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Netflix has revolutionized the way we rent movies, it’s nigh impossible to argue with this fact. Their low cost monthly fee for unlimited movies with no late fees spoke to millions who signed up for their service. Not content to rest on their laurels, Netflix added an amazing online streaming service to their already amazing DVD service. Unfortunately, Netflix is now revolutionizing how to mess up dealing with their customers.
I have been a big fan and customer of Netflix ever since they started out. Originally I had the expensive 3 disc plan but soon dropped down to 1 with streaming to lower my bill. I enjoyed their selection of TV shows on channels like HBO that I do not subscribe to. I would always be a season behind, but at least I could watch it. Their streaming offerings seemed anemic in the beginning, but their Anime selection has always been top notch, and is growing rapidly.
Earlier this year Netflix announced they would charge for the DVD service and the streaming service separately, thus increasing the price of having both by a whopping 60%. There was much outrage as that is a significant increase in price. I had just dropped my price from about that level down to its current $10/month level so I was unhappy as well.
The real kicker is how Netflix CEO, Reed Hastings, handled the backlash. Instead of apologizing or explaining the reasoning behind it he sent out a mass email that was sort of lame. It basically said “The price increase is good for you” which did not make any sense to the populace at large. As bad as the outrage over the price increase was, it paled in comparison to the response to Hastings’s letter.
Soon after the abomination of a communiqué, Netflix announced that they would split the two services further and each one would be its own company, with the DVD service being renamed as Qwikster. This separation was going to force users to create a brand new account with its own queue and everything. This was the straw that broke the camel’s back for many and Netflix has seen almost a million users cancel their accounts since all this has been happening.
I think all of this outrage and backlash could have been avoided in the beginning with Netflix simply just being honest with us. Fees for content licensing have gone up almost by a factor of 10 in the last few years. If the Netflix price hike was due to them reacting to their fees going up, then they should have said so in the first place. Most of us would have forgiven them since our cost would not have even doubled when theirs had grown by such a large percent.
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