Netflix is all over the news today for their decision to abandon their plan to separate their DVD rental services and their video streaming platform. The new name of the DVD rental division of Netflix was going to be Qwikster and it was going to be entirely dedicated to DVD rentals sent through the mail. The consumer response to the announcement of Qwikster was, to be kind, negative. Netflix has made a series of unfortunate decisions recently in regards to the way that they do business and consumers have not hesitated to lash back mostly on the internet.
The first unpopular decision by Netflix was to raise their prices by 60%. They didn’t just raise overall prices however, they instead separated their membership into two kinds one for DVD rentals and another for customers who only wanted to stream movies. This meant that people who wanted the ability to rent DVDs and stream video had to subscribe to each service separately. While the cost of maintaining one account was lowered to $7.99 a month as opposed to $9.99 a month consumers would now have to pay $15.98 for both services and they would have to maintain two accounts as opposed to one.
The consumer backlash was tremendous and some comedy icons joined in the fight. Well, just one comic icon, Seinfeld’s Jason Alexander. This video chronicling the struggles of Netflix subscribers soon went viral because while it did in some ways mock the intense anger that people were feeling against the brand it also highlighted the fact that people were upset with a brand that they loved. This was Netflix’s first opportunity to at least present their consumers with a better explanation for why they were making these decisions. Instead, they made the poor branding/PR decision to do nothing to quell their customer’s dissatisfaction. They lost approximately 1 million subscribers after this pricing hike.
The Qwikster announcement made a few weeks ago just added fuel to the fire. Now, it looked like Netflix was determined to move ahead with an overwhelmingly unpopular decision and alienate even more customers. This webcomic is an example of how popular online media and digital opinion leaders took the news (not very well). After their Qwikster announcement Netflix experienced yet another substantial drop in subscriptions. This caught their attention and they quickly changed gears and announced that they would no longer be moving forward with Qwikster.
While this most recent announcement seemingly soothed the masses (Netflix stock rose 10% afterwards) it was too little too late. Now Netflix looks like they only care about public opinion when it means that they stand to lose a lot of money. This leaves them looking greedy which is something that a brand never wants to do. Customers (especially in the age of social media) want to feel like the brands that they like are listening to what they have to say. Netflix has some serious thinking to do if they want to remain successful.