Monday, October 10, 2011

Netflix to public: never mind

I have to hand it to Netflix: they may be witless, but they aren't complete dunderheads. After the tidal wave of criticism from their customers and a free-falling stock price, they've figured out that just maybe they should not split the streaming and DVD-by-mail businesses asunder.

CEO Reed Hasting (how much longer will I be able to make that statement?) posted on the company blog today that:

    It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.
Bravo - that man must have an MBA.

So, again this plays out more and more like the saga of New Coke.

By the way, in case you've forgotten how that ended, Coke actually gained market by re-introducing Old Coke, er, Coke Classic. Other than looking clueless by tampering with a classic, the whole "fiasco" solidified Coke's place in the market.

So who's to say how ill-advised all this seems in the long run?

Consider: Netflix raises prices - customers bitch and talk about leaving the company. So Netflix essentially says, "Okay, we'll be two separate companies."

Suddenly all those bitching customers who made noise about using a different company are faced with the prospect of dealing with a separate/different company whether they want to or not. Separate accounts! Separate billing! Loss of all their carefully managed queues.

Oh no!!!

In my heart of hearts, I doubt Netflix management is so adept at strategizing they'd come up with something this Machiavellian. Still it's amusing to consider.

Stay tuned. There's at least one more act waiting to play out here.

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