How Netflix went wrong: Qwikster was good for company, not the customer.
| Los Angeles
As a red-faced Netflix, the media delivery giant, reverses course and kills off its newly formed Qwikster DVD division, many observers are scratching their heads over how such a successful upstart company could make such a gaffe.
Netflix spun off Qwikster to handle what was clearly seen as a business on its last legs 鈥� the model of delivering physical DVDs in that familiar red-and-white packaging to people鈥檚 mailboxes.
The thinking behind the now defunct move? As total digital delivery of all entertainment loomed ever closer 鈥� and the US Postal Service rumbled about changes in its services and fees 鈥� Netflix was clearly banking on its cyberfuture.
The company鈥檚 mistake, says Fordham University Professor Paul Levinson, author of 鈥淣ew New Media,鈥� was in making the best move for the company 鈥� not the consumer. 鈥淪plitting the two services may have been in the best interest of the company,鈥� he says, 鈥渂ut it is less simple for the customer.鈥�
Beyond that, he says the move to create two companies with separate log-ins and fees was surprisingly 鈥渉am-handed鈥� following, as it did right, on the heels of a price hike in July.
鈥淢y advice at this point is for Netflix to consider rolling back those price hikes as well,鈥� he says, adding, 鈥渋n this day of such economic hardship, customers are angry at businesses trying to get more money for the same service.鈥�
In defending the price hikes in his announcement Monday, Netflix CEO Reed Hastings said, 鈥渢he last couple of weeks alone, we鈥檝e added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS.鈥�
Social media was alive with impassioned critique of Netflix in the wake of these two changes 鈥� the price hike and the creation of Qwikster, says Robert Thompson, founder of the Bleier Center of Television and Popular Culture at Syracuse University in New York.
鈥淢ost of the students I heard talking about Netflix said they were going to drop it rather than pay more or go to two web sites,鈥� he says with a laugh. The question of how Netflix could have stumbled so badly and so quickly is a cautionary tale in these digital times, he notes.
Clearly, the two business moves were in the firm鈥檚 best interest. But, somehow, the company seemed to have the notion that customers would happily support what was in the company鈥檚 best interest 鈥� without any pushback. 鈥淚t鈥檚 a bit Shakespearean,鈥� Professor Thompson says, explaining that leaders in any realm often ride the acclaim of their followers into power.
But, once there, 鈥渢hey forget who put them there,鈥� he says. 鈥淭hey start thinking that their constituency cares about their self-preservation,鈥� he notes, adding, 鈥渋n this swiftly changing digital world where one day you can be up and the next day you are something to wrap yesterday鈥檚 fish in, nobody can afford to take their consumers for granted.鈥�
This is not to suggest that such entitlement on the part of consumers is necessarily a good thing. 鈥淏ut just look at MySpace and Blockbuster,鈥� he says. Their moment in the cultural zeitgeist was temporary, and now it鈥檚 over. Time will tell, but that could be the Netflix story as well, he adds.
