September 20, 2011
-- by Dave Johnson
As I wrote yesterday, I think the reason Netflix has lost 1 million customers is that most of their customers do not yet know that anything has changed.
In 1985 the Coca Cola company, sitting on the #1 brand in the world, with a spectacular product, loyal customers and spectacular sales, decided to scrap the product and come up with a new formula. They called it "New Coke." It didn't work out, and is remembered as one of the biggest business mistakes of all time.
In 2011, having dominated the competition, Blockbuster having gone through bankruptcy, spectacular market share growth, sales growth and stock somewhere around 300 decided that being an American company and all it was too obviously being good to its customers. Netflix announced a huge price increase, and then announced they are going to make it impossible for customers to continue to do business with them by splitting the company into two separate companies, with two separate websites.
I guess it's possible that the Board and CEO could be replaced, and they go back to being the Netflix that was successful... but in the meantime there is Blockbuster, Amazon Prime (includes free 2-day shipping on all Amazon purchases), Hulu, Redbox, Comcast has XFinity, I don't know what ATT does, etc.
I mean, can you imagine being at Redbox or Blockbuster, sitting around wondering what you're going to do, and hearing these announcements? I mean, like winning the lottery?
Don't leave a comment talking about how their business model required them to ... anything. Any business model that involves screwing the customers, giving them less for more money, making it harder to get what you want... just don't justify it. I don't want to hear it. This is so stupid, it is the epitome of how MBAs destroyed Silicon Valley.
Posted by Dave Johnson at September 20, 2011 5:36 PM
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