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Pardon My Piling On Netflix

Posted by Bill Lee on September 20, 2011 at 01:59 PM

I'm a fan of Netflix CEO Reed Hastings, and have enjoyed using Netflix service in the past, so I hate to pile on to the brickbats he's already received--but my goodness. Customers are irate for the way Hastings has handled the price and service changes Netflix is implementing. Mr. Hastings and his communications people have demonstrated a baffling tin ear when it comes to implementing and explaining these changes to customers.

In July, the firm annoiunced to subscribers that it was splitting their DVD by mail and movie streaming service in two, and were going to charge them 100% of the subscription price for one, and 50% for the other. That and other changes lead to a major uproar from customers, until finlly Mr. Hastings sent out an apology to subscirbers yesterday.

What's missing from both is any explanation of how (or even whether) these changes are adding value to customers. In fact, they hardly take the customer's view at all, in stead focusing on the needs and perspectives of the company. In his apology,Mr. Hastings says things like:

For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). 

And this:

So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently.

It's all about Netflix. I don't see anything about how the changes create value for the customer. There's not even a sense he's thought about it.

Say it ain't so, Reed!

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