Netflix - NFLX - stretching?

| About: Netflix, Inc. (NFLX)
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Six minutes ago online movie rental company Netflix sent the following email to its subscribers:

Dear xxx,

For a limited time, we're offering our valued members a special opportunity to give your friends and family one month of free Netflix service; that's twice the length of our regular free trial! Just forward this email to your friends and family, and they can enjoy a month of DVD rentals for free. We're only offering a limited number of these special memberships, so pass this on soon!

-Your Friends at Netflix

Quick comments:

  • Extending the period for free trials is equivalent to a price cut for new subscribers. It allows Netflix to attract new subscribers without cutting its profits from current subscribers, who may be devoted to the service and thus less price sensitive than potentially new subscribers.
  • Does this promotion suggest that Netflix is failing to achieve its new customer goals? Netflix is now underpriced by Blockbuster Online, and Blockbuster recently outlined plans to further expand its online movie rental service.

NFLX chart below.
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