Netflix, Qwikster and the Wrong Way to Break News

COMMENTARY | Early Monday morning, Netflix issued an apology letter in hopes of slowing the mass exodus of subscribers unhappy with a 60 percent price hike. In the letter, Netflix CEO and co-founder Reed Hastings explains that the DVD end of Netflix will be handled by a new entity, Qwikster, and Netflix will now only deal with streaming services.

The two services — and their two websites – will no longer be integrated. While that separation will likely help Netflix’s bottom line, it seems like a pretty bad idea from a customer standpoint.

I watch TV. A lot of TV, and shows that I couldn’t otherwise watch, including British television, I’ve seen through Netflix. Often older episodes are available for streaming, while the most recent season of any given show is only found on DVD. On the current Netflix site, I can click a few tabs and get all seasons in a mix of formats.

Now to do the same thing, Netflix will require two completely separate websites that have no cross-functionality and no benefit for using both of the services. Before the announcement of Qwkister, I might have stayed with both plans at Netflix to cover all of my viewing bases because it was convenient and because of that music to any business’ pocket book: inertia.

Now Netflix has pretty much kicked me out of my cozy viewing, and even cozier habit, nest and told me to check out the competition. Perhaps, to borrow the misquoted brilliance of Mark Twain, reports of zombie company Blockbuster’s death have been greatly exaggerated.

Netflix is having trouble maintaining its content. It took the one aspect of its service that is still a benefit to the consumer, that sets it apart from its competitors, and eliminated it. Streaming is great. DVDs by mail can be great as well when you fully utilize the service. But now I have no reason to get both from Netflix and Qwikster.

In fact, as DVDs by mail often sit around, unwatched, for a while, the question is whether paying separately for the service is even worthwhile. As Blockbuster has deals to get many new releases first, that perk — previously not a draw due to price and convenience — suddenly looks attractive. One-night movie kiosks abound; I’ve even got one in my building. And I can stream Amazon video to my TV or computer, often the same day the DVD becomes available.

So, Reed Hastings, it appears that, unfortunately, your apology resulted in the opposite of its intention. Instead of giving me, as a subscriber, a reason to stay, it’s given me the information I needed to realize I’d likely be better off canceling the service.

Customer loyalty is a funny thing. If you treat your customers as something more than customers, as Netflix did for many years, customers will respond in kind. But once you start thinking only of the bottom line, so do we.

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