Netflix is a selfish company

September, 2011

So I just read the apology email from Reed Hastings (Netflix CEO), turns out it was a bait and switch. He wasn’t apologizing, he was doing more of the same, focusing on his needs at the expense of his customers.

He started out apologizing, but ended up slapping me in the face. Awesome. For those of you who didn’t get it, or haven’t read it, Reed does apologize, but then he announces that they will be splitting out the DVD and Streaming services into two companies. Here’s a recap on Wall Street Journal: Netflix Separates DVD and Streaming Services.

Focusing on their needs

This reeks of someone changing things to make their life easier. Netflix has a lot of confusion internally, and this helps them to remove that and focus better. That’s fine, I get that.

However, any good company will figure out how to eliminate internal problems without disrupting their customers. As a product manager, I’ve had to fight many battles where an internal team wanted to simplify their process at the expense of the customer’s experience.

All business changes need to be run through this filter: Does this improve the customer experience?

The pricing and company rodeo they’ve been running us through fails that test miserably.

People want more, not less

Look at Apple, they are offering more services in more areas (streaming media, better integrated products, etc), and people are eating it up. By removing the integration between streaming and dvds they are adding complication to customers’ lives and eroding their value.

Netflix should be looking at ways to provide further integration with other services and offerings that can leverage the data sets and customer base they have. This move embodies the “do one thing and do it well” mindset, which is admirable, but isn’t what is generally needed in the media world today.

I’m sure, as Netflix claims, the products will move faster now that they are becoming disentangled. But I don’t think that product problems have been their stumbling block, it’s been media and availability. This change seems to be more of a distraction for customers for than anything else.

What now?

Well, I’m not canceling my account now, but the bar to disrupt Netflix has just gotten lower. The biggest hurdle in this space is still content, getting the right amount of media available is key. But pure digital players no longer have a huge hurdle of physical media to overcome, and other players like RedBox, could consider getting into the streaming side with a huge advantage.

Will Netflix disappear because of this? probably not. Will they look back and rue the day they made the switch? Maybe. Will I end up on another service? I’m not sure, but the likelihood is higher now than ever.