Netflix is in the news again. CEO Reed Hastings apparently has decided against splitting the company into two distinct product lines – DVD rentals and streaming video. The decision was made after customers protested and share value dropped some 60% since July.
I don’t know about you, but it doesn’t necessarily surprise me that Netflix changed its mind considering the outrage of customers and subscription cancellations.
If you are not familiar with the Netflix customer problem story, a couple of months ago Netflix decided to raise prices for their DVD and streaming video services. But what they failed to do was a very good job of communicating the significance of the price increase to their members. As members started realizing that the increase was as much as 60%, they got angry. The CEO wrote an apology on the Netflix blog and explained the price increase and that they were going to improve things by making two separate product lines. This would mean renaming the DVD rental product to Qwikster and keeping Netflix for streaming video. He also explained that they would be adding a second website so each product would have it’s own site. This change would require customers having two accounts, pay two bills and go to two different websites for services. Well, the blog got pounded with comments from angry customers and many started canceling their subscriptions.
So here we are today and apparently Netflix got the message and is now scrambling to make things better for their subscribers. When I read stories like this I have to wonder who is behind the scenes steering this Public Relations nightmare?
This whole story made me think of the Tylenol poisonings back in the 1980s. The story was that seven people died after taking Extra-Strength Tylenol that had been tainted with cyanide. It was a criminal act that the company ultimately paid for. The product was recalled and they then created a new safer packaging. This was the beginning of double packaging for many products.
Tylenol did a phenomenal job with the PR of this incident and it was clear they had a good public relations strategy. They pulled all the products off the shelves, were completely transparent with the details of the case and went back to the drawing board and didn’t re-release the product until they could guarantee the product’s safety to the public.
So why did Netflix remind me of this story? I don’t know, I guess my thoughts are with all the press, even though not favorable, with this story Netflix has a great opportunity to turn this thing around and be great agin. I’m just not convinced they have the right people guiding the process.
With the Tylenol example, some people refused to buy their product after that incident for fear of getting a tainted product but many of us thought that the product would be safer and better because of what happened – and it was!
Netflix I know this has to be a very difficult time for you so I hope you have some seasoned professionals behind the scenes helping steer this public relations nightmare!