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Netflix Damage Control: Too Little, Too Late?

Netflix hiked prices and spun off its DVD service into a separate company.

It’s been just 24 hours since Netflix CEO Reed Hastings issued an apology for hiking prices by as much as 60% and spinning off its DVD rental business into a separate company, but firm officials say they’re determined to keep their current customers from fleeing.

To that end, Netflix says it plans to offer more personalized services based on the choices of its customers, company spokesman Steve Swasey tells Pay Dirt. For instance, he recently watched and rated “The Red Violin” feature film, which led to Netflix recommending “Note by Note,” a documentary about the Steinway piano company. “Content is tailored to your taste and it will continue to evolve,” he says. The company also plans to further expand its movie and TV offerings, including more international content like Bollywood movies and European independent movies that haven’t gotten mainstream theatrical releases here.  “We want to regain the trust and loyalty of our members,” he says.

But business experts say these efforts may not be enough to stop the customer backlash. Instead, the company should consider giving its current subscribers free DVDs and downloads or a free introductory period that’s longer than 1 month to lure customers back, says Jonathan Bernstein, president of Bernstein Crisis Management. “Even a discount is conditional and would not be enough,” he says. Technology blogger Joe Manna agrees. “It’s important to do something a little extra to show the company is being thoughtful of its existing customers,” he says. Swasey says Netflix is not offering a refund or grandfathering, and no freebies.

Pay Dirt readers, what can Netflix do?


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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to or tweet @SMPayDirt.