Netflix’s status with users

Been several posts about Netflix’s status with Wall Street and while the stock has taken a dive, the fact that Reed Hastings was able to quickly step up and admit to a strategic mistake earned him some good will – as one journalist said, he’s still has Teflon so his mojo’s still on.

Talk about Teflon – or maybe the halo effect, SAI’s Jay Yarrow quickly dismissed that Netflix didn’t botch the rate increase communication to subscribers – everyone will complain no matter what in this down economy.  Sorry Jay, yes, there are definitely ways Netflix could have handled that announcment better.  First of all, as I said before, even though Netflix is out to trounch cable providers, be respectful of your competition; else you may become one yourself.  Over the years cable companies have taken similar beating for the way they’ve raised their rates so they plan, spin, and offer consessions to work around that rate increase, and they do it ahead of of time.

What could Netflix have done?

  • be transparent with subscibers
  • offer migration plans to move people over slowly to the new rates like all new customers get new rates and loyal existing customers get stepped up plans
  • The point being, at least make an attempt to pretend to understand the impact this will have on your loyal customers

“Netflix Pays $1 Billion To Get Gossip Girl, And Other CW Shows For The Next 4 Years” -Oct 13.  C’mon.  With deals like these, Netflix will clearly be in the hole more quickly than they will ever admit.  When you start off being a cheap service, and move to the big tent with the big players, you’ll never be able to eek out enough blood from the proverbial turnips who are your subscribers.

On the other hand, like Steve Jobs never asked customers what they want, HBO always said that they’re a pay service, and that quality programming doesn’t come cheaply.  When HBO launched 30+ years ago, everyone balked and proclaimed that no one would pay for TV shows, but they did, and still do.  Quality original programming.  Not sure how much people will actually pay for The Gossip Girls.

Netflix is no HBO.  Netflix started from a different place and just may have a huge base of the wrong kind of subscribers to get it to long-term success.  As I’ve been saying ad nausem, the TV/Video content production/distribution ecosystem is a hecka more complex than the majority understand, and I think Reed is starting to grab a clue and panicked.

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