COMMENTARY | Netflix is once again trying its hand at reactive damage control in response to a recent mass exodus of users. The negative feedback is largely because of the company’s move to raise rates on its combined streaming and DVD by mail service, which formerly cost $9.99. Company analysts believed separating the two services and charging $7.99 for each would be the best move for Netflix in the long run. They obviously did not account for the viral nature of the complaints and the value customers put on continuing their service.
This morning I received an email from Reed Hastings, the co-founder and CEO of Netflix. It contained an apology, and also referenced more changes to my Netflix account. To further separate their DVD by mail and streaming businesses, Netflix is now going to charge them separately on my credit card and the DVD mail service will now be called Qwikster. The only improvement as far as I’m concerned is the option to add video game rental to my account, which will also add an extra charge.
Netflix made a big mistake introducing the streaming service as a bonus to its mail-order service. If the company had started it as a separate service in the first place, customers would have no basis for complaints and Netflix would still be a growing and thriving company that enjoyed high satisfaction and customer service ratings.
I understand that the two services deserve special attention and marketing, but the way it was handled makes me feel like I am a victim of highway robbery. The service I paid $9.99 for in August suffered a 60 percent increase in September.
The Internet and more specifically social networking has exacerbated discord to an extent never before seen in reaction to a single policy change by any company. Even after it became apparent that the move was wildly unpopular, Netflix refused to compromise on the policy, which to the company itself was a strategic separation of two totally different offerings, but to customers was nothing more than a drastic price hike.
While the email and press release made it clear that I am now a member of Qwikster, Netflix is not going to go back to its successful business model and the company regrets losing a ton of customers to a blatantly bad business strategy, I just feel like it’s another insult to my intelligence and another nail in the Netflix coffin.
My circumstances have changed since I originally signed up for Netflix. I would have been considering dropping the service at this time regardless of the price hike and changes to the format. However, I would have been much more likely to stay on as a customer if Netflix would have made an effort to compromise with the large group of upset customers.
The DVD by mail service is extremely fast and, aside from an occasional scratched disc, I never have any problems with the actual service. If they cannot make some type of concession to me for staying loyal after the massive exodus, I don’t believe I will ever receive a DVD in a Qwikster sleeve in my mail box.