Netflix Always New Way to Get Movies
Do you use Netflix? I've used the service for years and have always enjoyed the selection and service quality. But if you've spoken with any active Netflix user lately or kept up with the latest social media headlines, you've probably learned that Netflix customers aren't too happy. Netflix, which has offered a simple DVD movie rental and streaming package for years, recently decided to separate these two services and raise the prices of each. Netflix will become a streaming only company, while a new company called Qwikster will offer DVD rental.
Reed Hastings, the Co-Founder and CEO of Netflix, explains the need for specialization as the reason for the split in his recent apology email sent to Netflix customers. Hastings states that DVD and streaming services are different services with different cost structures that need to be marketed separately and grown independently.
Why are Netflix customers so upset? Hastings announced these service and price changes through press releases instead of addressing customers directly. Hastings acknowledged his mistake and apologized to Netflix customers in an email in which he said, "I messed up. I owe you an explanation." But of course, a lot of damage had already been done.
So what can businesses learn from Hastings' mistake? Always communicate major changes in your business with your audience directly. Customers will appreciate hearing about changes or mistakes from you instead of the media. And if your business does make a mistake, apologize publicly and directly. Though Netflix customers are still not thrilled with the separation of the DVD and streaming services, Hastings has done a good job of admitting his mistake, apologizing to Netflix customers and explaining the situation. But, as Hastings has learned, it is better to announce your changes to customers beforehand, avoiding - or at least limiting - the need for crisis communications.
I know I will continue to be a customer of Netflix as they've done a good job at recommending movies that I will enjoy based on my previous ratings. This may be the ultimate strength of Netflix, knowing what movies you'll enjoy, and will keep it ahead of other streaming services in the future. What is your take on the Netflix split? Would customers have received news of the division and price hike better if they had heard from Hastings first? Do you think Hastings was effective in apologizing to customers? Would you have handled the situation differently?
Sarah Hamilton works for the Nashville PR firm, Lovell Communications Inc. They are a national marketing and watch hollywood movies agency that protects brand reputations and works with companies to build and grow their businesses. They specialize in public relations, crisis communications and healthcare marketing services.
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