Today was a seemingly good day for Netflix. They just announced a better than expected 4th Quarter after what has been seen as the most disasterous year in their existence. Between the decision to split their DVD business off into a new company called Qwikster and their troublesome price hike, Netflix suffered a 70% drop in their stock price in a matter of months. Well, after today, it seemed that Netflix had put its worst days behind them and was poised for recovery. That was, until Reed Hastings made the following announcement.
Today marks a new beginning for Netflix. After a great Q4, we’re looking to tackle our biggest challenges as we look forward to the future, not only to improve our business but to improve the service we offer to our great customers. The biggest challenge we face today is simply not enough quality streaming content. We hear our customers, but our negotiation difficulties with certain movie studios have left us with our hands tied. So, we’re putting measures in place to solve this issue, and we think we nailed it. Starting tomorrow, users will be encouraged to rip and upload any Blu-Ray or DVD new release movie that is not currently part of our growing Instant Watch collection. In return, you’ll be credited with a free month of Netflix service. We believe that if even 3% of our users contribute to this initiative, we’ll be able to provide every new blockbuster hit within 1-2 days of its release.
News of this initiative seems interestingly timed, as the Stop Online Piracy Act (SOPA), was just put on hold after a national protest. However, if Netflix launches this initiative, they are set to face a tremendous amount of legal ramifications Robert Shapiro couldn’t even hope to defend. In fact, we wanted to validate our predictions, so we reached out to Robert Shapiro himself. “Let’s put it this way”, he said, “Netflix’s survival will be about as promising as O.J. Simpson’s innocence.”
We were able to get our hands on a screenshot of the new feature, shown below. We’ll be watching as this develops.