I’ve been curious about whether or not Netflix customers have forgiven the company for their huge faux pas (plural) this past summer — first in doubling the price of their combined DVD-by-mail/streaming video service, then in splitting the company into two pieces (Netflix for streaming video, and Quikster for DVDs), and finally saying "never mind" and putting the company back together again (but keeping the new higher price).
The answer is: Not so much.
You might recall that, after Netflix announced to the world in September 2011 that the change in its pricing structure was going to result in a drop of about 1 million subscribers, the company’s stock dropped 15% in price in just one day. Yesterday, Netflix’s stock price closed at $117.04 — quite a change from its 52-week high of $304.79, and not much of an improvement over its recent 52-week low of $103.13.
So, what’s the problem?
In the case of Netflix, just saying you’re sorry wasn’t enough. Despite CEO Reed Hastings’s half-hearted apology, customers have for the most part not forgiven the company, and their exodus over the past couple of months has not been reversed in any significant numbers.
If I were Reed Hastings, I would have given my customers more than just words of apology. How ’bout a month or two of free service for my loyal customers? Or why not back off the doubling of price for existing customers? Wouldn’t a 25% increase be enough?
Anyway, we’ll see what happens in the long run. With stiff competition coming from all directions — Apple, Amazon, Blockbuster, and every cable television company across the country — Netflix may find that it has already killed the goose that laid the golden egg, and no amount of apologies will bring it back to life.