I’ve written about Netflix before and how much I like the service.  I love the instant gratification of streaming movies and apparently I am one of the few people who doesn’t use the DVD option. So, as you all know, many customers were not happy with Netflix’s price increase followed by the split of the DVD and streaming movie services. This combination was so lethal that around one million subscribers left Netflix for other services.

The Price Increase

The first derailment for many customers was the price increase of Netflix.  Before the hike, customers received unlimited movie streaming and one DVD at a time for just $9.99 a month.  The rate increase raised the price to $7.99 for unlimited movie streaming or $7.99 for unlimited DVDs that come one at a time.  To get both services together like before, the price moved up to $15.98 a month.  What was lacking was an increase of services on Netflix’s part.  Netflix did not say that they would increase their streaming library or increase the amount of new releases on DVD.  So why would customers pay more?

Netflix Announces Qwikster

The next shocker for Netflix customers was the announcement of Qwikster.  Qwikster was to be the DVD portion of Netflix, making Netflix just a movie streaming service.  With this separation meant two websites, two accounts, two passwords – oh, and of course, the higher price tag.  A user named Willie Williams said it best when he commented on the Netflix blog:

“Individually, your DVD and streaming services do not offer enough to justify the expense.  As a bundled service, they supplement each other and provide the value that made Netflix wonderful.  DVDs allow you to view newer releases in a fairly timely manner.  The streaming service allows for viewing of the older catalog of movies that come up when you think of it but might not be worth waiting for to arrive in the mail.”

Williams also describes how other services would be cheaper than the new Netflix plan based on his five DVD per month average: simply go to RedBox, pay $1 per movie and get five DVDs for $5, thus saving $3, and then replace Netflix streaming with Amazon Prime and save $2.  These two Netflix competitors provide quicker access to new releases compared to the usual 28 day wait with Netflix.

The Death of Qwikster

On Monday, Netflix announced that there is no more Qwikster.  The price increase will stay in place but there will not be separate services/websites/accounts for streaming movies and DVDs.  To try and show an increase of service, Netflix said they have added hundreds of new movies and thousands of TV episodes to its movie catalog. Netflix also says it is “now done with price changes”.

Netflix had it right for so long and this will surely go down as one of the worst corporate debacles. What can we learn from Netflix?  Essentially, listen to your customers when you make a mistake.  Do more market research before forcing a major change on your customers. Netflix obviously should have done more research before splitting their services.  Perhaps the data they had regarding how many people rented DVDs didn’t accurately represent how customers really felt about Netflix.  Let’s hope there is a significant increase of available movie content on Netflix: they’re going to need it.

Curt Finch is the CEO of Journyx.  Discover more on the Journyx blog.