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“I messed up…” This is the one of the key lines that Netflix CEO Reed Hastings told subscribers in an email on Sept. 19th. I remember opening my inbox and saying “You’re damn right!” and then not reading any further. And I believe I was pretty mild about it. When Netflix recently announced that it was going to split its streaming and DVD-by-mail delivery service AND up the costs, it prompted a lot of backlash. I was invited to join anti-Netflix groups, and publicly bash the company for just being so blunt and crass about the whole thing. The reality is that I have XBox Live, so the only way to enjoy Netflix on that system is through streaming. It’s a pretty cool app. But what happens when I wanna watch “The Gate”, or find “Adventures in Babysitting”? It will tell me DVD only. Typically, it wouldn’t be a problem, cause I just tap a few keys on the laptop and badabing! badaboom!, it’s en route. Not anymore.
I understand the move. I get how Hastings feels that streaming and DVD by mail are two separate focuses. It’s a business decision. But when you’re a market leader, the last thing you wanna do is jump up one day, and say, “Oh by the way, we’re splitting these two. And yeah, before I forget, it’s more money. k thanks bye!” (Hastings never actually said that, that’s just what some people heard) I do believe he’s sincere with reaching out to his customers as he wrote “I owe you an explanation. It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology.” Good man. Maybe I’ll forgive you.
He nuts and bolts of the change comes because the DVD to door part will now be renamed Qwikster (because it’s “qwik”, get it?) and offer video games. Netflix will remain as the streaming option. He explained the entire change as follows: “Most companies that are great at something — like AOL dialup or Borders bookstores — do not become great at new things people want (streaming for us)…” “So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.” While I agree with the business decision, (and we’ve beat his delivery of this news to a bloody pulp), it’s going to be a challenge to stay loyal. We’re in agreement on this one as he also added, “For me the Netflix red envelope has always been a source of joy.” “The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.”
Lots of folks have already jumped over to Blockbuster who has media-to-door and streaming options already. They integrated video games months ago. In the end, consumers are a fickle bunch. You can’t please everyone, but instead of treating your customers like inmates on initiation day, be simple, direct, and kind. Understand that people are resistant to change, and although change may be necessary from time to time, you have to treat your customers like a virgin on prom night… Gently.
Hasting ended by thanking those that have stuck with him. Because I am an avid XBox player, I’ll stick by your side too. But you better add some more titles. Or add an Elisabeth Shue section! Hang on, Blockbuster.com is calling… BRB
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