Netflix, the fiasco simplied:
This summer Netflix announced a price increase. The gist was that if you had streaming and DVD-by-mail service, you would see a jump in your bill or you could cancel one of the services.
A one disk a month DVD service including unlimited streaming for $9.99 became one disk a month DVD service for $7.99 plus streaming for $7.99 or $15.98 combined.
The price hike caused outrage.
So the CEO apologized in the now infamous, “I messed up” letter.
But he didn’t change any of his mistakes. He just rebranded the mistakes, literally. The DVD by mail service is going to be Qwikster. The price hike remains in place.
To be clear: The price hike, the source of the outrage and the reason millions dropped Netflix last month, is, as near as I can tell, still in place.
The only change from the mistake is the name change of the DVD by mail service. Mr. Reed is not trying to undo his mistake, he’s just trying to spin it and obscure the fact that he’s sticking with the plan to stick his customers with a higher bill.
In reality, he’s really just trying to get rid of the DVD by mail service by making it undesirable. The problem is that he did it in the wrong order. The proper way to have done this is to split the service without raising the price, keeping the majority of the price in the streaming service, and then rebrand the DVD by mail services. Then when Qwikster, no longer associated with Netflix, later raised their prices, Netflix would have been unaffected in the eyes of their customers.
Mr. Reed not only royally messed up, he failed to apologize with any actual effect. basically it came down to: “I’m sorry I’m screwing you, my customers, over. But, I’m going to go along with my plan to screw you over. We really just wish we could unload the Disc by mail business and focus on the streaming service.”
Note: This post, including the interpretation and speculation of Netflix’s future plans, represents the opinion of the author. The actual facts should be researched by the individual reader, if they really care to do so.