Netflix, the once beloved DVD-by-mail and video-streaming service, has been messing with its strategy — and customers' minds. In July, Netflix raised the price on its popular DVD-and-streaming combo plan by 60 percent, inciting subscriber rage. Then last month, in another unpopular move, Netflix announced it was splitting into two different companies, creating a new business called Qwikster to manage its DVD-by-mail offerings. Now, just three weeks later, the company has backtracked on the controversial Qwikster split, presumably in response to customer outcry. Will America forgive Netflix for its recent missteps?
Netflix will be fine if it wises up: Chief executive Reed Hastings has a rep for being "one of the tech sector's most consumer-friendly CEOs," says Greg Sandoval at CNET. He's built up a lot of customer goodwill over the years by freeing customers from video store lines and late fees, and customers will likely forgive Netflix's transgressions if the company stabilizes and puts this strange summer behind it. Netflix needs to make two things a priority: Adding more titles to its streaming service to make up for the price hike, and "not generating any more headlines."
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Netflix's image (and bottom line) may feel this sting: Netflix's abrupt about-face is a little hard to reconcile with the glowing aura — "super smart, able to see around corners, not afraid to run against the herd" — that used to surround the company, says Peter Kafka at All Things D. This stark reversal suggests that the Qwikster backlash was costing Netflix even more customers. We'll see when the company's Q3 subscriber numbers are released Oct. 24. Regardless, the price hike is still in place — and customers, and Wall Street, still aren't happy about it.
And it might be too late to recover: "Has the damage already been done?" asks Ryan Lawler at GigaOm. Maybe. Competitors like Amazon Prime, Dish Network, and Blockbuster Movie Pass are looking for any opening to steal Netflix's customers. Those services have been improving their offerings, and fed-up Netflix customers may turn to them as an alternative... if they haven't already.
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