SmartMoney Blogs

Pay Dirt
A daily look at what we buy, how we spend, and the companies that do right - and wrong - by their customers.

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?


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 10)

View all Comments »
    • I believe it is Very nice weistbe but I dont like to pay a monthly fee for a purse. By the time you pay all that u couldve saved up for a nice replica or maybe an authentic. i dont know if there is any other weistbe like it thats the only one I know of. ENJOY!

    • Netflix is already dead in the water! There are no barriers to entry with regard to their business model. Content is king and the big studios can easily come together to offer the consumer a better streaming experience for less and make Netflix irrelevant.

    • Someone at Netflix should be fired. If this is the best strategy they could come up with to move the company forward in a rapidly changing business environment just think what the alternatives must have been. I’ll give them one month to come up with something that makes sense to a customer, if they don’t, I’m gone.

    • I can’t believe that a red vending machine (Red Box) is giving the mighty net flix a run for its money. But its true. The large price increase is a slap in the face. And they did the large price increase in the middle of a terrible economy.

    • Streaming content is very dated and what passes as a new release is ridiculous. I cancelled my account the value is not there for the higher price. Everything I wanted to see was on a DVD. I am using another service now with much newer content.

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 quentin.fottrell@dowjones.com or tweet @SMPayDirt.