Netflix subscribers today, your subscribers tomorrow.Written by Kevin Wallach
September 20, 2011 # 11:25 am # Marketing Insights # 7 Comments
All the fuss over Netflix yesterday started me thinking about what a great day it is to be an affiliate marketer with a nice opt in email list of people who may be (or until recently were) Netflix customers. In case you are making the universal monkey face that signals confusion I’ll explain.
Netflix apparently decided that one big blunder in 2011 was less than it could aspire to and ambitiously set out to anger its shrinking customer population a second time yesterday.
Netflix made news this summer with a price hike than was not received well by its subscribers to put it euphemistically. The company justified the relatively large increase in monthly costs for subscribers by pointing out its own rising costs in securing content rights. The hike in price from $9.99 to $15.98 came without much consolation from Netflix though customers were also offered the option of paying $7.99 for one or the other of the two services depending on their preference for streaming video or DVD rentals. I’m guessing like many companies seeing growth in their acquisition of new customers Netflix thought that customers would grumble a bit and then accept the new cost of enjoying commercial free streaming content and reasonably easy access to the DVDs they want via mail. Shocking as it probably was to the leadership at Netflix, customers responded much differently and current projections have the net customer loss at around 1 million. This comes not long after Starz announcement that it will not renew its contract that expires this year to supply content to Netflix. In accordance with the law of threes Netflix is also getting a fair lashing in the stock market just when it claims it needs to raise more cash.
Now if you were in charge at Netflix you might build a bunker in your office and demand silence of everyone in your organization until the dust settles. Netflix instead issued yet another change in its service yesterday, this one very likely to rattle even the most loyal among their customers. DVD rentals will now be made available under an entirely separate, new brand called Qwikster while streaming video will remain under the Netflix badge. So the customers willing to shell out more money each month to keep their options of streaming video and DVD rentals will be forced to accept the requirement to manage separate log ins and billing accounts for the two services. Oh but the CEO of Netflix did pad the news this time with a personal “oops, my bad” regarding the way the first change was made public. Apparently it’s not the changes that were a bad idea but the way they were announced. If you do much reading around social circles online you will likely find few who agree with that by the way.
All of this flaunting of power and halfway apologizing will likely cost Netflix big time and anytime there’s a mass exodus of customers from one company there’s a close competitor waiting to catch the landslide of new business. Though analysts don’t point to a clear benefactor in those terms you can bet that someone is gearing up to send out a lot of emails today. Will it be you or your company that guides these customers to a friendlier (and more tuned-in) DVD and streaming video provider or providers? This is certainly the sort of thing that qualifies as an event and no doubt affiliate marketers will want to act on it while there are still customers walking out of Netflix.