The Netflix Implosion

If you had any doubt about what’s going on behind the scenes at Netflix, this week’s blog post from CEO Reed Hastings confirms it for me.  The company is in chaos.

I used to be a huge Netflix advocate and was thrilled to switch from Blockbuster, but something has gone terribly wrong and we’re watching it all play out in public.

In the blog post Hastings apologizes to customers for the way Netflix handled its recent announcement of a 60-percent price increase and separate fees for DVD and streaming service.About halfway into his blog post Hastings announces a complete split of the DVD service, which will now be named Qwikster. An announcement made so hastily that Netflix didn’t even own the Qwikster twitter name and has just a simple webpage placeholder on the website.

A Mashable columnist called it “the worst product launch since new coke.”

The change to a new name and different website just adds to more confusion for consumers, who are still reeling from last month’s price hike announcement.  And while Hastings’ blog apologizes for poor communication (not the price increase) this new communication doesn’t seem to make much sense either. Not to mention that it’s also poorly written.

No doubt all of this is aimed at stopping the plunge of Netflix’s stock price, which fell 19% after angry customers defected after the price increase. It is amazing to me that a company that seemed so in tune suddenly has a tin ear when it comes to consumers.

It appears to be another major CEO blunder (see my post on the Yahoo & Groupon debacles) for which sometimes there is no fix.

Clearly Netflix is wrestling with licensing and contract issues as it expands this new business model , but it’s painful to watch the company self-destruct ,  especially when it continues to victimize its customers.

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About Matt Silverman

Matt Silverman is a marketing and communications executive who proactively manages corporate reputations and builds brands. Matt is the Vice President and Managing Director of R&R Partners, a marketing and communications agency ranked among top 50 in U.S. by Adweek. The opinions expressed here are not necessarily those of R&R Partners. View all posts by Matt Silverman

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