Netflix and Brand Image

Ahh the fiasco that is Netflix.  What happened to you Netflix?  I used to think you could do no wrong and you’d always be king, but then you flushed your own brand image down the toilet.  Shame on you.

For those not familiar, Netflix is an online movie rental company that initially pioneered the DVDs-by-mail program.  In recent years they have revolutionized online streaming and created an incredibly valuable customer base of VERY happy and satisfied clientele.

Then for whatever reason (I don’t know the numbers behind it so they very well could have been losing tons of money on their business model), they decided to separate the DVD/Blu-Ray and streaming services into two separate entities and raise pricing.

Customers were obviously not happy with this so to “address” this, they decided to completely rebrand their DVD business as Qwikster and keep Netflix just for online streaming.  Both with two separate websites, two separate subscriptions plans, and completely separate from one another.  Hmmm, head scratcher.

People obviously didn’t like this so the latest word is they are scratching the idea and staying completely with Netflix.  This might be one of the most ridiculous brand gaffes I have ever seen.  Talk about not knowing the direction of your own company, CEO Reed Hastings seems almost as indecisive as someone trying to dismantle a bomb deciding between the blue wire or the red wire.

Amongst all of this, Netflix managed to lose over 1 million subscribers and opened the door for the bankrupt Blockbuster to reenter the online game.

The biggest problem here is communication and a lot of it could have been handled much differently with a better outcome.  Again, I don’t know the numbers but here’s what I would have done.

• First, 100% transparency and communication throughout the whole process.  Nothing was explained or communicated until after there was outrage and this isn’t a good way to run your business.
• It’s hard to raise pricing on something that people have been paying for.  It’s even harder when you raise the price but lower the value which is exactly what Netflix was doing.  Try adding some additional value to the raise in pricing or at least make it appear as though you are:
• First keep everything bundled (streaming/dvds)
• Then play it off as you are adding x, y, z studios and also adding the ability to stream from multiple new devices.  You can keep the current catalog at the current price or upgrade to receive the new content and all future updates for just $XX more.  A Netflix Plus if you will.
• Experiment with other features that users might pay a premium for….expanded queue management, shipping priority on movies, ADD games (like they are doing now…should have done this before).
• These are just suggestions off the top of my head but what you can’t do is what you did…raise price, lower value.  HUGE brand destroyer right there.
• Who thought Quikster was a good idea?  That person should honestly be fired.  How the hell is that a good idea?  Take a 15 year old brand and just change it?  Come on!
• Get everyone on the same page!  The stories coming out about support telling multiple things to multiple people was not good.  Have a plan for your business and stick to it.  Don’t change it on the fly based on customer reaction.  You wouldn’t have to change it if you had properly vetted and tested the ideas before you rolled them out.  This all comes down from the top so the CEO NEEDS to have a handle on this entire situation.  I don’t think he did.
• Start a new.  Ok, so you screwed up…other companies have done this and recovered.  Turn a new page today with your customer base and your brand.  Launch a campaign about how you screwed up and offer something incredibly great for your current customers and past customers.  Retain and reward.

Essentially this is a good case study for what NOT to do with your business.  More importantly, it illustrates how powerful your brand image can be and why you should be concerned with keeping it favorable.  I really hope Netflix can recover from this because they did a lot in the way of bringing streaming content to the web.