Netflix CEO says he's 'tired of making excuses'
On earnings call with analysts, Reed Hastings talked about the company's inability to meet a target for adding new streaming subscribers and said "it doesn't feel great."
Reed Hastings doesn't appear to be trying very hard to hide his disappointment about Netflix's poor third-quarter performance.
During a conference call yesterday with analysts to discuss the, the Netflix CEO sounded a little shaken and down. The company's critics would say rightfully so.
The Web video-rental service acknowledged yesterday that it failed to meet a quarterly goal for signing up new customers to its streaming service and will now miss its full-year target of 7 million new streaming customers. According to Netflix's revised subscriber numbers, Netflix will now finish the year with between 4.7 million and 5.4 million new streaming subscribers.
In his closing statement, Hastings said: "We're continuing to work very hard and look forward to being in a better place relative to our guidance a quarter from now. We certainly try very hard every quarter. It doesn't feel great to come in at a lower half, but it is what it is."
Earlier in the call, Hastings addressed a question from an analyst who wanted to know about the effects of "seasonality" and the Olympics on Netflix's performance. Netflix had previously said that the London 2012 Olympic games and the warm summer months could sap demand for video entertainment and suppress new subscriber additions.
But with a golden opportunity to dump the company's troubles on these factors, Hastings appeared to tear up the script.
"You're very gracious, because I imagine what you really feel is: 'Why do we make seasonality excuses and then Olympics excuses?' And aren't you getting tired of hearing it?'" Hastings told the analyst. "We are tired of making those excuses, as opposed to getting back to our track record."
The track record Hastings was referring to was the dazzling streak of quarterly performances prior to the summer of 2011. That was when Netflix and its CEO alienated customers with a botched price increase and a failed attempt to spin off DVD operations. The backlash came in the third quarter of 2011, when it lost 800,000 subscribers. The company hasn't been the same since.
Before last year's meltdown, Netflix subscriber numbers seemed headed for the moon. For the first quarter of 2011, the company added more than 3 million new customers. In the quarter prior to that one, the company added 2.8 million.
But don't look for Hastings to hang his head for long.
During the past decade, the video service has. There were periods when the stock tanked on news that Netflix was engaged in a price war with Blockbuster and when Wal-Mart entered the sector. (Don't forget that Netflix eventually trounced them both.)
For a report on how, company insiders told me that Hastings told employees afterward that all great tech companies had goofed at some point in their history but that they recovered and moved forward.
That said, Hastings is bound to be confronted by more doubt about Netflix's streaming business model. The first being whether the service is as attractive as it was before the company started losing rights to films from some of the top Hollywood studios.