What started out as a great business that seemed to be savvy, forward-thinking, and downright smart has had a rough year thus far.
First, of course, we have the well-known and oft-criticized rate hike. Sixty percent! That’s a big jump. Imagine if gasoline prices had jumped 60% or more in a relatively short time span, we’d be really…oh, wait. Well, it sure is criticized, at any rate. Myself, I didn’t see it as a big deal – the DVD-to-home thing was never all that appealing anyway, and so I didn’t feel like it was a problem. It seems pretty clear I was in the minority on that point, as Netflix lost 1,000,000 subscribers due to the price hike. I overheard two guys complaining about the $6/month price hike to each other as we waited in line to buy $7 popcorn and $5 soda at the $11 movie we were going to see. (Ed. note – This seems like it’d be a good place to complain about my over $100 cable bill last month. But meh.) One vocal complaint on Netflix’s Facebook wall complained that Netflix was his ONLY luxury since he was on unemployment, so the extra $6 a month was a deal-breaker.
But really, a price hike is understandable if the company was not profitable at current rates. I think it is unreasonable to expect otherwise. The real problem was in the communication, or lack thereof. Netflix didn’t wish to damage its stock viability by announcing that it simply wasn’t making ends meet and therefore needed to increase rates, so they tried to slide one under the radar. They sent an email to subscribers, which millions stated they never got. Antispam for the win?
Netflix has had further failures since then. Stock falling is just the start. Now the word is that the streaming movie giant has failed to secure a deal with Starz to continue the deal already in place – that means not only will Netflix cost more, but the selection will likely become quite a bit smaller. Not good.
But lets get back to the communication part. Where Netflix has really fallen flat is its public relations and media management. Over the weekend, Netflix CEO Reed Hastings sent an email out to all Netflix subscribers with a pseudo-apology and explanation, and also to announce the split of Netflix (streaming movies over the web) and its newly-named-yet-exactly-the-same-DVD-by-mail service Qwikster. Keep in mind that what Qwikster now controls is what Netflix was started out as. But Netflix sounds more “computer-y” so they are keeping that for the streaming. I think we might have advised against a brand-name split. This announcement has already been lampooned greatly – check out this webcomic for one of my favorite commentaries on it (warning, some not-exactly-safe language inside) http://theoatmeal.com/comics/netflix.
The most recent gaffe, as of the time I wrote this, is the fact that nobody at Netflix or whoever they are paying to help with this PR nightmare bothered to check to see if Qwikster was viable on the two major social media platforms. A quick check on Twitter will reveal that @Qwikster is a pot-smoking potty mouth who started his Twitter account in April. One of his more tame Tweets: “Hahaha Aye Mayne I’m be annoying my bro to day”. Check out http://twitter.com/#!/Qwikster if you want to see more of his gems (poorly-spelled and grammatically incorrect explicit language warning).
So now Netflix is paddling as fast as they can against the social media current, trying to avoid going over the waterfall. They did manage to get a Facebook account up for Qwikster (with a Netflix envelope that has been Photoshopped to say Qwikster as their icon). One of the first comments that I saw on the page was “More like Quitster.” Now, whomever it was that didn’t have time to research whether Qwikster was a viable name to use seems to have time to remove dozens of posts each hour – which is prompting even more posts which curse at Netflix for removing posts. This is not going away anytime soon.
I can’t wait to see what they do next.
Kalvin Kingsley is the Operations Director for KK BOLD. He has had The Notebook in his queue for the last five years running.