#Netflix and the New Red: Act 2

In July I wrote about Netflix poor handling of their recent price hikes and the seemingly callous and arrogant manner in which they made the announcement and dealt with the subsequent customer outcry. Read here: https://brandsandbottomlines.wordpress.com/2011/07/13/netflix-and-the-new-red/

Since the price hike took effect Netflix has lowered its estimates by at least one million subscribers and its share price has dropped about 25%. Sadly, they did not heed the warning of thousands of negative comments or customer threats to close their accounts. It was not until their share price started to drop that Reed Hastings mea culpa surfaced.

Today, they took their recent actions to an even more confusing level when Reed Hastings offered an apology for the way in which the earlier changes were handled.

“In hindsight, I slid into arrogance based upon past success,” Hastings said. “We have done very well for a long time by steadily improving our service, without doing much CEO communication.”

But then rather than offer an olive branch to customers lost or currently on the fence, which would have been the most logical thing to do, it seems they completely panicked and lost the plot. Hastings  went on to announce that he was breaking Netflix into two companies; renaming the DVD-by-mail service to Qwikster and keeping Netflix for online streaming and gaming.

This change will further inconvenience customers, who will now have to sign up for two different accounts, create two queues and pay two companies on their credit cards each month and not be able to avail of both streaming and mail service from a single provider. Even more embarrassing for Netflix, the Twitter handle for @Qwikster is already being used someone who has a pot smoking Elmo as his photo, and tweets stuff like “Don’t believe that nigga that sed the bought my shyt cuz it aint tru.”

Hastings ended the blog post by saying, “Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words.”  I believe that Netflix’s latest actions just made this task twice as hard.

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