Tech Doesn't Trump Trust

by Peter Bredlau on September 22nd at 3:42 pm EST

If you're a storm-chaser, gas up the pickup and get moving – this is going to be a big one. Call it Hurricane Reed, or the Oops of the Century.

 

When you're an industry leader in a popular and emerging technology like video streaming you can afford a public relations problem now and then.

 

When you have 25 million subscribers you can take a little chance on your subscriber rate and customer base.

 

When your stock is flying high you can take a few risks with your business and your brand.

 

Its Netflix of course. Unless you've been living back when movies came on a tape from a store, you know that a risk has become a blunder and then a nightmare for Netflix and CEO Reed Hastings. After splitting the streaming side of the business from the DVD distribution side, and raising prices nearly 50%, customers quickly found a Facebook page, Twitter account, message board or blog to give their two cents.

 

Hastings apologized. He really apologized. He expects people to believe that he's not living out a Simpson's episode where a landfill has a pile for Beta, VHS and an empty spot labeled “DVDs”. His apology is a decent start to set things right but it won't win back all the customers. The New York Times online reports that Netflix has lost 1 million of its 25 million subscribers and that stock has dropped 19%.

 

But this isn't the real problem. Hastings and company at Netflix took a business risk. Hastings is a risk-taker, but not a fool. He killed his own dream, the Netflix Player, in late 2007, because it wasn't future thinking enough for his vision. This most recent decision is not as crazy for business as some suggest (easy for me to say, I'm not a subscriber) – video streaming is the present and the future and Netflix is, as usual, ahead of times. The decision, and the accompanying price hike, are survivable. When streaming takes over, customers will be back (yes, DVDs will meet their inevitable demise – or did you think that VHS and videodisc were eternal?).

 

However, the “crazy like a fox thing” is wearing thin. Even the brilliant aren't immune from the occasional monumental brain freeze. What made the smart and creative Netflix, creative enough in 1998 to sell 10,000 President Clinton deposition DVDs for 2 cents each as a publicity stunt to promote the company, get so sloppy? High prices make consumers mad, bad judgment makes them crazy, and a complete lack of forethought destroys trust. The bad judgment? What else do you call naming your new business Qwikster without checking that the associated Twitter tag is best known for its dope smoking Elmo and tweets that read like they were sent by Cheech and Chong. Nice. That's the image I want associated with that little red envelope, although it looks likes the little red envelope problem is about to take care of itself.

 

It's alright for a business to take chances, even a business as large as Netflix. Customers expect it and will go with you – IF they trust you. But, even an eighth grader checks to see if their cool site name is already taken. Geez, the program even prompts you if the name is taken. Trust is like glass, its beautiful until broken, and then no one can put together all of the pieces. Reed, and Netflix, should have known better.