Netflix makes complete U-Turn

For readers who are unfamiliar with the Netflix platform, I’ll cover it really quickly. Netflix started as a mail-order DVD rental service, which people were able to sign up for via online monthly subscriptions. Some time later, Netflix began offering its subscribers high-quality video streaming for movies and television shows at no extra cost.

But just a couple months ago, Netflix announced that it would start charging separately for DVD by mail and online video streaming. This really did not sit well with consumers, causing thousands of members (including this one) to cancel their Netflix accounts.

A few weeks later, Netflix announced the new direction its company was taking. The new plan was to completely separate DVD’s from online streaming. Under the new plan, the Netflix.com website was dedicated to online streaming and the company was starting a completely new site called Qwikster.com, which required a separate membership for its DVD service.

The front page of Tuesday’s SF Chronicle displayed the latest in the whole Netflix catastrophe.

Apparently, the company and its CEO have done a complete 180 after public outcry over this new plan. The company is nixing the whole plan, canceling the new Qwikster.com website and keeping both DVD and streaming under one account at Netflix.com. The company’s official position is apologetic, and they’ve been on the defensive for months now, first apologizing for the fee increases and now again for proposing the separation of services.

The result is a weak-looking company that can’t make up its mind. Meanwhile, investors are getting skittish, and Netflix shares are taking a huge hit. According to the SF Chronicle, Netflix went from an all-time high of $304.69 per share in July, to $111.30 on Monday.

The thing that surprises me most is how Netflix did not see this coming. A company of that size must have done an extensive amount of market research before attempting a change like this. It would be interesting to take a look at its findings and figure out exactly what its logic was. There had to have been fears of public dissatisfaction.

Netflix had a pretty successful formula, and this all could have been avoided by not messing with it. In the end, Netflix probably made the right decision for everyone by keeping DVD’s and streaming under the same roof. You know what they say: “If it ain’t broke, don’t fix it.”