Tuesday, November 15, 2011

Netflix's Demise

After being a loyal Netflix customer I was surprised as countless others when I received an email letting me know that my service of unlimited streaming and one DVD mailed at a time would not only be separated but also more expensive. I was confused and without giving it much thought I canceled my service as I would be traveling in the upcoming weeks and leaving the U.S. in the upcoming months. It seemed like such a hassle to have two separate accounts.

Netflix’s decision to not only raise prices but also in addition separate their services has been a topic of conversation everywhere from classes to casual get-togethers. With no apparent reason or explanation the DVD rental and Internet subscription service sent out an email to inform its customers of its plans.  There was no sort of clarification or justification for this change, the company was merely communicating a fact through this email and assuming people would either be okay with it or eventually get over it.  The membership, which at one point cost customers under $10 for a combination of DVD rental (with delivery) and online content streaming, had increased to just under $16. 

Netflix required its customers to have two separate accounts, one for the DVD rental service that would be known as Qwikster and one for the online streaming that would retain the name Netflix. This presented a burden in many ways, first of all having to keep track of two separate payments and additionally it would require users to go back and forth between accounts to access their queues, making a process that used to be simple, more time consuming and complicated. Since the company issued an apology statement and video to its customers regretting the way this decision was handled and eventually canned the whole thing, announcing the termination of Qwikster within a few weeks. However the company has already lost over 800,000 customers and angered many more.

While Netflix had been a media company that had focused on having an analytical data-driven approach to making decisions, its lack of consumer insight resulted in a terrible failure. It is the combination of quantitative and qualitative customer data that could have prevented this whole debacle. Netflix disregarded the emotional attachment that customers had to the Netflix brand and the red envelopes they had been receiving in the mail for years. Changing its business model and moreover what the brand stood for shows us that these types of decisions must be incredibly well thought out and looked over from every angle.

Ana Rico 
Graduate IMC

1 comment:

  1. Ana This is a good blog except you don't establish what we should be learning and establishing your expertise in the first paragraph. Also, this should be reinforced in the final paragraph.

    Make it easy for the marketer/reader to understand your key recommendations and your IMC expertise.

    Finally, your twitter tweet is REALLY weak. Noone cares about your first blog but they do want to read your marketing expertise. Pick your words wisely to create intrigue to make the reader want to read this blog.