Netflix Teams Up with Facebook; Continues to Search for Ways to Win Back Customers

Netflix Teams Up with Facebook; Continues to Search for Ways to Win Back Customers

Sep 23, 2011

Netflix LogoIt’s been a rough few months for Netflix – first they announced significant rate increases that sent customers fleeing and stock prices plummeting. Then came this week’s dreadful announcement that the company was splitting its streaming and DVD by mail services into two companies – meaning customers utilizing both services would get the pleasure of managing two queues and rating a whole lot of movies all over again. For the casual observer, this comedy of errors has been hilarious to watch. For whatever reason, Netflix – a company who once could do no wrong – suddenly can’t do anything right.

CFO David Wells is keenly aware of this – and says that Netflix is hard at work trying to devise some contingency plans in the hopes of keeping current customers and maybe wooing a few deserters back into the fold.

During a Goldman Sachs conference call earlier this week, Wells outlined some of the plans the company is mulling over. The most obvious is backing off the new pricing rates – which went up by over 50% in some instances – but Wells doesn’t see that as a particularly good move. “At this point, we’re going to step back and look at a number of things,” he said. “But lowering prices, or offering a discount for three or six months, is a little bit of kicking the can down the road. It’s certainly in the realm of possibility, but I don’t think its going to win back the customers that we lost.”

I’m no MBA graduate, but I think this would be the best first step the company could make – unless we’re talking about a temporary rollback, only to see prices go back up in three to six months. Outrageous price hikes to offset the cost of new streaming contracts with the studios were what started this maelstrom in the first place. Lowering the prices and keeping them at a more reasonable rate seems like it would bring some of the flock back for sure.

Also on the table is a la carte VOD plan to complement current subscription services. Wells stresses that this idea also is not high on the list, but that Netflix would consider it if customers wanted it. One has to wonder why customers would want this, though. If it’s VOD featuring the same kind of stuff already on satellite and cable TV, what’s the point?

One step the company has taken is joining up with the newly revamped Facebook. As Mark Zuckerberg works diligently to make his social media site into an all-encompassing entertainment portal, companies like Netflix and Hulu have inked deals to allow users to jump in to view programming their friends are watching through the site.

Of course, given Netflix’s current streak of bad luck, there are naturally complications. US law doesn’t allow Facebook users to link their Netflix accounts currently. So, while the rest of the world will be able to use this feature of Facebook, US users will be left out. CEO Reed Hastings has urged users to contact congress to get them to remove this restriction, but no one knows when such a move might come – or if it will come at all. In the meantime, US citizens can link up with what their friends are watching and listening to on Hulu and Spotify. Better luck next time, Netflix.

What seems readily apparent is that Netflix might be considering plans to alleviate their current woes, but none of those plans seem to have much traction with the executives at the company. What can Netflix do that would make you happy? Would a lowered price structure win you back or are things too far gone at this point? Weigh in below. 

[via Variety, Forbes, /Film, Deadline]

Categories: News, At Home
Tags: Netflix
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