That was qwik.
Less than a month after Netflix CEO Reed Hastings announced the split of Netflix’s old model into streaming (Netflix) and mail-to-home DVD service (Qwikster), he’s had a change of heart. In an October 10th blog, Hastings said, “It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.”
The people spoke and Netflix reacted. Sheesh, New Coke much?
Last month, when Qwikster was announced, I talked about “knowing your brand” and highlighted the pitfalls that go with a major branding overhaul. While Netflix is the brainchild of Hastings, it still very much belongs to us, the consumer. After all, the whole point of Netflix is making it as easy as possible for customers to select and view movies without having to leave their homes. For a moment, Hastings neglected the convenience that the Netflix provided: a central hub for selecting, ordering, and watching those movies.
In his “apology blog” Hastings wrote:
“So here is what we are doing and why:
Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD, plus lots of TV series. We want to advertise the breadth of our incredible DVD offering so that as many people as possible know it still exists, and it is a great option for those who want the huge and comprehensive selection on DVD. DVD by mail may not last forever, but we want it to last as long as possible.
I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We feel we need to focus on rapid improvement as streaming technology and the market evolve, without having to maintain compatibility with our DVD by mail service.
So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently…”
That’s where Hastings got it wrong though. The split made marketing the services easier for Netflix, but it didn’t benefit the consumer; in fact, it inconvenienced them.
When Hastings, who’d already become acclimated with criticism from the price change, saw an even bigger backlash with the Qwikster announcement, he had two choices: 1) Stick to his guns and roll out Qwikster to his declining client base or 2) Listen to his customers, compromise, and give them what they’re asking for. Fortunately, he chose the latter and now may save face and a few subscribers in the wake of the whole Qwikster botch. Lesson learned. But while Hastings has decided to nix the split of DVD and streaming services, he issued another statement via his blog announcing that price increase will remain in place.
The Wall Street Journal has reported, “The company’s stock price has fallen more than 60% since it announced price increases July 12.”
However, the decision to keep the DVD and streaming services together under the same Netflix roof may help them retain some of the customers who were scared off by the prospect of having to sign up for and use yet another service.
Hastings was in a tough position. The market was changing and he decided that his business model needed to adapt in order to stay afloat, even if that meant increasing prices. He just did it in a very public manner on his blog, with, what seems to be, very little thought. Hastings took his blows and now seems to be doing what’s best for his business: making his customers happy. Hindsight is 20/20.
Next time you’re thinking about rebranding or redesigning your website, use Reed Hastings as a cautionary tale. Before you add that humongous Flash piece, lengthy bio, video, or those pictures to your website, ask yourself, “how does this help my visitors solve their problem or get what they need faster?” After all, that’s what your website is really there to do, isn’t it?
*Oh yeah, and you’re probably wondering what happened to Jason Castillo in all of this? As it turns out, Castillo missed out on his opportunity to sell his @Qwikster Twitter handle to Netflix. Better luck next time.