Netflix caught my eye years ago and had my wallet up until the two most recent changes to their business model. Having run internet businesses since 1998, I am pretty familiar with the need to change and grow and change again dependent on the market and the customer base. So I was not suprised when Netflix started changing their model to include different pricing or a change in pricing. Having reviewed over 1200 movies using their service, I was dug in deep.
It was wonderful watching a movie while working on a spreadsheet, database or organizing family photos and there in the corner of the screen played a movie from Netflix. Not a being a person who is too keen on wasting time watching tons of movies, this seemed to be a pretty justifiable way of getting away with it.
And it is cheap! Or at least it used to be…
The change didn’t surprise me. Much like distributors in the ecomomy, prices have to be adjusted to compensate for cost increases, fuel surcharges, etc., I get it. The first wave of price change was okay, I gulped like everyone else thinking that Netflix may have found out they have a great business model. There might be no stopping them, I remember thinking. They could sell our reviews, the fact that loyal customer would remain loyal after the price increase, etc. Its only a matter of time before they really dig in and start testing the waters. That thought came and went as I moved on to more and more movies.
Then they changed it again. <Ugh>. It took all of a second for me to get that gut feeling that always serves me well and cancel my service. That was it, cancelled, done.
For some reason, it seemed to me to be either greed or a form of negligence on the part of Netflix. How, you may be wondering? Well as a business person, I usually have a grounded sense of fairness. The ability to bring to the table the facts and value and to let the customer decide. The yanking out of the tablecloth by Netflix was not so well thought out, enough to piss off most, if not all of their customer base. Think about that. What business or entity does that and thrives?
My belief is that Netflix made the right business decision separating the DVD business from the streaming business. One is a dinosaur, the other cutting edge technology that is efficient, convenient and profitable. How they did it was the mistake.
Will they survive the debacle? My prediction is most certainly. They will survive and thrive unless some business can capitalize (quickly) and soak up the lost customer base and meet or beat their service model.
Their core conflict is the movie industry. If they cannot sustain their market share because of lack of content they are doomed. Content is attained by offering money and money is not available without raising prices (they think) or in retaining customers (my thought).