Reed Hastings has not studied the aphorisms of Henry Ford II, the forbidding yet much gossiped-about scion of the famous motor family. "Never complain, never explain," he once said, in a stoicism that seemed obsolete even in the 1970s, when he uttered the words.

Explaining is what Mr. Hastings, the CEO of Netflix, has been doing a lot of lately. The company's stock price is down by 70% since July, partly on the fumbles that made him a household name. Mr. Hastings annoyed royally his customers by introducing a price hike that, in itself, hit only those who use both the streaming and mail-order sides of the business. Then he tried to separate the two businesses altogether, slapping dual users with the need to manage two accounts and pay two bills (though he backed off this part).

"So what?" is a question not as easy to answer as it seems. Investors and Wall Street analysts, if not awarding brownie points for execution, have universally endorsed Mr. Hastings's strategic thinking. Some in the media accuse him of rolling out a New Coke or Edsel. A better analogy would be Steve Jobs thumbing his nose at those who wanted a floppy drive with their iMac or Bob Dylan blowing off the folkies and playing rock and roll.

Mr. Hastings has been trying to mold his company to the future, not the past. You can't blame him for that. But then the company reported a shocking subscriber loss of 800,000 on Monday, and some of those who left are pure streaming customers who shouldn't have cared about a price hike aimed at DVD users. No wonder shareholders are panicking.

The real problem exposed here isn't that Netflix subscribers are a surly and sentimental lot, even if they are—especially the seniors who live for the red envelopes. The real problem is that Netflix doesn't license nearly as much content for streaming as it does on disk. On Netflix's streaming service, there's always something to watch, but seldom the thing you want to watch.

Take it from a customer. Nine times out of 10 the program you're seeking is available only on disk. You may not order the disk. You may order it and never watch it. But its very availability on disk, in the minds of many customers, seemed to imply it was only a matter of time until Netflix's huge DVD library would be available for streaming.

Wrong. That spell has been broken, as Mr. Hastings belatedly seemed to acknowledge in a letter to shareholders Monday. Breaking the spell will be a good thing in the long run.

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Netflix bears have all along argued that Netflix was destined to fade to irrelevance because its customers wouldn't allow it to raise prices enough for Netflix to afford premium streaming content. But the obvious rejoinder is: Whose customers will? Implicitly the critique blamed Netflix for not being able to win a race that nobody will win, in which all the stuff we want comes from one source at one price.

Forget about it. That world isn't coming. The hidden lesson of Netflix's fall from grace is that content markets will remain fragmented. In the future, you'll still need a search engine and a credit card, and you still won't find what you're looking for. In such a world, there's no reason Netflix can't survive and prosper with a streaming proposition that amounts to "all the content that $8 per month will get you."

In such a world, it will become clear that Netflix's great innovation was not the discovery that there's a market for streamed content (which surprised nobody). Netflix's great innovation was a price point—a bunch of choices for less than the price of a movie ticket. One strength of this business model is that others with TV ambitions (Apple, Amazon, Google, HBO, the cablers) won't feel a need to challenge it directly. They'll do better to make their own niches and charge a price that rewards them for being different.

Henry Ford II's advice was categorical, and perhaps categorically bad. Mr. Hastings's real failure was to explain too late and too little, and not to complain enough, especially about his customers.

After all, there is nothing wrong with hiking prices on customers who aren't carrying their weight. Businesses do it all the time. Credit card companies work hard to get rid of clients who don't use their cards often enough or don't run a balance.

Mr. Hastings was absolutely right to try to get more money out of disk users—money he needs to acquire content for the streaming business. How much content will be enough? That question will yield only to experience and revelations yet to come about who else plays in this market and how they play. The biggest risk today for Netflix may be short-term: Running out of cash and investor confidence even while a winning position is still potentially within its grasp.

But here's another guess: When content suppliers discover that the future won't be winner-take-all, they'll be more willing to support Netflix in its niche by making shows available at a price that works for Netflix.