You’ve likely heard the news today, that Netflix is fracturing itself into two companies. The original, DVD-by-mail delivery service company will become Qwikster, while the Netflix name will be reserved for the video streaming arm.
Given that Netflix has already lost a million customers recently by splitting their plans and charging for discs and streaming separately (taking the base rate from $10/month to $8 + $8 = $16/month, if you still want both services), this seems like the organization is playing catch-up bureaucratically with decisions already made. The new name is stupid, yes, and sounds like it fell through a time warp from last decade, but that’s a minor problem. I don’t have a dog in this fight, since I’m not a customer, and I don’t plan to become one.
I’m just thinking of routine users like my parents. They tried streaming once, when I told them it was free with their account, and they promptly concluded that they wanted to watch movies on their TV, not their computer. They’ve been happily using a simple Netflix plan the same way for years — why should they have to switch websites and how they do things now, when they’re happy with the product they have? THAT strikes me as an issue, because any time you make people think about their habitual choices, you risk them deciding to change or eliminate them.
Especially when you make everything more complicated. Separate websites means having to maintain separate lists of movies you want to see, and separate credit card charges every month (if you do subscribe to both). The Brads webcomic summed it up nicely. Sometimes visuals are the best communication method. Click the image to see the whole thing.
Company founder and CEO tried to explain the logic in a message to customers, but his priorities are clearly not theirs. He thinks the backlash is because the company didn’t communicate enough.
now I see that given the huge changes we have been recently making, I should have personally given a full justification to our members of why we are separating DVD and streaming, and charging for both. It wouldn’t have changed the price increase, but it would have been the right thing to do.
I think increasing prices by 60% is a hard message to gain acceptance for, no matter how much or how well you talk about it, and now, you’re making performance more difficult for existing customers. Splitting may be best for the companies, especially if one believes that the future for each looks very different right now, up to the point of eventually competing with each other, but it’s inconvenient for users. They gain no benefit, only confusion. Still, if this is a better choice for the company, the CEO is doing his job in placing their survival above customer wishes.
Update: (10/10/11) Netflix has changed its mind — the company is staying one for now, no splitting, no Qwikster.
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