September 19, 2011 by David K. Sutton
Netflix’s Duplicitous Actions
Two months ago Netflix announced a new pricing strategy that was met with near universal derision. The result was a 60% price hike for customers who were using the most popular DVD and streaming package. Their reasoning for this change was vague at best and that’s because it was a cold and calculated business decision. But was this decision made in a vacuum, ignoring the customers that made Netflix a success?
After this announcement I did decide to continue with Netflix, changing my plan from 1 DVD at a time and streaming to streaming only. Technically this means I save a couple of bucks per month but I’m still left with a jaded attitude towards Netflix, especially since I’ve been a customer for 10 years. Out of nowhere they decide to split their two services and force existing customers to make a decision that they should never have had to make.
Fast forward to today and Netflix CEO Reed Hastings sends an apology letter to customers. Except, it’s not really an apology. In fact, this letter might do more damage to Netflix than the announcement two months ago. Not only did Netflix support their decision but they further clarified that the DVD service is going to spinoff as Qwikster. Really? This means a new website including separate billing. Customers that choose to keep both DVD and streaming services will receive two charges on their credit card each month. The letter started as an apology but by the time you finish reading it feels more like a slap in the face. If I had chosen to stick with the DVD service I would probably be fuming even more than I am now.
Alright, let’s put things into perspective, this is just a video entertainment service. After all, there are much bigger problems in the world. But sometimes you just have to wonder what people are thinking. Netflix has been on a great run of success. Recently they seem hell-bent on reversing that trend.
If you are wondering, yes, I will be keeping my Netflix streaming plan – for now.
An unhappy Netflix customer.
UPDATE – 10/10/2011:
Netflix has reversed course and will now keep it’s DVD rental service under the Netflix name. This means Qwikster is dead. It also means customers that subscribe to both streaming and DVD services will not have to deal with two websites, two accounts and two separate charges on their credit card. Netflix has not made any changes to their price increase.