Once upon a time, Netflix was the undisputed heavyweight champion/top dog/King of the hill. They single-handedly slayed the big bully BlockBuster Video and basically sent them into extinction. Their ease of use, with a mail-in DVD program -OR- an instant streaming service of thousands of titles, was a game changer and quickly set the industry standard. And their simple and affordable price structure had new customers signing up by the droves and sent stock prices skyrocketing. So why then is Netflix in big trouble?
Within the 2nd quarter of 2011, Netflix has been immersed in a public relations nightmare. They’ve seen the company stock on a suicidal nose-dive and have seen customers canceling their accounts by the thousands. What happened???
First, the extremely popular $9.99 monthly unlimited DVD-rental and streaming combination plan was scrapped. In what many saw as a fit of financial greed, Netflix made the odd decision to separate its DVD and streaming services into 2 separate plans, each priced at $7.99. For those customers who still craved a combo plan, the cost was raised a whopping 60% to $15.98 a month!
Realizing months later that the company goofed, Netflix CEO Reed Hastings made a public apology. “It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” he said. “That was certainly not our intent, and I offer my sincere apology.” Reed then went on to announce that Netflix will now be 2 separate companies — Netflix for instant streaming, and the new “Qwikster” for DVD rentals. Or in other words, all the loyal customers who could get both service only a few short months ago for $9.99, will now need 2 separate accounts, 2 separate payments, and an additional $5. bucks a month. Needless to say, customers are NOT happy!
But at least someone is finding great joy in the Netflix blunder: Blockbuster — which just teamed with the Dish Network in hopes of snagging some disgruntled former Netflix customers with its own streaming video service. For $10 a month, Dish subscribers can have access to the new Blockbuster Movie Pass service. The service, which will start October 1st, will provide more than 3000 movies streamed to TVs or computers as well as DVD rentals by mail and/or in Blockbuster stores.
Can Netflix recover from its deadly PR blunder and remain champ? Or is Blockbuster about to get up from the 10 count and come out boxing and ready to reclaim the title?
