Today Netflix CEO Reed Hastings sent an email to Netflix customers and posted this blog post explaining the reasoning behind the company’s recent price hike and apologizing for not communicating this earlier. In a nutshell, they are breaking off the DVD business to a whole separate company called…are you ready for this…Qwikster (for which they don’t even own the Twitter handle). The two sites will not be integrated the way streaming and DVD-only is now. IMHO, it’s a bad, bad move. I’ve written before about Netflix as a shining example of everything Blockbuster did wrong. With the latest moves Netflix is making, I’m afraid they’re heading down a path where I’ll have to eat my words. For the record, I get that there may be other factors at stake here that play into these odd decisions, e.g. licensing issues. But if that’s the case, come clean and explain that. (I wonder if the 19% drop in stock price last Thursday at the announcement of losing a million subscribers has anything to do with this announcement’s timing?)
Bad PR Adding to An Already Hurt Brand
It goes without saying the Netflix brand has been greatly damaged in the past few months since the price increase announcement. And based on the comments on their blog, and the fact that their stock is down 5% today as of this blog post, it seems like the brand is hurting even more. And as of now, I can’t imagine a world where a name like Qwikster will be good. (But, I also didn’t like the name DreamWorks when that studio started. So maybe it’ll grow on me). So, with all of this bad PR going on, what does Reed do? He makes a video to announce it. Okay. That’s great. Smart. Talk to the people. Let them see and hear you. But what I can’t for the life of me understand is why on God’s good green earth did they not foot the bill for a professional video? A message as important as this should have a well-polished, well thought-out, terrific looking video that makes me want to buy into their plan. Instead, they put up something that looks like it was shot this afternoon in their company’s outside food cafeteria, with poor audio (relatively speaking), and thrown together by some intern on FCPX.
They should take a queue from Apple. When Apple has to make a big announcement, they have a video to back it up and you know for darn sure their best PR pros in the company are making sure the people in the video are well-versed and well-spoken. If you’ve seen any of their product videos, you know what I’m talking. They’re simple, yet just like all Apple products, are designed elegantly with high production value. This video by Netflix is a mess and a further bad move. Here are three reasons why:
- Poor quality suggests lack of concern. If I do something to really piss my wife off, I don’t make up for it with with a crappy 99 cent card I picked on on the way back from a job. Something that feels like an afterthought. She wants to know that I really care and take the time to show it. This video is kind of like that crappy 99 cent card. It doesn’t even have Netflix branding intro or outro.
- Further damage to brand. A cheap video makes you look cheap and makes the brand look cheap. Nuff said about that.
- Lost opportunity. Video has the power to rally people and get them excited about a cause when it’s done right. Netflix missed an opportunity to use this medium in a powerful way that could have not only eased some of the anger about the price hike, but might have gotten folks at least more accepting of this change.
The video comes across like the letter – something they had to do because they never planned to do it in the first place. The public out-lash forced their hands. It seemed like a well run machine until they got greedy.
Again, this is appearance based critique, but I could not agree more with your article.
I agree with you Chase. But as soon as they knew they were going to do it, they should have put the wheels in motion to do it right. I don’t think Reed woke up this morning and said, “I think I’ll write this letter.” 🙂 They knew enough in advance to do it better than they did. It will be interesting to see where this goes. I’m sure the Hulu guys are loving all of this. 🙂
Qwikster is terrible name. For some reason it reminds me of Napster or Friendster. And yes, I agree, poor video, poor business idea (what do I know about business though, I’m no big CEO like them & don’t even have 1/4 of their earnings). They need to hire someone new for their PR, well, do they actually have a PR team/person? PRESENTATION is EVERYTHING!!! Both of these guys are “CEOs” / “OWNERS” and it looks like they shot this video on an iphone, are not even dress their best or even slightly above average to address their clients concerns and seem like they are reading their words.
Can someone please tell them that in communication the words you use account for only 7% of its effectiveness.
Well said Alexis. I didn’t even get into the dress code. Not that they have to wear tuxedos or anything. But even their posture is bad. Like I said. A 99 cent card.
FWIW, I’m no CEO either, and this may actually be the best decision in the long run for all I know. But like you said, presentation is huge.
Hey Ron, bad for Netflix— But a blessing for producers like us. We can use this as ammo when we pitch to businesses of WHAT NOT TO DO! 😉
Wow, I agree… Quikster doesn’t roll off the tongue, sounds like a new clothing line for teens.
I will say that at least they poked fun at their video in their blog article when they said: “You’ll probably say we should avoid going into movie making after watching it.” Doesn’t change the fact that they should have put more effort into their communication strategy.
I have been an $8 Netflix customer for a few years and really liked the unlimited streaming and 1 DVD in the mail.. seemed like the right pace for my family. I was very frustrated when I had to choose one over the other. And then it seemed that their online selection went to crap. I am keeping a close eye on Hulu+ to see if they start to get new “popular” movies, maybe I will switch there. It seems like Netflix just took themselves out of a race that they were already winning. I would think they would make a move like this if they had some competition… but this just didn’t make sense to me as an end user. Oh well…. they will reap what they sow.
Thanks for the post Ron,
Dan
I don’t mind the name at all but I can understand their thinking of the low quality video. I’m guessing their motivation for it was “if feels more personal” I think it works for people in the political world, where the comments from “expert figureheads” need to come quick.
I think their attempt at personal doesn’t work well. it falls flat and comes off as not prepared.
I agree with all your points. Poor choice of name & the video was just plain wrong for a company of this size.
I like the low-fi Google instructional videos, they’re edited and produced well. This netflix “announcement” video, as you mentioned rightly looked like something “…thrown together by some intern on FCPX”. A rush job in every way.
There is something about this whole Netflix saga, I feel they have good intentions, but as everyone is saying, their execution & timing is terrible.
Apologising for your past mistakes then repeating a similar mistake instantaneously is not the way to do it. Something tells me the CEO is just winging this without any PR consultation whatsoever. Or should we read more into what the CEO wrote today, “In hindsight, I slid into arrogance based upon past success.
I know Netflix is trying to evolve and not become the “Blockbuster” of the movie rental business, but they just need to slow down a little and take deep breaths. Netflix/Hasting’s obsession with being ahead of the curb seems to be what is hurting them right now. They are making a lot of changes (wrong one’s) all at once.
It’s ironic when you read CEO’s own words, “Companies rarely die from moving too fast, and they frequently die from moving too slowly.” don’t think they’ll “die”, but they’re making some bad moves right now & losing customers. Moving slowly maybe just what is needed right now.
What’s sad is, Reed Hastings knows that video is of poor production value, he even joked about it in his blog post saying, “Andy and I made a short welcome video. (You’ll probably say we should avoid going into movie making after watching it.)”. So then why would a CEO let a poor product out the door? It must be his self confessed “arrogance” sliding again. You’re right Ron, they could learn a lot from Apple.
You nailed it on the head Henry when you pointed out they realized up front the video was bad. They knew they made a poor quality video, a video meant to appease the angry customers, and they put it out anyway. It’s either arrogance, ignorance, or a little of both.
I agree with a lot of the things you stated in this post. However, the quality of the video really isn’t too much of a concern. In fact, I think what they were trying to do with the approach of a simple video is to show humility. Reed has always shown humility by communicating with customers and offering discounts whenever there has been an issue with the service. Therefore, a simple video that anyone can make means that Reed is trying to relate to his customers. Approach them at their level. Not seem large and powerful or overbearing. An expansive and beautifully produced video would just seem high-and-mighty and distant to customers.
As Henry suggested, Google has used this approach as well.
I get what you’re saying Don, but a well produced video doesn’t have to look “high and mighty.” I’m not talking about a cinematic epic shot on a RED. A video IN FOCUS, lit well, with good audio and shot on a white background can still come across as simple and on the viewers’ level. And that’s the thing. Anyone who knows video well knows that when it’s done right, you can make it look however you want, w/o the viewer knowing all that went into it. In this video you have poor audio, the other guy looks bored, the setting is awful, it’s out of focus in parts. It all goes to their brand and says “cheap.” It feels rushed, like all the decisions they are making. And I still stand behind the statement that if they did put a little extra into it, they could have created something that might have inspired viewers to have faith. Based on the comments both the apology and the video are going, I think others agree.