After the Netflix PR crisis that occurred the past few months after the service’s price raise in July, CEO Reed Hastings recently tried to make things right. He scrapped Qwikster and announced that Netflix would return to the service that everyone has grown to love. While the price raise will stay because “the price change was necessary,” Hastings promises that “we are now done with price changes.”
It is now almost two weeks after Hastings made this last announcement. What can we learn from this crisis? Where does the company go from here?
Carolyn Kepcher provides a checklist in her article, “Netflix provides good example of what NOT TO DO in big business strategic changes.”
• Assume that success is forever: Don’t let your success get to your head because you never know when an obstacle can arise.
• Make a big change without communicating: Kepcher explains that people everywhere need an explanation, a chance to give their own opinions, and some advance notice.
• Follow a mistake with a bigger mistake: When involved in a crisis, make sure you handle it promptly but efficiently to avoid digging an even deeper hole for yourself.
• Do too little, too late: Don’t wait too long to respond to your crisis, or you’ll never recover from it.
I believe Netflix is on the right track to recovery, even if it took one or two tries to please consumers. Hastings hopefully learned his lesson after the heavy public backlash on the Internet and will not act so quickly next time to fix something that does not need fixing. As for the price increase, I do not know if this will continue to hurt the company, but I think everyone appreciates Qwikster’s elimination. Some say the company does not want to be in the DVD business much longer because Hasting wants to move towards online streaming, but hopefully Netflix will survive this rough time to even move in this future direction. With the recent addition of the CW Network to its streaming service though, I see Netflix getting out of this rut and surviving this hardship.
What do you think? Did Netflix dig itself too deep or will people forget about this in a year or two?