Monday, September 19, 2011

Netflix redeems itself... sort of

Back in July I wrote about Netflix's decision to split the prices and charge separately for instant viewing and delivery by mail. I felt satisfied, as I am sure many other Netflix customers did, when I recently saw an article on the extreme drop in Netflix customers after its announcement on the price changes, which went into effect this month.

Now, Netflix co-founder, Read Hastings, has sent out an apology letter to all members and opened a forum for discussion on a similar blog post. Watch the video announcement at the end of this post. Here's an excerpt:
It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.
Turns out, Netflix is renaming its direct mail service Quixster and keeping the name Netflix for streaming.
We realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.
Personally, I don't like the new Quickster logo, but I understand their reasoning, branding-wise. They would have been smart to hold off changing prices until the announcement about the new brand, though. It might have saved them a lot of complaints.

The problem remains, however, that people like things simple. Netflix was the original "have movies sent to your home" service, and it was one of the first to offer streaming of movies online. I think a lot of people liked Netflix because it combined the two and made it simple. If Netflix wanted its new branding to work, it would have kept the Netflix name for both streaming and direct mail, but started a new streaming/instant brand and worked that up separately without the Netflix association. Then they could have slowly weaned out the instant on Netflix and referred people to the new brand.

So, while this new announcement and apology has redeemed Netflix in some ways, it has made things worse for them in other ways.

What do you think? Where did Netflix go wrong? Did they have the right idea for all these changes?
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