Netflix CEO Reed Hastings is one of those guys that lives a high profile business existence. He’s the CEO and chief promoter of Netflix, he is on the board of Facebok and more. You would think it might be lonely at the top like you hear. What he has experienced recently shows, however, is that there is plenty of room at the top these days for people to push and shove to try to knock someone down a few notches. Hastings knows.
The great “Price Change Debacle” of the past few months has tarnished the once stellar reputation of the content distribution player and today is the final mea culpa of a person that, at one time, seemed to be able to do no wrong with his business.
Today, in a post from the Netflix blog, Hastings is eating some online humble pie and doing what he absolutely has to to get the ship righted again for Netflix: listen to his customers. That means that Qwikster, the DVD only site, makes a quick exit.
It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.
This means no change: one website, one account, one password… in other words, no Qwikster.
While the July price change was necessary, we are now done with price changes.
I messed up. I owe everyone an explanation.
It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology. I’ll try to explain how this happened.
This is an abject lesson in what corporate hubris can do in the age of consumer empowerment. Look at the stock performance over the past three months. That’s a 58% drop in value according to Google Finance. Ouch!
Reputation these days is a fragile thing. There are few that are immune to the wild swings that the new consumer power pendulum can make. Some that are currently impervious may be Mark Zuckerberg but that’s because a healthy amount of people just don’t like him anyway. Even in death we saw people writing of the shortcomings of Steve Jobs. Reputation today is a rough business.
Back to Netflix though. This 180 degree turn is one that will be a case study for business schools for years to come. It is likely that a year from now Netflix will be moving merrily along as its streaming business becomes stronger and the DVD side continues to fade.
What will likely not be forgotten however is how Reed Hastings handled this situation. In reputation terms, he may have cashed in many of his chips. Everything he does and says will be measured against the time he had to back pedal as fast as possible. People will keep this in the backs of their minds and the Internet will allow them to pull up this dalliance as if it happened right at the moment they need it.
Let this be a lesson. Be careful out there.
What impact do you think this whole process has had on the reputation of Netflix and Reed Hastings?