I understand the reasons for Netflix spinning off its DVD business as a discrete and separate entity. They recognize a sinking ship when they see one and, theoretically, this would enable them to eliminate tons of overhead (buildings, postage, the employees who check and stuff discs, etc.) increasing their profit margin for the foreseeable future. In fact, I wouldn’t be surprised if the massive overhead reduction results in a huge profit in the next quarter.
I get it. There’s just a better way to do it.
Remember, in the current news/media environment, what’s most important is what happens directly surrounding an event. This increased revenue will surely allow Netflix to do new, better things with its money, but consumers are not seeing the benefit right now. They’re only seeing inconvenience. We now have two queues to manage, two websites that have our personal/financial data, and, most importantly, two discrete entities handling what used to be one integrated experience. The sum inconvenience might not be all that bad, but it will be blown up because Netflix did nothing to make themselves simultaneously better (in public perception).
Consider these two scenarios:
1. Netflix announces the Qwikster split and simultaneously announce a major content coup. Maybe they have concurrent releases of a network’s lineup this season. Maybe they made a deal with a major network to score their entire back catalog or they’ve got a movie studio’s releases. This distracts consumers from what they’re losing by showing them what they’re getting.
2. Netflix announces that they’d like to pass some of the savings along to you and drops its streaming cost by $1 per month or something. It represents a loss of $12 per customer, but if the DVD shipping business was costing them more than $12 per customer, they wouldn’t have tried to wring $96 per year out of us by splitting the plans.
Either of those would do amazing things for Netflix’s public perception. Instead we see them as inconveniencing us while simultaneously increasing the perceived value of Qwikster, the service they see as dead in the water, by adding a new feature: video game rentals.
It reeks of desperation and tone deafness and I can’t believe that ostensibly smart people have made such a stupid decision. Of course, they could be counting on people forgetting that this is a big deal in a month’s time and hope that subscriptions will climb, but I don’t foresee them picking up the customers they lost with this move.
You’ve made some odd decisions, Netflix. Let’s see what America does now.
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