Netflix: An exercise in social media backlash over business decision

A 2:21PM on July 12 I received an email from Netflix informing me that my $9.99/month subscription for 1 DVD out at a time + unlimited streaming is going up to $16.99. That's about a 60% price hike!

My stomach started to churn. I'm a long-time customer. I signed up before they even had local distribution channels. It used to take about 10 days from the date I mailed back a DVD to when I got a new one, but I stuck with Netflix because I believed it was an overall great value.

My opinion never wavered when they eventually dropped the price of my 3-DVD out at a time plan, when I realized that I wasn't watching enough movies and dropped down to the 1-DVD out at a time plan, and when they added a rather sad assortment of B and C level movies for streaming.

But this...a 60% price hike...made my blood boil. And I've only streamed a handful of titles in the last several years.

So I tweeted it, and followers retweeted it. And other Netflix subscribers tweeted it. And Facebook members posted complaints in their status updates. And the Netflix Facebook Page lit up like a Christmas tree with 41,000+ comments on the announcement from angry members, plus countless Page posts raging against Netflix's move. And the Netflix blog received 5000+ comments on its post about the fee hike. "Dear Netflix" is trending at #5 in the top 10 on Twitter. Several of my social media friends have shared a link to a blog post called, "Mad About Netflix Prices? Here Are Some Alternative Services."

This is all within the just last 26 hours.

So, what did Netflix do to quell the social media storm? Nothing. Not a peep from them in response to their angry customers. 

Netflix has been known for its exemplary customer service and brilliant business planning for many years, so they likely anticipated the backlash. But did they expect the volume and the venom? Only Netflix can answer that, but they're not talking. 

Perhaps they're attempting to wait out the storm and hope that everything just goes back to status quo. Maybe they're waiting to gage just how bad things get, as in how many people quit Netflix. Maybe they just don't care. They've made a business decision, and the heck with customer backlash.

In any event, it seems bad business to have not anticipated the storm thundering over Netflix right now. And the past has proven that brands are made and broken in social media. Time will tell if this is one of the all-time-great examples of social media failure or a brilliant move by a company running one of the largest-scale research projects of all time.

 

 - Christine Pilch

Comments

[Morriss Partee]

I have a little bit of experience from the inside with a situation somewhat like this, though of course far, far smaller in scale.

Yes, customers are upset, of course they are. But Netflix is going to be just fine whether or not they respond via social media. Sure they are going to lose a bunch of customers. Sure they have upset many customers. But they will more than make up for any loss of long-time loyal customers with the additional revenue generated. So while they might not like the short-term heat, they will be smiling all the way to the bank after this initial storm blows over. I wish it didn't work that way, but it does.

So with all the heat they are taking right now, I think they are actually smart not to be responding now. Because ANY response will just fan the flames of the anger, no matter how calm and reasoned they might try to be. By remaining silent for the time being, they are taking the punches, but not ramping them up.

Actually, I think their mistake is in doing this right now. The most important point about this which you bring up is that the availability of movies on demand is not nearly what is available on DVD. They needed to either make the cost of the streaming plan lower than DVD or else wait to do this until it was much closer to on-par.

[Christine Pilch]

Thanks for your comment, Morriss. I agree that there is a large disparity between the streaming and DVD selections, so pricing them the same is ridiculous.

There is still no word for Netflix. It seems they have taken the stance of refusing to address customer concern.

I disagree, however, that this won't hurt them in the long run. They have now proven that they don't care about their members, and that's never good business tactic. True, many customers will stay, until a strong alternative appears, and then we'll see the exodus of people who do remember how they were treated.