Only time will tell if Netflix has indeed lost it and whether they will find their way.

Movies get delivered to your house and there’s no late fees? At first, Netflix offered such a great alternative to the traditional neighborhood movie rental place.  Eventually, they took a huge bit out of Blockbuster because Netflix had a great selection of movies that goes back further than your average Blockbuster location.  Things were going great, until the public heard about their decision to spin off the DVD-rental division into Qwikster and adding a possible game rental component.  What the hell was going on?

I wondered the same thing, especially after Netflix decided to nix many of their proposed changes.  The companies would remain together, though subscribers using both the streaming and rental components would have to still pay for each separate one.

I have to question what was going on in the mind of Netflix CEO Reed Hastings and his advisors.  Here’s what I envision the thought process being:

We’ve let our subscribers enjoy both services.  Let’s, essentially, charge them twice what it costs one service.  Also, we’re going to spin off our company and, to compete with Blockbuster (already includes video game rental) and Gamefly, we’re going to include video games.  Forget that our streaming selection sucks.  We’re going to charge it on par with our DVD-rental service.  What’s that? Our subscribers don’t like it? Wait, wait. We messed up.  We’re going to keep it all the same but still charge subscribers for each service that we offer.

In reading about business and listening to a wide variety of business podcasts, one of the things that keeps repeating time and time again is about alienating your core.  These are the people that will follow you through the fires of hell, as long as you treat them right and not do anything to piss them off.  I feel that Hastings and Netflix forgot this.

I think that the public, also, has learned something invaluable.  When a company offers you a service or good for free, it’s almost guaranteed that this will only occur for a short period of time.  Inevitably, they will charge you.  It’s the name of the game.  However, the thing is to introduce this in the best way possible—not some half-baked plan that isn’t fully fleshed out.  It’s a great way to alienate your core and make you question if you’ve lost it. Only time will tell if Netflix has indeed lost it and whether they will find their way.

Author: José A. Rodríguez
Image: Paula Anderanin