By M.Christian
YNOT – Like most folks, I’ve been watching the … okay, let’s be honest here: pathetically clumsy dance Netflix has been doing lately. In a nutshell, for financial reasons the gigantic online video rental service decided to sever its physical product division — the one that mails DVDs to subscribers — from its web-based video-on-demand division. So it did.
The outcry was immediate and raucous as 800,000 rebellious subscribers abandoned ship, not only because they suddenly had to deal with two bills each month, but because their subscription rates suddenly doubled. The company stock took a rather large dip, and then investors joined the lynch mob.
Netflix Chief Executive Officer Reed Hastings apologized and the company recombined, but it remains anybody’s guess what will happen with the monthly subscription prices. A rate that before the split stood at about $8 monthly for access to both DVDs and VOD ballooned overnight to more than $17. There’s still a large “WTF?” quotient in the equation.
Techland’s Matt Peckham provided a bit of perspective in his piece “Netflix Was Right, and We’re Being Fickle.” In his view, Netflix’s split personality resulted from the company’s desire to phase out physical product in favor of much more lucrative online streaming. By gradually nudging reluctant technophobes to embrace VOD, the company eventually would be able to duck out of the DVD rental business altogether without losing a chunk of its business.
Or that was the plan, anyway.
Sound on Sound columnist Dan Daley provided a similar analysis.
“While consumers angrily lambasted Netflix for upping prices, the economics behind the move are clear: Streaming a file costs far less than making and mailing a disc that will eventually wear out from handling and exposure, and nudging consumers to drop discs in favor of files will be very good for the bottom line in the long run.”
The why of Netflix’s decision makes perfect sense. The how? Not so much. To put the situation bluntly, Netflix screwed up. Watching was a painful experience for those of us who’ve come to view the company as a sort of gold standard for business smarts. The resulting comedy of errors seemed a lot like seeing daddy’s fake beard on Christmas.
And so I began to wonder: What can the rest of us learn from Netflix’s public self-flagellation?
It’s true — and then some — that things move fast these days. Movies, books, companies, you name it, come and go in a matter of days, not years. The same is true of customer feedback … or any kind of feedback for that matter. Just look at politics: It used to be that a politician on the campaign trail had to cross his or her fingers and pray they were saying what the voters wanted to hear. Pre-internet, they’d wait weeks or months to see how the fly-over states responded. These days, though, political strategists and handlers can tell, second-to-second, what words are working and what words aren’t, giving them a chance to change their candidate’s course practically in mid-speech.
Businesses, too, have this kind of immediate contact with their customers and clients, which can be a very good thing. Product flaw? No problem. Mistakes can be spotted and fixed before most people even know they exist. Bless the internet, right?
But with this immediacy comes a kind of … hysteria. What Netflix did wasn’t wrong. God knows all kinds of companies have had to change their products, their presentation, their entire look. Pay attention to what Google has been up to, for example. What Netflix did wrong was not taking a long, cooling, deep breath before doing anything.
The real problem isn’t that Netflix changed its organization or its pricing. Netflix’s egregious errors was much more insidious: It totally, completely and almost disastrously overreacted when people began to complain. In essence, Hastings pulled out a gun, took careful aim at his foot and then pulled the trigger not once, but three times. Blam! We’re raising our prices and splitting in two. Blam! Oops. Never mind. That was a bad idea. Blam! Sorry we bothered you.
Even worse, he did it all in the name of trying to appease a few very vocal critics. In so doing, all he accomplished was causing the majority to question not only his business acumen but the stability of the company itself. If Hastings simply had waited before acting on what those loud-in-volume but small-in-number critics said, things could have turned out very differently.
What does this mean for the rest of us? Any business, smutty or not, needs to remember that while it is essential to listen to what the masses are saying — especially feedback from customers and clients — it is equally important to pay attention to who is doing the talking. Smart business owners know change naturally will cause some people to walk away. That’s inevitable. But that doesn’t mean owners should back away from an unpopular-at-the-time decision if that decision is vital to their continuing success. Continually making massive course corrections based on public outcry is an excellent way to tap-dance right over the edge of a cliff.
You know what they say about cliffs, right? It’s not the fall that kills you. It’s the sudden stop at the end.
If Hastings had simply stuck to his guns or, at the very worst, explained his decision with professional logic, all of the chaos could have been avoided. Yes, Netflix would have lost customers, but he might not have lost the respect of other businesses. He might not have lost the public’s and shareholders’ confidence.
Fortunately for Netflix and its remaining customers, its self-inflicted wounds weren’t fatal. However, the company’s injuries should serve as a warning to other business owners trying to navigate choppy waters in an age of fast and often dramatic communication: Always, always, always think before acting — and don’t let panic push you into making a worse mistake.
M.Christian is a YNOT.com contributing editor and an author of literary erotica that blends the spectrum of sexual preferences and desires with horror and science fiction. Got weird sex news you want to share? Email him.
