Netflix: A Story of Greed, Apathy & Karma
As longtime Netflix subscribers, we were really miffed to learn earlier this Summer that they’d be dramatically increasing their rates. While we previously paid $9.99 per month for one DVD at a time plus unlimited streaming, the same combination would, effective September 1, 2011, cost $15.98 per month.
Note that this new pricing included no additional features—in fact, they’ll have less to offer since Starz Entertainment has terminated its deal as a content partner. Netflix claimed the increases were necessary to continue to grow & improve their service. Maybe. After all, the streaming service was initially a freebie but had grown significantly, so the need to shore up the infrastructure could be legit. But the company’s unapologetic, cavalier attitude struck a sour note and many customers were understandably angered, threatening to cancel their subscriptions entirely. Given the company’s withering stock value since—especially plummeting since Sept. 1st—a lot of those rightfully disgruntled customers have followed through with their threats. (In fact, we did too!)
Today, subscribers were treated to a personal message from Reed Hastings, co-founder and CEO of Netflix, with as backhanded an apology as you may have ever heard. He feigned remorse for how they handled the rate hike but still did nothing to earn back customer trust or instill faith in his leadership. He explains that the company is rebranding the DVD mailing portion of their service as “Qwikster” while retaining the “Netflix” brand for streaming only. This divisive maneuver is sure to aggravate customers who’ll have to bounce back & forth between the two sites, never knowing which movies will be available for streaming vs. delivered. Beyond that, this just seems like a feeble effort to distance the now-disgraced Netflix brand name from the price hike debacle. It’s a desperate move by short-sighted, greedy, leaders whose faulty management and slap-in-the-face customer service have just cost them the keys to the kingdom.
Netflix is embedded in TVs, DVD & Blu-ray players, videogame consoles, and well… just about everything but your toaster yet rather than continue to gradually build on the captive audience within that already-installed base, they spurned their loyal fans, got greedy and blew a phenomenal, once-in-a-lifetime market lead. Especially given how flippant the company’s management has been about all of this, it’ll be nothing short of a miracle if they ever fully recover. This is pure, swift consumer karma in action. Make room on the loser’s bench, TiVo & Palm!
Were you a Netflix subscriber before the price increase? Did you stick with ‘em or jump ship?
Be sure to check out Seinfeld’s Jason Alexander put a hilarious spin on this situation: