Netflix fixes what was never broken

Take a company with a stock price north of $300 a share and millions of new subscribers every year.

Take a company with a stock price north of $300 a share and millions of new subscribers every year. Add puzzling decisions, such as a drastic price increase and the introduction of services few subscribers want, plus poor customer communications, and you have the New Coke moment of 2011, brought to you by Netflix.
The one-time tech-sector darling sent many customers running for the nearest Redbox this summer when it announced subscription price increases of up to 60% as it sought to move consumers to its Web-only streaming services. Thousands of consumers complained on Netflix's blog and social media sites such as Twitter and Facebook.
For nearly two months, Netflix stuck to its guns. Finally, CEO Reed Hastings apologized to consumers via email, saying, “In hindsight, I slid into arrogance based upon past success.” Noted. But instead of stopping there, he added that the company would drop the Netflix brand for its DVD-by-mail service and adopt the moniker “Qwikster.” Aside from getting used to a new name on the familiar red envelope, the decision also meant consumers would have to use separate websites to manage their accounts and pay distinct bills for the streaming and mail services. The countdown to the next apology began immediately.

PR Play rating:

1. Clueless
2. Ill-advised
3. On the right track
4. Savvy
5. Ingenious
Netflix also forgot to Google the name “Qwikster” before committing to it. Otherwise, it would've found it was already taken by a profanity- and marijuana-loving Twitter user.
Within a month, Netflix saw the light, nixed its separation plan, and dropped the Qwikster brand before it ever launched.
Netflix had a disaster-filled three months. However, it gave consumers some of what they wanted by returning to its mail-and-streaming-combined roots and original brand, al-though it did keep the unpopular price hike in place.

Hastings was right in his apology email when he said many brands fail to transition well to new technologies. Considering its poor customer communications and service decisions, he could've been talking about Netflix.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in