As a Netflix customer, I have been fascinated by its recent move into original programming.
Netflix began as a mail-order DVD service that revolutionized the movie rental business with a brilliant logistics system. Instead of driving down to the local movie rental store, consumers could now choose videos from the comfort of their homes and get new movie releases delivered right to their doorsteps.
Netflix (along with the more recent RedBox) upended the video rental industry, and brick and mortar rental stores like Blockbuster were decimated as a result.
Blockbuster failed to see the direction that the industry was heading, and it evolved too slowly. Some of this was beyond its control, some was not.
Now, the industry is evolving again, and this time it is moving towards streaming content. Netflix seems determined to keep pace and even lead the shift.
Yet, with change comes challenge, and one of Netflix’s challenges will be maintaining the customer experience as it changes some of the fundamental features of its business model.
In an excellent article in Yahoo Finance entitled Netflix Dropped Your Favorite Movie, Get Used to It, Aaron Pressman writes about Netflix’s new strategy. It can be captured in a few key points:
The Shakespearean-flavored House of Cards, a political drama featuring Kevin Spacey and Robin Wright, was Netflix’s first foray into original programming — and, along with a few other titles such as the relaunch of Arrested Development, it worked. According to Pressman:
More than 12% of Netflix subscribers said they signed up because of the original programming and another 8% said they would have canceled but for the new shows, according to a survey of 1,000 U.S. customers last month by Wedbush Securities.
A quote from the article encapsulates the heart of what Netflix is trying to accomplish:
Executives have been telling investors that the company is modeling itself as the HBO for the Internet. ‘The goal is become HBO faster than HBO can become us.’
With Netflix’s change in direction comes a shedding of its previous strategy. Netflix will no longer be a virtual Library of Congress for movies. It is beginning to limit its catalog of older movies. Classics like Big and Young Frankenstein will get the axe.
As both a Netflix and Amazon Prime customer, I can tell you that finding classic movies (using streaming) is a lot harder on Netflix than it is on Amazon.
Netflix is embracing a changed business model, and it will not please all of its existing customers. Customers who came to Netflix because they wanted to be able to rent almost any movie under the sun will likely find the service providing fewer options over time.
What can be done to help soften the change?
Here are five tips for handling a change in business model:
Managing a changing model can be one of the most daunting customer service challenges in business. Change often starts with a numerical analysis — how many more will we gain and how many more will we keep — however, what begins with numbers ends with people.
Remember that a changing model means a different customer experience. If you have a strategy to reach out to customers who are not fond of the change, you might just see your original numbers get even better.
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