For readers who are unfamiliar with the Netflix platform, I’ll cover it really quickly. Netflix started as a mail order DVD rental service, which people were able to sign up for via online monthly subscription. Sometime later Netflix began offering its subscribers high quality video streaming for movies and television shows at no extra cost.
But just a couple months ago Netflix announced that it would start charging separately for DVD by mail and online video streaming. This really did not sit well with consumers, causing thousands of members (including this one) to cancel their Netflix accounts.
A few weeks after that Netflix announced the new direction the company was taking. The new plan was to completely separate DVDs from streaming. The Netflix.com website was now dedicated to online streaming and the company started a completely new site (Quikster.com) requiring a separate membership for its DVD service. Many people found this either super confusing or super annoying (I sit in the latter camp).
On the front page of today’s SF Chronicle was the latest in this whole Netflix fubar.
Apparently the company and its CEO have done a complete 180 after public outcry over this new plan. The company is nixing the whole plan, cancelling the new Qwikster.com website and keeping both DVD and streaming under one account at Netflix.com. The company’s official position is apologetic and they’ve been on the defensive for months now, first apologizing for the fee increases and now again for proposing the separation of services.
And the result is a weak looking company that can’t make up its mind. Meanwhile investors are getting skittish and Netflix shares are taking a huge hit. According to the SF Chronicle Netflix went from an all time high of $304.69 per share in July, to $111.30 on Monday.
The thing that surprises me most is how Netflix did not see this coming. A company of that size must have done an extensive amount of market research before trying a change like this. It would be interesting to see the findings and find out what happened here. There had to have been fears of public dissatisfaction.
I actually kind of feel bad for Netflix CEO Reed Hastings who really looks like a fool because of all this. Netflix had a pretty successful formula, and this all could have been avoided by not messing with it. But in the end Netflix probably made the right decision for everybody by keeping DVDs and streaming under the same roof. You know what they say: “If it ain’t broke, don’t fix it.”
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