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:
3. On the right track
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.