I wanted to blog about Netflix a couple months ago when they announced their new price structure (and consequent increase), but by the time I was bothered enough by indignant consumers to share my thoughts, it became mostly irrelevant. Netflix users were outraged by the price increase, which was essentially only for their DVD mail service, a service that requires much more overhead and resources than their instant watch service. I kept telling the people around me that Netflix had a plan. Instant watch is the future, DVDs are dying. And it's true. Netflix CEO, Reed Hastings, has had the future of Netflix in the back of his mind since the company started, and now he's just pushing it forward.
As most people know at this point, Netflix has recently stumbled into another PR problem. In a tardy apology letter to users, Hastings announced that Netflix is now becoming two separate entitites - Netflix will become your go-to place for online streaming, while Qwikster will remain focused on DVD mailing. In my professional opinion, splitting into two companies was a horrible, awful, stupid idea. People know the name Netflix, don't change it. Especially to Qwikster, which evokes memories of awfully-named Internet start-ups of the early 2000's. Netflix has a strong brand, but Qwikster adds a new element of confusion to the mix, which will just trip consumers up if and when they want to use the DVD mailing service.
Let's recap: Netflix raises prices substantially, people are angry and end their subscriptions. Netflix sends a letter to all remaining customers announcing Qwikster and loses more subscriptions. Is Netflix done for?
That's a big no. Netflix tried to fix something that wasn't broken, but they're still on the right path. Their PR disaster does not change the fact that online streaming is the future. I'm a 21-year-old college student - all I do is stream. I watch Netflix on my computer frequently. I own an Apple TV; almost 100% of the content I watch on my television is from Netflix. If Netflix doesn't have a movie I want, I stream from a different source and hook my computer up to my television. My generation streams content a lot. Netflix is ready for us... but a lot of the older generations aren't on the bandwagon just yet, nor do they want to be. Technology requires exploration and discovery. In a few years time, many other demographics will realize the virtues of streaming, especially with the advent of Internet televisions. However, this realization and discovery shouldn't be rushed, and that's where Netflix has stumbled. They are forcing their customers to change their habits, and that won't work. They need to provide their customers will everything they need to slowly discover the benefits of streaming.
Reed Hastings is smart. He's on top of his game. But he's ahead of the game, and too impatient to wait. Sure, people are ditching Netflix on "principle" and are furious at the company - but Netflix isn't finished. Netflix is focused on obtaining new licensing and expanding their streaming features - in fact, as of yesterday morning, they have signed a deal with Discovery, bringing popular Discovery Channel TV shows to their streaming collection. This little brand disaster will pass and people will adapt to, and learn to love, the new Netflix.
