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Fremont: In 97, Netflix came up with the DVDs by mail service, which became an almost instantaneous hit among the American public. Then, a decade later in 2007, it started internet video streaming services and this repeated the success. The company has had a dream run so far. With more than 24 million happy customers, it seemed to be on cloud nine. Its stock market prices were on the verge of touching the sky, when the company did something and the downfall began.
In Greek tragedies we are presented with a hero, who stands at the peak of personal and professional success, who is loved and worshiped by everyone around him, and then suffers a down fall with no safety nets to stop the disaster. The higher the hero stands, the harder he falls, is the simple formula. The direction in which Netflix is going now makes one wonder, doesn't it have all the necessary ingredients to be a perfect Greek tragedy!
The trouble for Netflix started brewing in July this year, when the company announced its renewed plan and increased monthly rates. The rate was up by 60 percent, and the customers were least impressed by the decision. To add fuel to the rage, the company failed to convince the customers properly about the necessity behind their decision. It was the company's failure to recognise the power of social media that triggered this downfall.
The angry customers hit the social media and the web was flooded with hatred towards Netflix, and gave a knockout punch to the company in Wall Street. It barely survived that punch and the result is its stock price, which was over $304, falling to just over $140. The company woke up to the fact that customers now are more powerful than they expected, and the gravity of the situation can soon get out of control if damage control is not taken.
This realization of the company has reflected in the recent apology offered by Netflix CEO, Reed Hastings. Netflix's blog on the 18th of this month had a blog tentatively titled, 'An Explanation and Some Reflections' in which he put forth an apology and tried to explain to the customers the new business angle the company is adopting. He started by saying 'I messed up. I owe everyone an explanation,' and from the comments the article got, we can say only the first sentence the consumers agreed with and they were not very happy about the explanation part.
Hastings explained the new structure of the company; how the online streaming of TV shows and movies will remain with Netflix and the DVD service will be a separate entity named Qwikster. And judging by the comments his post received, more than 25000, the customers are least impressed by this. They do not like the idea of having to go to separate websites to order DVDs and to watch movies online. Even the name Qwikster is making them take a defensive stance. 'An "apology" only after you lose a million of us customers, and then the "apology" has the arrogance to explain the split of the two services without even explaining why the exact same service that used to cost one thing is now worth the huge price increase just because the services will now have two different names,' commented Ed Jelinek, an unhappy customer.
The number of customers bailing out from Netflix is on an all time high. Netflix itself is expecting at least 600,000 customers to leave the company by the end of this month. Hastings ended his post by saying, 'Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.' The question is, whether the customers are willing to give the company the time they need to regain the trust or are they giving up on the company already.
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