Why I'm Cancelling Netflix, And Why You Should Care

| About: Netflix, Inc. (NFLX)

“So what? Who cares,” might be your typical response to the title. Pouring over quarterly reports is much like using moving averages on charts – it is a lagging indicator of past performance. In an effort to guess where the business is headed we need to consider user experience and competition. My reason to cancel Netflix (NASDAQ:NFLX) could be shared by many others and it may be a leading indicator of the eventual outcome for the company.

First Love with Netflix

Here in Canada we do not have the same options as our southern neighbors. Streaming video on demand is meager at best – at least the legal options. When Netflix Canada debuted in late 2010 it seemed too good to be true – all you can watch movies for $7.99. After signing up with the 30 day free trial and watching a few titles I began to notice that most of my time was spent looking for something suitable to watch as I waded through large lists of B-movies about giant crocodiles battling with oversized sharks. But hey, the service had good value and it was something new that had little competition. Surely more content would soon be added.

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Competition Ramps Up

Since Netflix came to Canada, other companies began to offer streaming video. GlobalTV (NYSE:SHAW), Citytv(NYSE:RCI), CTV (NYSE:BCE), and CBC put their TV content online including some decent movies for free. Apple iTunes (NASDAQ:AAPL) expanded their titles that you could rent for only 99 cents in addition to the newest releases at regular rental prices. Rogers On Demand (RCI) began an online offering of TV and movies provided you were a customer. Even the Brit’s are now offering BBC content with their global iPlayer app for $8.99 a month.

It used to be that Netflix had the Canadian market cornered with legal streaming movies – but this is no longer true.

Lack of Content

If the decision to raise subscription fees was one of the biggest mistakes in the history of Netflix U.S., then a severe lack of content will be the downfall of Netflix here in Canada. We currently have about one-third the content of the U.S. There is promise of beefing up the offering but with so little fresh content currently being added it feels like a Chinese food buffet after the local football team loads up on the meat and egg rolls leaving only fried rice and a snow pea behind.

While Netflix promises to give Canadians more, why should we keep paying $8 a month until they do?


Netflix doesn’t offer the newest movies, or even the best. In order to acquire a large amount of cheap content they obtained rights to cancelled TV shows and movies that should only exist on VHS. For $7.99 I wasn’t complaining at first. Now I need to reassess what I am paying for.

Realistically, our family watches less than 2 movies a month on Netflix and the shows are rarely crowd pleasers. Is this still good value?

  • Two new blockbuster movies on iTunes isn’t much more
  • All the popular TV shows are legally free through Canadian providers and I don’t even subscribe to cable. Some of these offer free movies
  • iTunes has 99 cent movies to round out the 'filler movies'
  • If I used Rogers cable my choices would even be wider
  • My wife loves BBC and my $9 would reap greater satisfaction there

With the amount of free and paid content, I am second guessing the wisdom of offering huge libraries of low quality content for a reasonable monthly fee. Instead of going to an all-you-can-eat establishment, á la carte may give you what you want at a cheaper price. While I believe Netflix had a wide head-start, I think they failed to establish themselves as a leader in good and fresh content. My one cancellation may have little effect on Netflix as a whole, but I can imagine that others are coming to the same conclusions I am – there are simply better options and better prices.

While the low price of Netflix may not make it a short, I don't think it would make a low risk long pick either.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.