Sunday evening Netflix CEO Reed Hastings announced via a blog post that the company will be splitting the brand in two – Netflix will carry on as video streaming service only, while the newly coined “Qwikster” will continue to offer the DVD by mail service upon which the company was originally founded.
The announcement came on the heels of reports that some 600,000 customers had left the company in response to their controversial recent price hikes (for some, allegedly as much as 60%), and was offered as a kind of half apology – not for the price hikes themselves, but for communicating poorly about why the changes where necessary at all.
By Hastings’ own admission, the manner in which these changes were made left much to be desired from a customer relations perspective. It doesn’t take more than 10 seconds on Google to find scores of angry Netflix fans expressing emotions ranging from disappointment to anger to downright befuddlement. Indeed, their reactions are understandable, if not entirely justified. What originally was a questionable price hike (from the consumer’s POV) now comes with a generous side of hassle to boot. Two bills to pay, not one. Two queues to manage, not one. Two sets of ratings/reviews to parse, not one. It’s hard to imagine that ‘non integration’ wasn’t a guiding principle behind the decision.
Yet perhaps as striking as the announcement itself is WHEN Hastings decided to break the news – on Emmy Sunday, when much of his customer base was likely either immersed in the award show itself or Sunday Night Football. It came across a bit like a teenager making amends with his parents just before church starts, or during a birthday party, or at some other equally opportune time. This wasn’t an apology that inspired much in the way of sincerity or confidence.
What to Make of It?
As a marketer, my first reaction to the news was actually quite different – wow, what a gutsy move, I thought! Whether it succeeds or fails, I have to respect the boldness of the decision, which Hastings consciously admits was borne out of a fear that his brainchild would suffer the same fate as other old media distribution giants like Blockbuster and Border’s. And while I’m still scratching my head at whether it’s the right move for either the brand(s) or their customers, I can’t help but feel like from a brand image perspective, Hastings’ announcement was another giant misstep, another half measure.
If Hastings believes so strongly that this move is the ‘future’ of content distribution, then why not embrace that point of view wholeheartedly, even with some irreverence? Netflix was the future of video rental 10 years ago, and we’re doing it again. There will be a few growing pains along the way, so you’re either with us (and the future), or you’re not. Who’s on board? The most price sensitive customers in the bunch would have jumped ship anyway, and whatever core of loyalists Netflix has would have admired the audacity and confidence from the consumer’s perspective, much like I did from a marketer’s perspective.
Instead, he offered what can only be described as a weak apology without taking way any of the pain, and actually adding some! Sorry guys, it will cost you some more…and now you’ll have to manage two accounts…but…but…but…?
But WHAT? I suppose only time will tell, but if Hastings is smart, he’ll provide that answer, this time without apology, and soon.