Thomas
Baekdal wrote an article today in which he explains why Netflix in fact got it right by splitting their business into two completely separate companies.
We can argue that Netflix should have treated their customers in a more graceful manner (and they should.) We can also argue if completely separating the two businesses are wise (personally, I think it will make it harder to convince people to change.)
But their overall strategy is the right thing one.
– “
No, Netflix Got It Right” by Thomas Baekdal
Photo originally by ozcast (License: Creative Commons)
Having the correct overall strategy is meaningless if you can’t execute it in a way that keeps your customers from jumping ship
en masse. Regardless of what your internal corporate decisions turn out to be, that needs to translate into a realistic customer-facing experience.
Making it extremely difficult for your existing (and generally extremely loyal) customers to do what they’ve been doing for years with no problems is not the way to do it. I understand the need to separate the aging (and true, in all likelihood
dying) DVD-by-mail service from the way-of-the-future streaming video service. It makes sense.
Old & busted; new hotness.
But execution and strategy need to go hand-in-hand. One without the other is useless and will bring doom. Doom! No one likes doom. Except maybe Sauron. He even had a mountain named after it. I digress.
The fact that the comments on Hasting’s blog post were almost entirely negative shows just how well that strategy is paying off. People are leaving Netflix in droves – the entire service, not just the streaming portion or the shipping portion,
the whole thing. Forcing users to manage two separate queues, two separate sets of ratings, with no integration whatsoever (and, given that Netflix has this wonderful API, I have no idea why they couldn’t integrate at
least ratings) is asinine.
You want to kill the DVD-by-mail business? Fine, that’s your decision, good luck with it. But infuriating customers in the midst of an “apology” isn’t the way to do it.
Strategy or no, Netflix still got it wrong, in a serious way.
The vast majority of marketing/PR sins are forgivable depending on the context, and given some time. There is one problem with the context of Netflix’s faux pas that may sink them: the loss of their crucial Starz/Sony licensing deal.
If the streaming service remained strong, and continued to get stronger as was expected, the price hike and the ditching of their mail service would be forgotten before too long. Replaced by a quaint nostalgia for the days when it was necessary to invoke a disc-shaped talisman in order to watch our media.
Instead we’ll all just open our wallets even further for the telecomm companies that have been fleecing Americans for the last century.
“If the streaming service remained strong, and continued to get stronger as was expected”
Ay, and there’s the rub. The price hike I could deal with. The service was already cheap enough that a couple extra dollars a month was fine.
But losing huge chunks of their streaming catalog (and just yanking those titles out of users’ queues without notice) means the service is getting less useful and more expensive, even without this Qwikster split thing.
Nonsense, and it’s going to make a lot of us just jump ship. (Insert pirating joke here.)