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NET FLIX Free Resources
Now I realize that I am probably...
Now I realize that I am probably an unlikely suspect to take swings at Netflix. Last month, I wrote about Wall Street underestimating the potential of the DVD market. Back in April, I wrote about the refreshingly unheralded revival of Internet stocks. On the surface, Netflix should be the peanut butter meeting the chocolate -- the grenadine diving into the ginger ale. But it's not. Logic is a twister, and Netflix is a trailer park.
I guess I better start explaining. It all begins with retention. Netflix has an awesome sales pitch. It's the glutton's dream: a smorgasbord that never rushes you out the door with free shuttle service to and fro. It's paradise, until the kinks pull the plug on the faade. You realize that the shuttle service can run days slow in a world where instant gratification is the norm. You show up, pay up, only to find that some months you just aren't all that hungry. The novelty wears thin, and I'm not just assuming that.
On an average month, Netflix will lose 8% of its subscribers. Multiply that by 12 and the annual turnover under hypothetically constant numbers is a staggering 63%. So, how good is this service if most members are giving Netflix the heave-ho within their first year. Could Blockbuster survive with that kind of defection rate?
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