Netflix used to be a company dedicated to providing it's customers with a service that no other company was offering, and that was a simple way to enjoy multiple types of entertainment. They also provided their customers with a sense of complete control over every aspect of their account and offered additional online services which were very successful in drawing in new customers. Netflix seemed like they had the movie rental business all figured out, and then some. But in July of this year, Reed Hastings and his team completely reorganized the entire structure of the company and split the movie rentals off into a whole new division under a completely different name, which will potentially cost them many of their loyal customers.
Reed Hastings and his team at Netflix have put the company in jeopardy and made a very drastic change to the way that they plan to do business, and did all this with absolutely no warning for their unsuspecting customers. This sort of blunder leads me to consider the phrase "if its not broken, don't fix it." Things seemed to be going so well for the company and now they have done something that has left them vulnerable for another company to take advantage and offer a service designed very similarly to the old Netflix at a much lower price.
I think that their biggest disadvantage now is that they have taken away that sense of ease and control by forcing customers to visit two completely different websites to do what they used to be able to do with one. In addition to unnecessarily complicating the process, they have also bumped up the price of a subscription for everyone, which is almost like adding insult to injury. If Hasting felt that the price for subscriptions needed to be increased, it would not be unreasonable to do so, he just did it in the worst possible way and even acknowledged this fact by writing a letter of apology to his customers on the Netflix blog site. I believe this uproar of complaints could have been avoided if Hastings announced what he was planning on doing with the company and if he had avoided splitting off into two companies to do the same thing that could have been accomplished with just one. Reed Hastings has made himself a villain in the business world for delivering a potentially fatal blow to a once very successful company.
Michael Lorimer
Source: http://www.forbes.com/sites/ciocentral/2011/09/20/hastingss-folly-the-netflixqwikster-quagmire/
3 comments:
I agree with how you focused on how this affects the customer. Netflix is really just providing a delivery service and could have been more attentive to their front line treatment of the customers in relation to price changes. I understand they are pioneering virtual movie market and are riding out contracts, but they could have at least set better expectations with the customer. They didn't seem to have much concern for our perception or our attitudes, so it doesn't surprise me they lost customer loyalty. It makes me wonder how much the same thing happened to their employees having to change around the system into two different businesses.
-Matt M.
Speaking as a former Netflix customer I think Mike makes a really great point. I used to be an unlimited streaming and 1 DVD out at a time customer and liked having that peace of mind that if something i wanted to watch wasn't available to stream I'd be able to have it sent to my house. Splitting the two services up was a terrible idea and will ultimately lead customers to find other video alternatives like amazon or itunes
-Eddie Nemeth
As a current Netflix customer I am not happy at all. I used to be paying around $13 a month for 2 DVDs out and unlimited streaming, but a quick look at my credit card bill just showed me now I'm paying $20. I'm not sure which I dislike more, the price change or now having to navigate on two separate sites. Personally, I'm sticking by Netflix for the time being, but if Hastings tries to pull any more funny business, I'm out of there.
I understand how it was a strategic move for the company, but the company must think about the customers to remain viable.
--Kaitlin Reichel
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