Originally published on PROpenMic
by Emily Diab
For years, Netflix has been the miracle service that kept the DVD rental industry afloat. At least its own rental industry. Netflix also takes much of the blame for crashing traditional rental businesses such as Blockbuster and Movie Gallery. Some such businesses were forced to close their doors forever, helping Netflix add millions of new customers a year.
As Netflix climbed the mountain of market control, its power seemed to turn to arrogance. Little did co-founder and CEO Reed Hastings know, taking over the market might result in closing a door of his own.
A Series of Mistakes
The Price Increase
On July 12, Netflix began its steady downfall by announcing a price change in its services. At the time, Netflix users paid $9.99 per month for two services: unlimited streaming and unlimited DVD rental. The same services are now priced separately at $7.99 each, coming to a grand total of $15.98 a month for both.
The 60 percent price increase resulted in an uproar. Thousands of disgruntled Netflix users began complaining via blogs and social networks. Ultimately, many members discontinued their service.
So why did a $6 increase on this popular service create such major chaos? James L. McQuivey, an analyst at Forrester Research, stated it best in a Sept. 19 New York Times article: “Once you arouse such passions in people, you have to expect they’ll be equally as passionate when they feel betrayed.”
This betrayal was the result of Netflix implementing a drastic change with little explanation. Customers felt abandoned without proper reason or justification for the changes.
Then came the “apology.”
Hasting’s Not-So-Hasty Apology
Two months later, another email from Netflix showed up in my inbox. But this time, it was personally signed by Reed Hastings. It’s about time!
One of the first rules of effective PR is to maintain positive relationships. Addressing users personally might have been the first thing Hastings did right.
So Hastings let the angry uproar die down for two full months, and then came back with his tail between his legs. But better late than never! The email began, “I messed up. I owe you an explanation.”
Yes. Yes, you do.
Customers who had hope in Netflix stuck around. I happened to be one, mostly because all of my other options have been bulldozed due to lack of business.
So the sincere apology and explanation I had been waiting for finally came directly to my inbox. And so I read . . . and read . . . and continued reading, and then I reached the end. The apology I had been waiting for turned into more bad news.
The email had a total of two apology statements, but Hastings never admitted fault. He glossed over his wrongdoing and turned the focus to customers who “felt [Netflix] treated them thoughtlessly.”
I’m sorry you feel that way.
In what was supposed to be a heartfelt apology, Netflix managed to throw us another surprise. This new surprise? Qwikster.
As if separating the services wasn’t bad enough, Netflix has now introduced a new company, Qwikster, which will take over the DVD rental service. So now, customers will pay two separate bills. How inconvenient.
Now everyone is thinking “Qwikster, what’s that?” Well . . . Netflix doesn’t really know yet either. Without an established website, brand recognition or market identity, how are customers supposed to trust Qwikster?
The Qwikster home page states it will be “launching soon,” the online equivalent of giving someone the “one moment please” index finger to the face. The new company also lacks a social identity, one of the easiest ways to stay in touch with a large (but dwindling) customer basis.
There is, however, a previously made Twitter handle for a man going by the name of Qwikster whose status updates consist of drug use references, foul language and sleeping troubles. You’d think Netflix would have covered its bases before it developed Qwikster.
Brooke Hammerling, founder of the PR firm Brew Media Relations, said in a Sept. 19 New York Times article, “If they were really serious about this and had been planning it for a while, they would have dotted all the i’s and crossed all the t’s.”
This PR blunder might be the end of the road for Netflix. The popular fan base that chose “Team Netflix” for years will have to decide for itself. When Netflix thought it had everything figured out, it soon realized that customers really do matter.
I guess being popular doesn’t mean everything.