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Life Long Reads

Netflix’s War on Customers

It’s no secret that the big media “old guard” want absolute control over how we as individuals experience culture. Rather than viewing the internet and the technologies and services it enables as exciting new opportunities to eliminate the cost of distribution and reach a global audience, they have insisted on clinging to a scarcity-driven business model that becomes more outmoded every year. From the “sue ’em all” campaigns of the oughties to the one-sided laws they continue to force through governments around the world, their desperate attempts to turn back the clock have met with utter failure.

Enter companies like Netflix and Redbox who focus on giving customers what they want as conveniently as possible, at a reasonable price point—what the studios should have been doing years ago. Their existence breathes new life into the doddering DVD rental business. Naturally, the studios respond not with effusive praise but by drawing battle lines—erroneously assuming that the success of these companies is driven by worthless studio content, and not by a quality service. They demand exorbitant sums of cash (a la Pandora) when the money should be flowing in the opposite direction. In these kinds of conflicts, the customers lose. The companies have little choice but to acquiesce to the studios’ demands, even at risk of destroying their own business. Redbox negotiated release delays, while Netflix tried to avoid this by passing the cost to us in the form of a 60% price increase.

I had some good back-and-forth on Twitter with Mark Hamilton, Caitlyn Mayers, and Ross Pruden about this. Here was an opportunity for Netflix to take the side of their customers. They could have explained that the increased prices were the result of the studios’ demands, charging the premium only to those customers who wanted to see the studio movies—directing at least some part of the resulting customer outrage at the correct target.

Instead, they tried to pass off corporate codswallop as honesty, providing hastily penned excuse after excuse to explain, justify, and apologize for what happened,, shielding the studios from any responsibility. The half-baked decision to split the company and “rebrand” is only making things worse. Customers have clearly shown that they want to obtain videos from a convenient source at an affordable price, and the company is quickly becoming one that provides neither. Netflix had a choice, and they appear to have sided with the media dinosaurs in their futile war on customers to regain control over our culture—and as a result, the company is paying a terrible price.