Thank You, Netflix!

Netflix, with its latest rate change, is helping customers like me explore not only other video sources, but also explore my technology to avoid being impacted by its changes.

In one fell swoop, Netflix has gone from being perceived by movie watchers across the U.S. as the darling ‘little guy’ that displaced Blockbuster to now being perceived as just another greedy corporation. In less than 24 hours after the announcement, over 30,000 people posted comments to Netflix’s Facebook page and they are almost entirely negative (some people suspect that 30,000 is conservative since Netflix is deleting some of the comments).

They had good reasons: they are paying millions of dollars in royalties/fees to Hollywood to stream videos. And despite what they say about their DVD channel being a long-term strategy, there is speculation that they sorely want to reduce their huge physical inventory and streamline their operations in the process. And then there are those pesky shareholders. All good reasons for raising your prices/changing your pricing model.

But the lesson for us as consultants is that you need to be very careful about making bold moves to force customers into a business model that works better for you. Netflix’s new pricing model incents customers to move to more video streaming/downloads vs. order physical DVDs. However, only 27% of Americans are currently streaming videos. Seems like too early to punish your ‘bread and butter’ customers.

Customers enjoy having the option of either ordering a DVD or streaming video. Personally, I try to download first, but if I can’t find the movie I want, I’ll order it. It’s great to have the option because the streaming product just is NOT there, yet. Even my 17 year old son knows that. When we talked about moving to the ‘streaming only’ plan to avoid doubling our fees, he went haywire, saying that most of the movies he watches aren’t available via streaming. And sure enough, he proved that by showing that only 2 out of 10 videos at the top of our queue are available for download right now. Not ok.

There are definitely things Netflix could have done to execute this change better, specifically, by doing it AFTER they had invested more energy and funds in beefing up their virtual movie inventory. By communicating added value at the same time they raise prices would have eliminated a lot of the outrage that their customers have. But as a result, they are forcing consumers like me to look around for alternative sources for videos and, yes, they will also get our family moving quickly to see what technology we have that will allow us to download videos in all of our viewing areas of the house. A move we’d have to make eventually, so again, “Thank you, Netflix!”.

About Jen Berkley Jackson

Jen Berkley Jackson, founder and owner of The Insight Advantage, has extensive experience in using various methods (surveys, focus groups, one-on-one interviews) to integrate the voice of the customer into all functions, helping organizations increase market share, revamp product lines/services, and ultimately increase customer loyalty and retention.

Comments

  1. Jen, I totally agree with you. Streaming video is our preference and the only delivery we will get is when one is not available to download, ie The Kings Speech. I am pretty PO’d at Netfix right now.

  2. Evidently, the 1 disk at a time folks are the most irate: According to an article on Y! News http://tinyurl.com/3fp52ng: “Approximately 50 percent of people surveyed are currently using the $9.99 one-DVD-at-a-time plan with unlimited streaming. Of that segment, more than one in four planned on canceling Netflix service when the price increase goes into effect on September 1. Thirty one percent plan on switching to the streaming only plan while 13 percent are opting for the one-DVD-at-a-time plan. Only 15 percent are planning on upgrading to the more expensive $16 hybrid plan.” Take my quick survey to weigh in from your own perspective: http://1991163.polldaddy.com/s​/netflix-new-pricing

Speak Your Mind

*

Help us fight SPAM * Time limit is exhausted. Please reload CAPTCHA.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Youtube
Youtube
LinkedIn
Share
Twitter
Visit Us
Follow Me
Instagram
Women In Consulting Blog