Letters from Netflix and Solutions by Jameyflix

A few months ago, all 25 million Netflix subscribers got a notice saying that in the near future, Netflix would be raising its DVD + streaming video service by 60%. Users could avoid the price hike by choosing to receive only DVDs or only streaming video, but if they wanted both (as they had become accustomed), they’d have to pay.

The price hike happened a few weeks ago. Since then, Netflix has lost a million subscribers. So the other day, Netflix members got an e-mail from the CEO indicating that in order to alleviate further dissent, Netflix would divide into two different companies, Netflix (for streaming) and Qwikster (for DVDs by mail). Two separate services, two separate queues, and the price hike (if you subscribed to both, just now separately) is still in place.

I’m amazed that this is something that people are outraged about. We’re all talking about watching movies at home, right? That’s it? And yet we’re outraged? I’m truly hoping that Hastings has a whole slew of e-mails in his draft box, all ready to send at the right time. Some messages I’m eagerly expecting:

  • That Qwikster will be divided into two separate services, one for DVDs, the other for Blu-Ray (called Bluester).
  • That he’s giving into to public pressure and reuniting the DVD and streaming services, but he’s sticking with the name Qwikster instead of Netflix “because he can.”
  • That he has no idea of what to do, so he’s having a contest to determine the best solution–just like the million-dollar contest for someone who could create a better recommendation engine for the site. Again, he insists that the solution be called Qwikster.
  • A picture of Hastings giving us the finger, followed by a short note saying that he’s made enough money, and he’s shutting Netflix and Qwikster down immediately. The P.S. would inform me that I have 7 days to return my copy of Ella Enchanted before he sues me for a million dollars.

Honestly, the switch wouldn’t be a problem if every movie and TV show streamed on Netflix. But they don’t–the selection of streaming video is actually quite small.

So here’s what I think Hastings should actually do:

  1. Recombine the services, reduce the prices to what they were two months ago (but still delineate pricing between DVDs and streaming), and give every Netflix subscriber (and recent unsubscribers) two months free. But announce that changes will be coming in the following form.
  2. Pledge to get every movie (and maybe every television show) on the streaming service by January 1, 2012. However, when they reach a critical mass, the way they charge for streaming will change. Unlimited streaming when you every movie available is preposterous. Us consumers shouldn’t expect that. We should expect to pay for what we watch. Thus the streaming plans will be determined by hours, with the caveat that you can roll over unused hours to the next month. That way consumers will assign a specific value to a streaming video, unlike right now, when $7 = infinity. $7 should never equal infinity anything. I think that change may actually help Netflix sign studios that currently don’t allow for streaming. As part of the exchange, Netflix should give them data, tons of data. When do people watch different types of movies? When do people pause movies? What types of product placements cause people to open a new tab in their browser in search of the product? What movies and scenes do people watch more than once?
  3. Announce that from now on, every year on July 1, subscription prices for all services will go up in correlation to postage increases and inflation. DVD rental today should not cost what it did in 2005, nor should it cost the same in 2016. It’s not sustainable that way. However, in recognition of loyal customers, you get grandfathered in for DVD rentals. So if you pay $10 for 2 DVDs a month now, you’ll always pay that much for the rest of your life. This is not only good for loyal customers, but it would also be great for Netflix–imagine the business they’d do every year on June 30th!

In all this fuss, people are forgetting what Netflix does right. Netflix has amazing, forgetting, transparent, and informative customer service, and that’s getting lost in all this fuss. Get rid of the fuss and go back to being an affordable, convenient, consolidated service, and we’ll go back to remembering why Netflix is awesome in the first place.

What do you think? What’s your solution?

5 thoughts on “Letters from Netflix and Solutions by Jameyflix”

  1. I love the option of Hastings giving everyone the finger and demanding that they return his stuff immediately. I’d give a lot more fingers if I had billions of dollars.

    • Seriously, how awesome would that be? I’d love for a company to do that someday. People complain so much about the products they love the most. Except TiVo (the real TiVo). I never really hear complaints about TiVo.

  2. He should announce that he has acquired the streaming rights to something big – like Friends – and then announce that he will NEVER allow anyone else to see it. He should then start a Twitter account devoted to his favorite jokes from each episode and constantly remind people that they will never get to hear these jokes themselves.

    • That’s awesome, Brad. Except I’d revise it to say that he buys the exclusive rights to a classic show so that only he can watch it. You can’t watch it on TBS, you can’t watch it on Hulu, you can’t even watch it on the DVDs that you bought 8 years ago–only Hastings can watch it. Then, and only then, will I applaud him.

  3. The problem is that Netflix grew too fast. They got all these customers through by creating a highly accessible product at an ultra competative price. It’s not the customers’ fault that the business model is not sustainable at the size that Netflix has grown to. So Netflix is trying to change the expectation that all their on which all their success is built.
    Most people are either in the corner of the comsumer or the business in these kinds of scenarios. But infering from your posting on responsible grouponing, you want good business to thrive, as a function of a responsible consumer. I just don’t think it’s the consumer’s job to try to keep the business afloat, in the same way I don’t think it’s the business’s job to make placate the demands of the masses. The ballance is in the market. If Netflix pisses people off, they will leave in exchange for another media service. But Netflix has already redesigned the market by squeezing out so many neighborhood rental stores, in the same way that Amazon squeezed out Borders. Now, netflix is the biggest game in town, and they will throw their weight around as much as they can afford to.


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