NetFlix, Qwikster and How NOT to Handle Company Changes

October 5, 2011

The recent separation of Netflix and Qwikster, and the subsequent increase in prices, has succeeded at one thing: focusing attention on the two brands, although mostly in a negative light. Netflix has been under fire for its apology — not for the increase in prices — but for how they handled it. It did not go over well with their customers.
Most comments about a company posted on the Internet are to complain: people are more compelled to state their opinion when they have had a negative experience. But it seems unlikely with the unprecedented number of negative comments on the latest “apology” that the happy people are simply failing to comment. People are genuinely angry and confused about Netflix’s recent PR decisions.
In an Entertainment Weekly article, John Young covers pretty much all of the bases as far as customer complaints go — and his points are quite valid: the price has increased by an average of 60%; the split now requires users to visit two separate websites with log-ins and credit card information for each; and the name Qwikster most decidedly doesn’t conjure up positive thoughts for the new brand.  not to mention I had to check my spelling in this blog post at least 5 times to get it right. Most importantly, though, the split makes it easy to kill off this “new” brand in the near future — who wants to sign up and pay for a brand that was created to be killed off?
All in all, the decision to break the brand into two has clearly irked more than a few Netflix customers. According to Rolling Stone, Netflix’s stock price has dropped by 11% this week alone, with a 50% drop in valuation. Add to those dismal numbers the increasing competition from giants Amazon and Microsoft with their new television program services for the Kindle Fire and Xbox Live respectively, as well as the collapse of the Starz deal, and this preventable PR disaster creates the perfect environment for previously loyal Netflix subscribers to hemorrhage to other services. It just goes to show the importance of good public relations — and of being transparent with customers.