Netflix Recovers from PR Nightmare 3 Years Later

Posted by Albers Communications on July 23, 2014 |

While reading the online headlines this week, one in particular stuck out to me: Netflix passes 50 million subscribers. This milestone comes just three years after some speculated that a nasty PR blunder would take the company out of existence.

While looking back, it seems Netflix has learned from past mistakes and continues to use those lessons as it forges ahead into the future. Let’s look at the timeline of events.

Rewind to 2011

July 2011: Netflix announces significant changes. As outlined in this company blog post, Netflix plans to separate its streaming and DVD services, including a separate charge for each service. Public outcry begins, starting with more than 15,000 comments on this particular post, and translating into cancelled subscriptions and falling stock values.

September 2011: Netflix CEO Reed Hastings offers his apology to subscribers. He acknowledges he made a mistake but, instead of leaving it at that, further explains that the streaming service and DVD services Netflix is known for will become two separate companies, with two separate accounts and billing. This further enrages subscribers who can only assume Netflix still isn’t listening. (You may have noticed on this particular blog post that commenting was not enabled, signaling that the company indeed wasn’t listening)

October 2011: Another blog post from Hastings – this time taking back the previous plan to separate DVDs and streaming services. The price change will remain in effect, but he points to new offerings on the streaming side as the reason.

December 2011: As if it wasn’t obvious already, Netflix shows up on this list of PR mishaps for 2011.

Fast Forward to 2014

January 2014: The first rumblings of a rate increase as shareholders receive notification that Netflix is exploring new pricing options. However, this time Netflix stresses that it’s taking its time and will offer “generous grandfathering” for existing customers. This is vastly different from 2011, when the rate increase applied to current subscribers immediately.

April 2014: A second warning to shareholders about the upcoming rate increase, this time with greater detail. The price increase will be one or two dollars and will take place later in the quarter for new members.

May 2014: Indeed, the $1 monthly rate increase is coming as outlined in this company blog post. However, current members are again assured they won’t see their charges go up for at least two years.

July 2014: Netflix passes the 50 million subscribers mark. It’s obvious the company’s plan – and attention to how it presented the plan to its shareholders, subscribers and the public — was a vast improvement over three years ago.

What should you take away from Netflix’s experience?

First, there’s great importance in having a contingency in your PR plan for issues. Begin by identifying issues that pose a threat to your brand (in this case, a necessary rate increase for Netflix), and then create your goals based on the desired outcome.

Think ahead to what strategies will help you achieve these goals. For Netflix, giving shareholders plenty of warning this time around and also grandfathering current subscribers into their current rates helped to ease backlash.

Finally, execute your plan and evaluate. Evaluation from 2011 showed that Netflix drastically needed to change its approach in 2014.

I predict Netflix will continue to grow its subscriber base. With dynamic original programming and a decrease in cable television viewing, they’re poised to become one of the standards by which entertainment is enjoyed. As long as they continue to communicate with subscribers in a way that provides quality customer service, the company’s future looks bright.

 

 

 

 

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