Last week was not a good week for Netflix, as they were down around 30% for the week as they revised subscriber counts way down from prior estimates. I’ve been a Netflix cheerleader for years, but after having witnessed some of the things that have happened over the past few months, last weeks nosedive is not surprising. In fact, it should have been expected.
How did Netflix lose their way?
- They celebrated. When Netflix started, they were a pesky fly buzzing around the big giant of the video world, which of course was Blockbuster. They went full tilt at Blockbuster and never stopped, and in the end, they ended up taking Blockbuster down. I think they got a little too complacent after beating Blockbuster, and decided to take their foot off the gas for awhile. Bad move.
- They cheesed off the wrong group. When Netflix announced changes to their pricing structure, they effectively unbundled streaming video and DVD-by-mail. This was great news for those customers who preferred one and had no interest in the other, but those groups are ‘fringe’ customers. The fact remains, the bulk of their customers would like to have access to both, but the new pricing plan turned their nose at those people. If you’re going to willingly cheese off a group of your customers, fine, but cheesing off the biggest group is generally not the best move.
- They got cocky. After the new pricing was introduced, backlash started almost immediately. I read somewhere that Netflix basically said that they expected some of their customers to be upset and that they were actually prepared to lose some customers as a result. What?!? Even if a company is OK with losing customers, rule number one is that you never, ever say that you’re OK with losing customers. Any Netflix customer reading that had to feel a lot less important after reading that. Really, really bad choice of words.
So can Netflix return to winning ways? I think so. Wanna know how? I’m not going to talk strategy or partnerships or pricing. Those details aren’t so as important as their way of thinking.
It’s simple. Forget about the fact that you’re the top dog. In fact, don’t even pay attention to those nipping at your heels. Instead, pretend that you’re the one chasing someone else and nipping at their heels. Why? Because that’s what worked for you. Netflix was untouchable the entire time that Netflix was chasing after Blockbuster. Netflix, you need that hunger, the one that got you to the top, so create yourselves an invisible target and make your moves as if you’re chasing after them.
Otherwise….you soon will be. For real.
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I'd say they got greedy and didn't realize demand for their product was so elastic.
I agree with The Biz. They took their popularity for granted but in this economy watching DVDs and streaming movies are not essentials. And with all of the competition, you can easily get the same product somewhere else legally. They also lost one of their biggest content suppliers 'Starz'. That is a big reason why they had so many popular titles on their list but now they don't.
The stock drop is just the beginning. And everyday seems to offer another reason to sell. Now they want to split off the DVD side of the business which will only alienate customers more. Their now a buyout waiting to happen once the split occurs.
I really don't see how Netflix can recover from this. I definitely thing every statement released by them, and their president, has sounded arrogant and has affected my loyalty. There are enough competitors out there for me to take my business elsewhere.
If streaming is the future, I think Netflix ought to be worried about their lack of contacts with the big content producers. But maybe splitting up the company is a hard decision they had to make… yet the process could have definitely been managed better.
Oops, I meant, lack of contracts
"Netflix basically said that they expected some of their customers to be upset and that they were actually prepared to lose some customers as a result."
There you have it. When a company morphs into a huge money-making machine, management doesn't care about their customers. It explains the customer disservice at Qwest, Sears, the big banks, you name it.
To bad as a group we consumers have neither the energy nor the gumption to turn to small, local businesses and simply quit doing business with outfits that affect a "take-it-or-leave-it" attitude.
I was a Netflix customer but after finding out about the price increase, I went ahead and cancelled the service. I just found out DISH Network is coming out with a special offer for new and existing customers! DISH Network has teamed with Blockbuster, they have a bunch of cool offers that are available to New and existing DISH Network customers as well as non-DISH customers. Blockbuster has the most extensive library of movies, games and TV shows and you can get thousands of On-Demand titles straight to your PC or TV! Customers will also have access to over 100,000 movies, TV shows and games by mail with new releases coming out before Netflix and Redbox. You can exchange them inside a Blockbuster store and even get Blu-Rays at no additional price. The best thing about this new offer is that you won’t find these titles on DIRECTV Cinema or Comcast on Demand and everything is combined onto one bill! I actually work at DISH Network and I’ve been wanting to tell people about this for a long time and I want everyone to check it out!