Netflix’s Duplicitous Actions

Qwikster - A Netflix companyTwo 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.

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  • I was watching their stocks plummet on the Market yesterday. Perhaps their move was too little too late? We had decided to keep both packages at the outset. It still saves us the cost of going to a theater, reserving those times for films we truly want to see upon release. I will be interested, however, to see how they split the costs of these services now that DVD’s are under a different umbrella.

    • One great point I read was that by spltting the costs into two charges they will be reminding their customers what each service costs instead of having a bundle. Therefore, if one of those services is not being used as much as the other, you will see how much you are paying for that less utilized service. For me, I didn’t use the DVD service that much over the past year or two but I still liked having the option. But I couldn’t justify paying 60% more (even if the dollar amount isn’t that much).