Tuesday, October 25, 2011

Netflix and Ronald Reagan

It's kind of sad to see Netflix continue their downward spiral. The latest news is that their subscriber base has shrunk by over 800,000 users in the last quarter. Of course, they still have 23.8 million users so there's time to turn things around.

After the short lived Qwikster debacle (or should I say the still-born Qwikster debacle since it never really lived) I had hoped that they would really take a look at their decisions and take some positive steps to turn their business around. Investors clearly have little faith in their decisions and their stock price has plummeted to under a hundred after being over three hundred earlier this year.

The decision to raise their monthly subscription price by over 50% was a major error. Time and time again businesses and governments have made the same error, raising prices or taxes in order to try to make more money. It is well proven that the right way to increase revenue is to reduce prices and taxes. Noted President and  economist (yes, his degree in college was in economics) Ronald Reagan knew this and turned a stagnant economy around creating one of the great economic booms in history.

Both Netflix and our current administration in Washington could learn a lot from The Gipper.

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