Price hikes are never going to garner rave reviews from customers. The decision to split streaming and DVD rental services and charge for each should have been the biggest issue customers had with Netflix. Thanks to some less than tactful PR and a few other missteps from CEO Reed Hastings, the web was abuzz with trash talk. Thankfully, it seems that Netflix has finally gotten it right. In their two month late apology, Netflix announced that they would be splitting their services into Netflix for streaming and Qwikster for DVDs. It would be two separate entities, with two individual web sites that would not work together. Fans that were already upset over price hikes were now also peeved about having to do their movie viewing via two different services. Last week Netflix scrapped those plans. Due to continued negative publicity and angry users, Qwikster has been abandoned. Sure, there will still be two separate charges for streaming and DVDs, but it can all be done in one user friendly space. In another announcement that is sure to delight the now skeptical Netflix users, there will be no further price changes. This is the correct decision that Hastings should have come to two months ago. Scratch that. Hastings should have made that decision before announcing any changes to the world. A billing increase may be unavoidable, but there is a right way and a wrong way to do it. Hastings chose the wrong way. He sent Netflix into a downward spiral of bad publicity. In this economy, a simple (and timely) email explaining the reasoning behind the split in billing, an apology and a thanks for understanding and your continued business probably would have sufficed. Before making your next major change at your company, consider how your customers will react. Weigh the pros and cons, and be sure to address the cons with your customers. Be understanding of their wants and needs. Put out fires before they start, rather than adding fuel to them as Hastings did with Qwikster. Unless you belong to the “any publicity is good publicity” train of thought... If that’s the case, be prepared to be raked over the coals by the unforgiving, almighty Internet.
It was at the 2011 F8 developers conference in San Francisco when Netflix CEO Reed Hastings announced a new partnership with social giant Facebook. In the announcement, Hastings revealed plans for a tight integration that would enable users to share information about the videos they are watching with friends via the social network, or directly through Netflix itself. The integration is set to roll out in 44 of the 45 countries it currently has a presence in. Believe it or not, the United States is the one country that got the shaft - it was not on the list! What’s the Big Idea? So what is standing in the way of the new Netflix-Facebook partnership taking off in the U.S.? An old video privacy law that originally went into effect back in the 80s. That’s right. According to the Video Privacy Protection Act of 1988, information regarding video rentals cannot be disclosed unless the renter provides their consent on a basis of rental by rental. This law, adopted nearly a quarter of a century ago by Congress, instantly stopped Netflix’s plans of integrating with Facebook USA in its tracks. And therein lies the rub. Like almost all botched moves in the marketing world, this one is starting to look like a bad business move on the part of the video rental player. Although the service is expanding its global presence slowly but surely, the United States is its biggest market by far. Netflix itself claims that it currently has more than 25 million members in the United States. This is in comparison to what has been estimated at around one million users in all other countries combined. Not being able to reach its legions of users in the U.S. is a lost opportunity and one that takes a lot of air out of what should be an enormous deal with Facebook. A Helping Hand The Video Privacy Protection Act became official after a video store in the Washington, DC area gave a local reporter the video rental records of Robert Bork, the U.S. District Judge whose nomination into the Supreme Court was rejected by the Senate for unrelated matters. Evolution may be the factor Netflix can leverage to turn the tide in its favor, seeing that there was no web or Facebook back in 1988. Michael Drobac, the company’s director of government affairs, said the law is in need of an update. He also encouraged users to write letters supporting an amendment that would change the law and allow Netflix to share video rental information in the U.S. Luckily for Netflix, it has been able to rally up support from its users, and a few members of Congress, who Drobac called “forward-thinking,” recently introduced a new law that would remove the roadblock and allow the Facebook integration to move forward in the United States. The bill, officially known as H.R. 2471, would essentially call for an opt-in program that gives the user the freedom to decide whether or not they want to share what they are watching with others. Netflix’s history with Facebook raises the question of whether it is really cut out for social media integration. Back in 2004, the service introduced a social feature called “Friends” that allowed members to see what their friends were watching, make suggestions and compare ratings. It pulled the plug on Friends in 2010 after learning that only 2% of members were using it. Earlier this year, Netflix discontinued another feature that allowed users to share movie ratings with friends on Facebook due to lack of usage. The latest integration effort may eventually reach the U.S., but by then, will it be too late?