This author is not a Netflix subscriber. The draw of the story about the media-streaming service raising its rates by over 60% earlier this week (a raise that will not have an impact on current subscribers until the fall) is how Netflix’s subscribers jumped all over the service via their social networks and Facebook. Netflix runs the risk of enduring a social-media backlash akin to that endured by BP during last year’s terrible oil-platform disaster and leak.
Of course, the repercussions of a rise in fees for subscribers are nothing compared to the environmental and economic travesties committed in the Gulf of Mexico – not to mention the deaths of eleven platform workers that BP/Halliburton/Transocean still have not had to redress. But parallels exist between their experiences because both companies first acted on the assumption that they could control the conversation/reaction, only to have the narrative pulled from them by the very people they thought they had mollified.
Netflix announced its plan on its blog on July 12th. Simply for the sake of context: the original plans of streaming only for $7.99 and streaming plus DVD orders at $9.99 a month were being themselves subdivided and the prices raised. To get both unlimited streaming and unlimited (but one-at-a-time) DVD rental will be $15.98.
It is not the first time Netflix has readjusted its price structure, but the reaction this time has been invariably one of fury and – more importantly – of threatened exodus. By 6:30 that evening, PCWorld’s Paul Suarez was reporting on the quick and damning backlash that had hit Netflix’s Facebook pages.
Confirmation of a Netflix subscriber's cancellation
Many of those commenting are encouraging a boycott and/or defection to the many other services that have moved into the market since Netflix’s founding in 2000. The striking thing to this blogger is that most of those who offer a more robust criticism almost invariably praise the company’s services and prices for the past decade, while singling out its greed in almost doubling the prices without offering any new or improved service.
For example, James Marler of JHM Ministries offered this response to Netflix’s blog (which we have here excerpted):
ATTN NETFLIX: In the past year, your stock has nearly tripled… TRIPLED! in a time of economic downturn. The reason for this, the ONLY reason for this, is that you were smarter than EVERY other company that does anything close to what you do. You had streaming (for some new-ish titles and a lot of titles people may never have otherwise heard of – my family will forever be grateful for “Pyarr Impossible”) and a DVD plan. It was perfect. The family could watch our ever growing list of titles on streaming, while waiting for our one-at-a-time DVD that wasn’t available for streaming. PERFECTION! I will forever be kicking myself in the pants for not taking 100% of my retirement fund and not investing it in Netflix a year ago.
And now you introduce this gargantuan price hike. Think about this for a second… as of September 1, I will have to pay almost 65% over again to receive the EXACT SAME SERVICE that I was receiving on August 30, This is bad, BAD business (price gouging, if it was at a gas station) especially in these financial times.
Now explain to me as a shareholder in your company why you think that ANYONE would not be better served by staying with the streaming only plan and going to Redbox or Blockbuster express a few times a month. In short, explain to me as a SHAREHOLDER IN YOUR COMPANY AS WELL AS A CUSTOMER why my stock is going to start dropping because you got greedy!BAD FORM, Netflix!
Some have even accused the curators of Netflix’s Facebook page of deleting critical posts (If so, they can not delete them fast enough for the torrents coming in!).
Again, what struck us was how Netflix had been able to position itself as an industry leader in (streaming) entertainment and a successful user of social media – only to see all that come crashing down in the last couple of days. Did Netflix misread the market? Should it have tested the waters of price restructuring via the very social networks it had courted for the last four or five years? Should it have not gone for such a significant price hike in one go?
As we opened the article, Netflix losing customers – even going bankrupt – is not in any way equitable to the BP/Halliburton/Transocean tragedy of last summer. But in both cases we saw companies assuming they had the upper hand in the conversation trying to explain events only to see that control taken from them by their current and potential customers. Thus, perhaps the most important questions facing Netflix now are: Will its subscribers use social media to force price or service concessions over the next few months? Can a company afford not to listen to the very conversation it helped develop? Alright, that last one is easy: No.
