Netflix is an Internet subscription service streaming television shows and movies. The Company’s subscribers can watch unlimited television shows and movies streamed over the Internet to their televisions, computers and mobile devices and in the United States, subscribers can also receive digital versatile discs (DVDs) delivered to their homes.

The company on Thursday morning revised downward its subscriber estimates for the quarter of the year that ends in two weeks.  The revision reflects the negative reaction to Netflix’s decision, announced in July, to separate its DVD-by-mail service from its faster-growing Internet streaming service. Before, DVD-by-mail was a $2 add-on for some streaming subscribers; now, each service now costs $8. Some subscribers were upset by what was effectively a price hike, and a subset of them have cancelled their Netflix accounts.

To make matters worse, the company announced a plan to split Netflix into two separate businesses, one for Internet streaming, which will still be called Netflix, and one for DVDs by mail, which will be called Qwikster. The company’s Web site was inundated with angry messages.

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Netflix viewed the pricing scheme as a necessary step that would allow it to keep mailing DVDs and would give it more money to spend on licenses for streaming content.

But the change has spurred about a million of its 25 million customers in the United States to drop their subscriptions, , and its stock has fallen almost 52 percent since the change was announced.

Amazing, you will agree with me.

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Why didn´t they manage the price increase in a different way? Why not doing some research or at least some testing for understanding the potential effects? Didn´t they realice why people where purchasing from them? Didn´t they consider the side effects n branding and customer loyalty?

And if you realice that you messed  it up: Why not apologizing with your customers? Why not launching a win back campaign? Why not going back to your original price level? Why going forward with the company split if you have suffered such a reaction from your customer base?

Quite a few questions for which I do not have a response but a warning:

Keep connected to your customers. Listen to them and understand why they are purchasing from you. If not you are the perfect candidate to mess it up again and again…


Ignacio Gafo


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