risk being lit up by drug cartels, I just don’t understand what the brains behind Netflix are thinking.

Keep in mind that these are the same people who thought splitting the company into two separate entities for its DVD-by-mail and online streaming services would be a good move. In this case, two was not better than one.

After quickly rethinking this, Netflix decided to remain unified as customers were already disgruntled about increases to the monthly fee. Perhaps its recent deal with DreamWorks and its first foray into original content, with the drama “House of Cards” premiering in 2012, will provide the much needed spark, but it’s hard to tell.

The woes of Netflix are only the beginning of a trend of established companies breaking down psychologically after desperately trying to out maneuver more versatile competitors. As the technology shifts toward the cloud-based services of Apple TV and the like, I wouldn’t be surprised if it’s the first of many to be institutionalized.