You know, I actually defended Netflix when it originally announced its price increase. Admittedly, part of the reason was that I have an emotional attachment to physical media, and although I recognized that separating the pricing was a move toward discouraging the DVDs by mail service, I determined that it wouldn’t harm that side of the business artificially. I figured that people with the money would hang onto both services and demonstrate the continued relevance of both media that you can hold in your hand and the United States Post Office. I also supposed that certain people like me would cast a vote in favor of those things by keeping only that service. I think Netflix discovered, to their evident chagrin, that I was right.
And in a move that will become a prominent case study in future business textbooks, the solution that they decided upon in response to unexpectedly negative customer feedback was to issue an arrogant non-apology while pushing the original idea to a further and more alienating extreme. Instead of simply retaining two price structures for different services and letting customers demonstrate their demand within the existing business model, Netflix will now be separating the two services into two completely separate businesses, with separate billings, separate websites, separate ratings information, even separate brand names, and ultimately completely separate customers.
In a replay of the July chorus, the response from customers and persons with common sense about how a business should operate has been overwhelmingly derisive. The perfectly obvious complaint is that the company is making it impossibly difficult for customers to utilize the dual service that they have already had access to. The Oatmeal quickly responded with this cartoon: http://theoatmeal.com/comics/netflix. One of the thousands of commenters on the Netflix blog post compared this move to separating phone service into a company devoted to talking and one devoted to listening. References to New Coke abound. People are predicting still more declines in the stock value of the company.
In his post, Netflix CEO Reed Hastings explained, no doubt disingenuously, that the complete severance of the DVDs by mail portion of the business is aimed at allowing management teams for each business to focus completely on their own needs, thereby helping the DVD portion to survive for longer. Now, I have no formal education in business management, but I’m pretty sure that it’s possible for a company and a subsidiary company to be managed separately, but share billings and retain user interface that is already well in place. Even if the creation of a separate site was deemed necessary for clarity’s sake or simply for the sake of a symbolic fresh start, I find it impossible to believe that Netflix couldn't have designed two separate sites that share ratings and reviews from customers who have accounts with both.
I call absolute bullshit on Hastings’ claim that he wants the DVDs by mail service to be around for as long as possible. Completely and unnecessarily divorcing the two services forces customers to choose one or the other. They are trying to deliberately, perhaps artificially, reduce demand for the portion of their business model that involves an investment of physical resources. And if that fact isn’t evident simply from the effort to sequester the older service away from the newer, they’ve even given it an awful, awful new name. The red envelope will now bear the name “Qwikster,” a name which I can only imagine was artfully designed to imply obsolescence.
The new brand remains true to the original by having two syllables and in no other way. Those two syllables combine two assaults on the durability and desirability of the business into one absurdly shitty name. To start with the more obvious act of sabotage, I would say that Netflix’s marketing department attached the suffix “-ster” to the new brand explicitly to place it in the company of businesses that are already defunct and to make it feel at home there. “-ster” was commonly attached to web business names about a decade ago, and has never been used with anything new that had a shot at being successful since then. Napster and Friendster still exist, as far as I know, but nobody cares, nobody really uses them, and the prospects for them growing in the future are slim to nil. By making the older half of their business of a piece with these oldsters, Netflix is transparently broadcasting the fact that it perceives Qwikster to already be in the same position of neglect, or that they want it to be.
More likely the latter given the other half of the brand. “Qwik,” Mr. Hastings helpfully informs us, is supposed to refer to the quick delivery offered to customers. So in order to promote the longevity of their premier service, they’ve chosen to emphasize the one feature by which it pales in comparison to the company’s other brand, which is now being put forth as a competitor. I’ll say a lot in praise of the DVDs by mail service, but by modern standards, quick it is not. The Netflix marketing team seems to be banking on the idea that every time they read the name on that little red envelope, the word “quick” will be on their minds and they’ll think, “Gee, I wouldn’t have had to wait a day for my entertainment if I had just chosen another title that’s available to stream online and watched that instead.”
Despite the strengths that they could have emphasized, they instead chose to create a new brand identity based on the one modest weakness that will repel all the shortsighted customers who can be trained to value convenience over quality. They could have called it PickFlix, or ClearFlix, or Doesn’t-rebuffer-or-increase-strain-on-your-ISP-Flix. Or they could have just called it Netflix Mail. But they went with Qwikster. They may as well have just called it Waitster and made the logo a cartoon of a guy looking at his watch while getting older. This goes beyond bad branding. It was never intended to be good branding. Reed Hastings wasn’t caught off guard by the blowback he received today; he was counting on it. As far as I can tell, his attitude is that anyone who still wants his company to mail them any of their 100,000 DVD titles can fuck right off. Go check some other dead and decaying websites, then put on a big band LP and type a letter to the editor on your Smith-Corona, you dinosaurs. Reed Hastings is too plugged in to the rapid changes of the modern market to stop and give a shit about whether you still want what he was offering you back when his company’s stock was more valuable and you were paying less.
I suppose that given the theme of this blog, I should give Hastings my respect. He’s trying to force a breaking point. But it’s a decidedly negative breaking point for most people concerned. If we accept the shitty deal he’s giving to his loyal customers, we demonstrate that decreased quality and selection is okay as long as we get our poor, limited goods quickly. On the other hand, we could spin this breaking point in our favor. I’ll be curious to see how many more subscribers they’ve lost after another month. I’m not sure how I’m going to respond yet. Netflix has been my only reliable source of entertainment for some time. The price hike hasn’t taken effect for me yet. I was planning on just keeping the DVD side, but now I’m not sure whether to support Qwikster despite the fact that it’s designed to dissuade support and is owned by someone who’s happy to treat his customers like gullible fools, or to try to find something else.
I actually didn’t know that Blockbuster had changed to a monthly subscription model. When did that happen and why wasn’t it four years ago? There’s also apparently something called Green Cine, which doesn’t have much of a site but seems well-priced and is uniquely focused on independent and classic titles. There might also still be one privately owned DVD rental store in my area. That could be neat in light of my nostalgia for physical media. I don’t think I’ve gone inside a building to rent a film since I was a kid.