Monday, September 19, 2011

Netflix: a company without a clue

Dear Netflix,

Get a clue about public relations. You used to be a customer-centric company, shipping DVDs quickly free of charge for your subscribers.

But this year you really blew it. In the quest for shareholder value, you announced this July the separation of DVD and streaming content -- and price increases of up to 60 percent. Netflix, by offering streaming content in the first place, you are saving yourself money in shipping, and offering a convenience to subscribers.

Here's what you received in the process of putting shareholder priorities above subscribers' desires:
  • A market value down 53 percent since the announcement, wiping out $8 billion in shareholder value
  • The loss of 600,000 subscribers
  • Tens of thousands of complaints
When I saw the e-mail from your co-founder and CEO, Reed Hastings, this morning, I was encouraged by its beginning:  "I messed up. I owe you an explanation."

I quickly was discouraged and realized that you haven't a clue about public relations. You now are separating the DVD business into something called Qwikster, but that site will not be integrated into the Netflix site. Therefore, subscribers will have to visit two different websites and have two different charges on their credit card statements.

Mr. Hastings, you also mentioned that you were concerned about Netflix going the way of AOL dialup or Borders bookstores. I don't think that you need to worry about that; those companies actually seemed to care a bit about their customers. The moves that you have made this year likely will be more akin to the New Coke debacle.


Brant Skogrand

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