Reed Hastings Netflix CEO just doesn’t get it

Netflix recently split their services into DVD shipping and internet streaming, while increasing prices.  Back in July this change was announced and today Reed Hastings has issued what he describes as an apology.  Only, it isn’t. 

The price increase and service reduction announced back in July1 was met with public outcry.  Reed Hastings and Netflix responded with interviews and press releases, but never a change in their policy.  In one of these interviews Hastings made a comment that the price increase was “just a latte,” which struck the wrong chord with some.  Yes, it shows he’s out of touch with his customer base, but that’s hardly breaking news on the heels of a 60% price hike. 

To make matters more interesting, on September 1, 2011 Netflix lost one of the biggest draws to it’s streaming service – the deal it had cut with Sony and the premium cable channel Starz.  So, not only does the Netflix price increase promise lower service and higher prices, but they’re also going to be offering 100,000 fewer titles.  And, these aren’t just old titles – Starz was contributing recently released movies and lots of Disney titles.

Now Hastings publishes a post entitled, “An Explanation and Some Reflections.”  In a nutshell, he’s saying:

  1. People are upset about the price increase and service reduction.
  2. I’m sorry I didn’t communicate about the price increase and service reduction more.  I wouldn’t have changed anything, you’d still be charged more and getting less, I just shouldn’t have been so uncommunicative about it.
  3. We’re splitting Netflix into a new DVD-by-mail service called Qwikster and keeping internet-streaming on Netflix.  Don’t worry, you’ll still get red envelopes.  You’ll now need to manage separate queues and websites that won’t be integrated.

Hastings, let me respond to help you put things in perspective.  And, I have a feeling I speak for some of the 12,000 people who responded to your morning’s post when I say this:

  1. If you’re not really going to apologize for something people are upset about, don’t bother apologizing for things they aren’t upset about. I’m not upset about the amount of communication.  Believe me, the problem is not that I’m just not getting enough Hastings with my Netflix.  In fact, I actually enjoy a product more when I’m not busy thinking about the CEO of the company.
  2. What really irks me about Hastings is that he has continually tried to spin price increases and service reductions as service improvements.  This really is offensive to me.
  3. This new development of Qwikster is making things worse.  Now, not only am I going to pay more and get less (especially with Starz leaving), but you’re doubling the amount of work I have by making me manage two queues.

Why isn’t anyone at Netflix paying attention?  Your customers are not alienated because Reed Hastings isn’t talking enough.  Your customers are alientated becuase prices and hassle are going up while services and selection are going down.

  1. Which was scheduled to be implemented on September 1 []

Why I am cutting back on Netflix

First, let me preface this by saying that my current plan is 3-DVD’s at a time, with free streaming movies, for $20/month.  As of 9/1/2011 that price will increase 20% to $24/month.

I get that streaming subscribers cost Netflix less and they make more money.  I couldn’t care less about the “It’s just a latte” comment.  Here’s what I don’t like – they want a 20% increase with no additional offering.  They’ve increased prices over the years, most recently just last year.  This morning Netflix VP of Corporate Communications Steve Swasey was interviewed by Michael Krasney on my local NPR station, KQED.

When asked about this, Mr. Swasey said, “What we’re trying to convey is that this is an improvement in Netflix service.”  (You can listen to the entire program here.)  He then goes on to attempt to reinforce that Netflix is still a good value.  I suppose it might still be a good value.  But, that’s not the point, is it?  Netflix is claiming that this is some kind of “improvement in Netflix service.”  Talk about lattes all you want, but do not lie about what you’re doing.

The e-mail from Netflix, the Netflix blog, and everything talking about these increases make no mention of any change, let alone improvement, in the actual service.  DVD’s won’t be delivered faster, the discs will still arrive scratched, there will still be a backlog on new movies, and there will still be the “window of delay” when new movies are released for sale.

Dear Movie Studios… would you like to borrow my glasses?

…’cause you are apparently as nearsighted as I am.

I netflix’d the movie Scott Pilgrim vs. The World a few weeks ago.  It was pretty entertaining.  I don’t often check out the “special” features on movies, but I went to that menu option after watching the movie.  In doing so the DVD notified me that the disc contained only the movie itself – but that I should purchase the DVD myself to watch the extras.

Here’s the thing.  I don’t want to buy your movie.  I’m never going to want to buy your movie.  It was good, not great.  But, really, that’s why I have Netflix.  I’m not going out to invest $20 in your movie and then have another DVD case clutter my life.  I’ve already paid for the privilege of watching your movie – I’m not going to run out and pay $20 (or more) on top of that to watch 15 minutes of people screwing up their lines.

Let’s look at this from a wider perspective.  The sorts of people who are willing to pirate a movie don’t really care overmuch about the DVD extras – they’re content to watch the main movie.  So, now you’ve created a system where the people who are actually paying for the privilege of watching your movie are getting the same content they’d see if they pirated the movie??  Shouldn’t you be doing the opposite?!  Doesn’t it make more sense to add more content to DVD’s, not less?  Why not make the actual DVD so incredibly enticing with extra features that those people who would normally pirate a film want to either (a) Netflix it or (b) buy it?  I mean, it’s not like the Netflix business model is going anywhere.  They’ve only gotten bigger in the last ten years and basically put brick-and-mortar movie rentals out of business.

Anyhow, for all you film execs who closely hang all over my every word – if the film industry wants my $20 directly, here’s what they have to do:  Make a movie so freaking awesome I’m going to want to watch it again – and soon.