Service exploring options in wake of backlash
A massive consumer backlash to recent changes at Netflix has the company rethinking its options — even the possibility of lowering unspecified prices.
Speaking at a Goldman Sachs conference Wednesday, Netflix chief financial officer David Wells indicated that such a reduction doesn’t jibe with Netflix’s corporate goals but wasn’t entirely out of the question.
“At this point, we’re going to step back and look at a number of things,” Wells said. “But lowering prices, or offering a discount for three or six months, is a little bit of kicking the can down the road. It’s certainly in the realm of possibility, but I don’t think its going to win back the customers that we lost.”
Netflix is trying to get back into consumers’ good graces after announcing the rebranding of the DVD portion of its business earlier this week. CEO Reed Hastings disclosed back in August that it would be split off as part of a 60% price increase for so-called hybrid consumers who wanted to continue to both rent DVDs by mail and streaming video online.
After experiencing double-digit declines in its stock price in the days following the introduction of Qwikster, Netflix saw a more moderate decrease Wednesday, closing down 1.18% to $128.50.
Another option that Wells said is being explored is revisiting the decision to separate the queues for Netflix and Qwikster, which would disadvantage hybrid consumers who utilize the company’s highly touted recommendation engine.
Wells also signaled another potential departure from Netflix’s previously stated philosophy: layering an a la carte component on top of the business’s one-size-fits-all subscription business. “What we said traditionally about VOD was it was a low-margin business that complicates (our) simplicity,” Wells said. “In today’s evolving and changing world, we’ll look at a number of different options.”
But Wells also made clear that making the move into a la carte was not a priority for the company. That said, the possibility of Netflix moving into a la carte VOD down the road could be of interest to everyone who sells more current movies, from cable operators to Walmart’s Vudu service. Whether the studios will license that tier of movies to Netflix is a whole other matter.
Wells emphasized that Netflix doesn’t want to overestimate the backlash via social media, which he suggests could represent a vocal minority that isn’t truly representative of the company’s user base.
“We don’t want to compound things by being reactionary and (want to) be thoughtful about what we’re going to do going forward,” he said.