To describe the repair guy , Vlad, would be to say he was a nice Russian immigrant, what I would call “hustler”. I don't mean hustler in a bad way but instead in the sense that he talked fast and moved fast but you felt a little uneasy with what he was saying. Dear reader, I am not picking on Russians as my wife has some in her background and I only mention it for color commentary purposes.You see I am pretty mechanically adept and have built computers and know how to repair many things mechanical and electrical, but I had never opened and HDTV. Once Vlad opened up the set I recognized immediately that at least my Toshiba was essentially a large screen computer. I know how to check circuits but I deferred to Vlad as I was going to be paying him to fix the set. He quickly identified that the issue was the power supply board which I had suspected. So he told me that he was going to order a replacement and we would pop it in solving the issue with the set.
Well Vlad disappeared and would not return phone calls so my set sat idle on our large living room coffee table. After a few days giving Vlad the benefit of the doubt I decided I could remove the board and get a new one myself. So I hopped on to Google and began querying for the part using the Toshiba part numbers. I discovered some interesting things in my search. First, there was a lack of any new boards from Toshiba and one supplier told me it was as a result of the earthquake, while another supplier informed me that Toshiba was no longer supplying those boards. Second, the supply cycle for replacement parts used to be quite long, I hate to date myself but I have a CRT based TV that I acquired new in college and was able to get replacement parts for 20 years after manufacture. My current HDTV I had to have in 2006 and 5 years after manufacture parts are barely available, is the part of planned obsolescence?I was not ready to give up on the set after all it cost a pretty penny and I do not want to go out and buy yet another set even though that is what Benny and Turbo Timmy would like me to do. Initially I tried EBAY to see if anyone was selling one of the boards from a parted out set they were unable to repair after putting a Wii remote or some such object through the LCD screen which carries an exorbitantly expensive replacement cost. No luck on EBAY and it seemed all the TV parts suppliers were out of stock. Not ready to give up just yet I stumbled upon a site that showed me the capitalist spirit is alive and well. The site tvparts4less.com offered a service that seems to be the only one out there (at least that I could find). In the true American entrepreneurial spirit seeing that there was a need the company rebuilds the power supply boards. You send them your board and they send you out a replacement when they have the tracking number of your board. In the ture spirit of American business the service and product were outstanding.
The board arrived via another outstanding American business United Parcel Service (NYSE :UPS) in a couple days. I popped the board in and thought I was home free. Of course on my Toshiba the way it relays a problem to you is what I refer to as the triple Blink red light of Death or TBRLOD. As soon as the set went to power up the TBRLOD appeared, so I was back to square one.
Trying to find someone who was willing to take the time to figure what else could be the issue was a task on to itself. After many calls and convoluted searches though Craig’s List I located a retired TV repairman, Rico, who works out of his basement for what he calls smoking money (what is it with TV repair guys and chain smoking?). So I hauled the set over to Rico's house several towns away. Within a couple minutes Rico had the set apart and had diagnosed another board buried inside had craped out as well. Once again the challenge was going to be getting the part. Fortunately, one of the suppliers that Rico uses had one board of the kind I needed so the story has a happy ending.
Living without a TV for several weeks allows one to do other things with their time, but I have this habit of watching documentaries on a variety of topics before I go to bed. Needless to say without a TV one has to use other methods to get their fix. My choice was to utilize my laptop and stream Netflix (NASDAQ : NFLX). Honestly I am fortunate that I enjoy the documentary genre as Netflix streaming options are shall we say not up to snuff in other areas.Today Netflix announced its plans to separate its streaming and DVD monthly plans which for some customers will result in a 60% price increase to maintain their current level of service. This announcement comes on top of a price increase just 8 months ago. So now you have the “choice” to get unlimited streaming for $7.99 or unlimited 1 DVD out at a time for an additional $7.95. Netflix then sent out an email announcing the changes and the manner in which it has transpired has left a bitter taste in many consumers’ mouths including mine. Apparently I am not alone as the Netflix blog has some 8600 + comments at the time I am writing this and the count on their Facebook page stands north of 42,000 comments. On both sites the comments are overwhelmingly negative with members indicating that they were unhappy and either had cancelled or intend to cancel their service.
It seems that people myself included don’t see the value for the consumer in separating the services. In essence Netflix is requesting that you pay an additional $7.99 without any additional improvement in service. Netflix blog site explains the pricing structure and states “ We hope one, or both, of these plans makes sense for our members and their entertainment needs.” Clearly judging by the reaction Netflix missed the mark in customer satisfaction. In the next paragraph they glibly write, “As always, our members can easily choose to change or cancel their unlimited streaming plan, unlimited DVD plan, or both by visiting Your Account.” It appears like many members are following their advice by canceling. To put things in perspective Netflix has 23 million subscribers and so far only about 50,000 have voiced their opinions on the available outlets, but one should also not forget that this is still day since the announcement.
Many analysts are dismissing this outcry by saying things like once people sit down and think about the dollar value they will not leave Netflix. I beg to differ with the analysts in this case. In an economy where it has been reported that at dollar store revenues are down because the people who used to come in with $12 dollars to do their purchases have cut back to $8; people could jettison a service that they perceive is no longer a value for the buck. The same analysts argue that customers won’t leave the Netflix ranch because there is no competition, once again I disagree. There are alternatives to Netflix like Vudu and Hulu which both stream recent movies and TV. Hulu Plus is around the same price of Netflix streaming and has a somewhat different content mix, but people might just opt to switch in protest. Vudu provides a wide selection of first run movies in 1080P HD which Netflix doesn’t offer, however, the cost is $2 rental for 2 days. Unless one is a DVD power watcher more than 4 dvds a month then the cost is the same for the privilege. In my own situation there are times where we watch more movies than others but it would be cheaper to go with VUDU on average. Additionally you have no monthly fee for the privilege of using VUDU. There are other services like Cinema Now and one for Amazon (NASDAQ :AMZN) so one can investigate those as well. For the DVD diehards there is Redbox which is a DVD vending machine that is a division of Coinstar (NASDAQ :CSTR).
Essentially the analysts and Netflix itself live in a static world where they don’t see that the barriers to entry are not that high. This move by Netflix is being lauded by the sell side analysts but it from my perspective it appears that the brand loyalty is what they are banking on keeping customers, which I don’t think will be enough. Given the alternatives and with Netflix raising the price it provides ample incentive for an Amazon or other competitor that has the capability of Netflix to come in and undercut them. Once a company reaches a certain level of hubris they end up losing customers just like broadcast TV lost out to cable and in turn cable has lost to satellite. It doesn’t always have to be this way, for example look at Apple (NASDAQ :APPL), who competes by gong to extreme measures for customer service , quality and design. Apple essentially creates both brand loyalty and a barrier to entry against multitudes of competitors.
Does this mean that Netflix will crash immediately, well the answer to that is no. But Neflix sports a pretty lofty valuation of 85 times earnings and the future stock price gains are based upon some fairly strong estimates of growth and earnings. The backlash developing over this perceived highway robbery could cause a stumble in Netflix and given the high valuation the fall could be spectacular.
At the moment most are very optimistic about Netfix as investors continue to see more and more dollar signs, and price the stock to perfection. As of this point in time I think Netflix will run higher because it can. If I were a shareholder in Netfix I would keep one eye on the stock and my finger on the sell trigger to protect profits. As for me I am leaning toward canceling my own account and moving to other services. You see it is not that I can’t afford the extra $7.99 but it is the principal of it. I don’t like it when I am asked to pay an excessive amount for no new or improved service or product. It would seem that there are somewhere in the neighborhood of 50,000 members that agree with me.