Netflix shoots itself in the foot... aka no more free streaming

[Scout101]

Christopher wrote:

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I've always taken "The customer is always right" to mean that you don't actively confront and correct a customer even when they're wrong, because that's likely to upset them and maybe cost you a sale. It's not meant to be literally true. It just means that when the customer is wrong, you either skirt the issue or find a diplomatic way of handling it without actually saying they're wrong.

And that if it's over an issue that's not going to make or break you, it's worth occasionally taking a hit and helping the customer if it seems like an honest mistake on their part. Lose a little money here and there, but you more than make it up by keeping loyal, happy customers. Obviously don't run yourself into the ground, but if you are a little more lenient rather than nickeling and diming the customer, they'll be back again and again, and tell others how great you are.

LL Bean is a great example of a company like that. Their return policy is, in a word, stupid. They'll take back anything they ever sold, no questions asked, will fix it for you, give you a new one, or give you back what you originally paid for it. You'd think that would crush a company, but people will spend more money there knowing they stand behind their things, and the stuff is usually good enough quality that you never return it anyway. A few people will return boots that are 20 years old and worn down, and they'll take them, but most people won't ever use the policy, but just buy another pair after time. Doesn't hurt their bottom line to be on the customers' side, and probably helps them more than anything. Tell me how you feel walking out of a place like that rather than somewhere where you obviously bought a defective item, but it was 31 days ago, or lost the receipt, or you can't 100% prove it was broken right away, or whatever. You recommend the first place to everyone looking for that item, and you tell everyone that the 2nd place sucks, you hate them.

[gh4chiefs]

Scout101 wrote:

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Since keeping my plan is basically signing up for 2 different ones (why no bundling, again?), when they raise plans a buck, you can bet it'll be for EACH plan...

I'd argue that's basically semantics. The bottom line is, it's a price increase to keep what you have now. The postive side of it is, if you don't see value in streaming or in the DVD plan, you can drop one or the other without having to drop both. Right now you can't separate them. EDIT TO ADD: I stand corrected, you can currently have a standalone streaming only plan.

Again, using me as an example, if I decided to drop streaming but keep 4 DVDs at a time, I could actually SAVE $6 a month after this is all said and done. Right now I don't have that option.

I think one's individual anguish over this really boils down to how much they value the streaming option, ESPECIALLY in light of a possibly reduced instant streaming library.

[LeadHead]

I think people are blowing this waaaay out of proportion. Streaming started out as free because there wasn't a market for it yet. Nobody knew what it was and very few ppl had the ability to use it. Now, millions and millions use it, and millions more have the ability to use it. Major change. also, most people I know, use streaming exclusively, so the DVD's are extraneous to them.

The streaming service has a life of it's own now, it should be separate. Despite the fact that the studios aren't big fans of the streaming concept, if Netflix has the resources to buy the big titles and even more content, they'll sell it to them.

I think this is a debatable decision, but it's getting blown way out of proportion.

[Robert Maxwell]

LeadHead wrote:

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I think people are blowing this waaaay out of proportion. Streaming started out as free because there wasn't a market for it yet. Nobody knew what it was and very few ppl had the ability to use it. Now, millions and millions use it, and millions more have the ability to use it. Major change. also, most people I know, use streaming exclusively, so the DVD's are extraneous to them.

The streaming service has a life of it's own now, it should be separate. Despite the fact that the studios aren't big fans of the streaming concept, if Netflix has the resources to buy the big titles and even more content, they'll sell it to them.

I think this is a debatable decision, but it's getting blown way out of proportion.

Yeah, it's also worth pointing out that Netflix had a user cap built into the streaming licensing because they had no idea it would take off so quickly. Now they have no choice but to renegotiate the licensing and they fully expect the studios to demand extortionate fees, since they can see just how much people like streaming.

[Kestra]

Clearly I need to get through all of the Star Trek series ASAP and then I can think about canceling.

[BillJ]

It's an extra six bucks-a-month plus tax for me. Bringing it to a touch over $19.00 a month. The cable company charges me seventy-five bucks a month for the no frills package where there is NEVER anything on worth watching.

I think Netflix has a long way to go where it's as poor a value as basic cable.

[Stone_Cold_Sisko]

Streaming library is too limited. I'm going to use this one month to watch everything streaming I want to see then switch away to a 2 DVDs at a time plan and go back to how I used to do it.

Frankly between video games and books, I can always find other entertainment during those 2 days it takes to get DVDs in the mail.

[milo bloom]

We're only on the 1-disc out a time plan, and sometimes we sit on the discs for weeks at a time, but the streaming gets used almost daily. We'll definitely be dumping the physical disc and using Redbox (or go back to buying used discs for cheap).

Still odd that they can't offer a combo package any cheaper than that.

[Captain Craig]

LeadHead wrote:

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I think people are blowing this waaaay out of proportion.

Rule of the internet says this is procedure.

[Temis the Vorta]

It's much more convenient to stream the next episode of a TV series than to have to wait for the next disc to arrive before you can continue.

The TV series I get always have between 3 and 6 episodes per disk, making TV a better bargain than movies on DVD. My problem is the opposite - I don't always want to watch several episodes back to back, and hang onto a TV DVD longer just to pace my viewing.

J. Allen wrote:

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What hurts Netflix is it's customer experience image. When it comes to corporate decisions, customers are completely ignored and told they just don't understand. It makes something that's already unpopular into a knock down drag out between corporate and customers, like the recent UI change for example. On the Facebook page, Netflix has also been deleting negative comments, so once more, they're just stumbling over themselves to piss people off.

Yeah, if they wanted to handle it more deftly, they should have led up to the price change with a concerted campaign to place the blame on greedy Hollywood studios. Why doesn't the Netflix page itself have a "message from Netflix" field where they can pitch the company line to customers? They should have been doing that for years, building up trust, and then they could turn this into "us vs evil soulless Hollywood bastards." Everyone hates Hollywood anyway, and it does sound like that's where the problem lies.

But deleting FB posts is just ham-handed bullshit. They're making themselves look like some kind of police state. This is a huge marketing/PR fuck-up. I would have expected a grown-up company to be a bit more clever and strategic.

I agree with others though, I hope this increase leads to more selection in streaming, and quicker new releases for DVDs.

The hold-up in expanding streaming is that cable and studios see streaming, not DVDs, as a threat to their businesses and I'm sure they'll continue to put up barriers to streaming. Since streaming will never replicate the deep library that they've assembled on DVD, I'm giving up on the very notion of it. Studios and cable will never have an incentive to play ball.

As for quicker new releases for DVDs, I'm pretty sure that needs to be tied to DVD releases for sales (to avoid cannibalization) but that's not an issue for me. I perpetually have 250+ DVDs in my queue, and I'm only dimly aware of what movie or TV show is releasing when.

But if there's a big jump over to streaming and people are no longer sitting on DVDs for months, that might solve the problem of absurdly long wait-list times.

[Temis the Vorta]

Christopher wrote:

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I've always taken "The customer is always right" to mean that you don't actively confront and correct a customer even when they're wrong, because that's likely to upset them and maybe cost you a sale.

Oooooh no. People don't like to be "confronted" and "corrected," even if - especially if - they're wrong! That approach will just make people madder and cause the situation to spiral wildly out of control (especially given the gasoline-on-fire nature of social media).

Here's how you do it. 1) figure out what you want/need to do (raise prices because of greedy Hollywood) long before you need to do it; 2) predict how people will react (Facebook rampage - that's an easy call for anyone passably familiar with the internet); 3) start building up a brand-image campaign to counteract 2) when you do 1).

This is not a customer service issue so much as a brand maintenance issue. Netflix should have been building a brand image like this: "We're a cool Silicon Valley tech company, and we're just like you! We're not like those soulless greedy bastards in Hollywood who want to screw both of us over. We've got your back. Let's fight them together!"

WHY didn't they do that? It would be the easiest brand building exercise ever! They would simply be tapping into already widespread resentments against Hollywood - it's always nice to have some hated entity to aim the customers' ire at, and away from you - and they wouldn't even have to lie, at least not very much (which generally is a large element of brand building).

Oh well, too late now. They need to go into crisis management mode. The executive level at Netflix is very much asleep at the switch.

LL Bean is a great example of a company like that. Their return policy is, in a word, stupid. They'll take back anything they ever sold, no questions asked, will fix it for you, give you a new one, or give you back what you originally paid for it. You'd think that would crush a company, but people will spend more money there knowing they stand behind their things, and the stuff is usually good enough quality that you never return it anyway. A few people will return boots that are 20 years old and worn down, and they'll take them, but most people won't ever use the policy, but just buy another pair after time. Doesn't hurt their bottom line to be on the customers' side, and probably helps them more than anything.

GREAT example of successful brand building. Through that return policy, LL Bean communicates "we are a solid, old-fashioned, honest-to-a-fault, down-to-Earth New England company that has the same values that you do." That is vastly more valuable than the cost of the few items that might be returned. Who knows what the company is really like? They could all be depraved party animals who spend the off-season in Fort Lauderdale, spending the vast profits they make from the brand image they're selling: solid, boring, plaid-flannel-shirt-wearing throwbacks to a nostalgic "better time" when companies took pride in quality, which of course, practically nobody does nowadays.

Brand image is the most valuable thing any company owns. Netflix needs to understand they are not a company that rents DVDs or streaming video. They are a company that sells a brand image to people. They are selling a brand image now that a lot of people don't want to buy. In fact, they're not in control of their brand image and as far as I've been able to determine, never have been. That's the first problem they need to solve. They can't let outside factors like balky studios and rampaging Facebookers define their brand image for them.

PS, this is what Netflix should be doing! Some other company is doing their brand-building for them. Why are these metrics not on everyone's Neflix page? "Here's our value, here's what the fraking cable companies charge, here's how you can get even more value from the service."

Here's the explanation for FeedFliks. Some variation on this app should have been part of Netflix all along, that gives a credible comparison between Netflix and other entertainment options: cable, DVD purchase, movie tickets. And to head off disgruntlement, the app could advise customers on how to optimize their account. That kind of transparency could go a long ways towards creating a brand image that "we're on your side." Netflix needs to give people good advice before they even know they need advice.

But now they're being compared with - brrr! - cable companies!

CNET article.

Many of the company's 23 million subscribers are outraged over the money issue and they're just plain disappointed in the way Netflix is behaving. Dumping a 60-percent price increase on customers and casually announcing the move in a blog post without warning isn't what Netflix is supposed to be about. There's no doubt that Netflix's brand is suffering. Good will and trust is being drained, and quickly.

...

Take a look at Wall Street's mute reaction to the pricing move. The company's share price went up after Netflix announced the increase yesterday and in afternoon trading today the stock was up 2 percent and just under $300 a share. Analysts that cover Netflix have predicted price hikes for a long time because there were few other ways the company could afford to expand its library--which customers are discovering is lacking in some important content areas.

When confronted by the argument that Netflix must raise prices to pay for content, one of my CNET colleagues, Maggie Reardon, may have succinctly sized up what many Netflix users are saying: "Who cares? That's their problem. Paying for content is the excuse that cable companies have used for years to justify price hikes."

The longer Netflix waits to respond to customer outrage, the more likely it is that negative attitude will be set in stone.

[Ninjacore]

N-Flix f***ed themselves the moment they redesigned the streaming site, this new price change is further evidence that they cannot run a company, I am waiting and constantly looking for the next N-Flix rival to come along, then good bye and good luck N-Flix.

[Sheep]

Temis the Vorta wrote:

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This is not a customer service issue so much as a brand maintenance issue. Netflix should have been building a brand image like this: "We're a cool Silicon Valley tech company, and we're just like you! We're not like those soulless greedy bastards in Hollywood who want to screw both of us over. We've got your back. Let's fight them together!"

WHY didn't they do that? It would be the easiest brand building exercise ever! They would simply be tapping into already widespread resentments against Hollywood - it's always nice to have some hated entity to aim the customers' ire at, and away from you - and they wouldn't even have to lie, at least not very much (which generally is a large element of brand building).

Maybe because Hollywood has ALL the leverage here? Who's to say that they wouldn't pull EVERY movie/show from Netflix or demand even higher fees in response to something like that, leaving Netflix with almost no selection aside from indie productions? Unlike Apple, Netflix doesn't have a product to fall back on should the movie or music industry exercise their rights to be gigantic douchebags--Netflix would be dead instantly if Hollywood takes its ball and leaves.

Think this is unlikely and that Hollywood isn't that stupid? These are the people who think that $30 on-demand movie rentals are a good idea. Not a monthly rental service, a single movie rental. Yes, they ARE that stupid.

http://www.variety.com/article/VR1118034714

[Temis the Vorta]

Maybe because Hollywood has ALL the leverage here? Who's to say that they wouldn't pull EVERY movie/show from Netflix or demand even higher fees in response to something like that, leaving Netflix with almost no selection aside from indie productions?

I did consider that, but Hollywood seems like the last people around who would get up on their high moral horses in what is after all, an image-based battle. It would just be Netflix doing exactly what Hollywood does as a matter of course - image management plus extremely aggressive business practices. They should respect Netflix for being a savvy player instead of what they are now, a bunch of hapless clowns. The way they've blundered is a professional embarrassment, and their business partners are probably questioning their credibility as a corporation now.

The Hollywood honchos would be smart enough, and grownup enough, to understand and respect the strategy behind the campaign and not take it personally - anyone with a thin skin isn't going to survive in Hollywood anyway - and after all, it's not like anyone's going to hate Hollywood so much they stop going to Transformers movies and other twaddle. An image-based battle wouldn't really hurt Hollywood's profits at all, and as long as the profits are safe, who really cares how Netflix sells itself to its customers?

If Netflix is nervous about the reaction, they can brief their business partners in advance. Netflix is good cop, Hollywood is bad cop, the money keeps rolling in. I'm not saying that Hollywood is "really" the enemy, it's just a branding campaign to help sell the idea of charging more money that Netflix and Hollywood splits. See the difference between that and an actual feud?

And the branding campaign wouldn't be as blatant as I've made it sound. I was describing it in a blunt manner just to get the point across. That kind of language would never see the light of day beyond Netflix's internal brand strategy white papers (even those would be less blunt and more professional sounding). There are ways to make Hollywood the enemy without being obtuse about it - some of the slicker political campaigns would serve as a good model.

[Immolatus]

U know this really sucks. I left blockbuster because it was too expensive and they constantly changed there prices, so I figured netflix is worth a shot (I used to do them years ago) now there playing the raising prices game when the rest of America is broke. The family loves to use the streaming and I like getting the DVD's but to be honest this makes me feel like dropping them. I hate when corporate America screws with the working man.